Page last updated at 11:29 GMT, Monday, 30 March 2009 12:29 UK

Argentina's grapes of success

By Candace Piette
BBC News, Mendoza, Argentina

Gaucho leading the parade
Mendoza's harvest festival is a colourful affair

In the heart of the Argentine wine country, the city of Mendoza is celebrating another abundant harvest.

At its annual harvest parade, floats laden with grapes and barrels trundle by, representing many of the leading wineries.

Each carries its harvest queen and her handmaidens, pretty local girls who throw grapes and sweets to the cheering crowds.

Leading the parade are gaucho cowboys on horseback depicting traditional rural life.

"This is all about the wine," says one of the cheering spectators, who is carrying a small child. "This is our celebration of the wine, and the people who work in the vineyards."

Inca irrigation

The city of Mendoza lies in a valley which was once a desert. But since the time of the Incas, it has been irrigated by a series of canals with waters from the glaciers in the Andes.

Herve Joyaux Fabre, President of Fabre Montmayou Winery, Mendoza
We need financing to develop. Each time we produce ten bottles, we need to finance thirty
Herve Joyaux-Fabre
Mendoza wine-grower

The mountains are clearly visible from the town as they rise out of the mists each morning, glistening with snow.

These are the highest vineyards in the world. Wine has been cultivated here for more than 100 years by European immigrants and their descendants.

Over 70% of the wine grown and bottled here is for the Argentine market; around 30% is exported.

Exports have grown dramatically in the past decade. In the past five years, Argentina has become the seventh largest wine exporter in the world.

Mendoza's Cabernet, its Chardonnays and above all its great Malbec grape have found enthusiastic markets abroad, particularly in the United States and the United Kingdom. Argentine wine is now sold in 130 countries.

But now there are fears that the global economic crisis will threaten this success story.

Financial worries

In his vineyard overlooked by the mountains, Herve Joyaux-Fabre tastes his grapes as he does every morning in the lead up to the harvest.

Like many here, he is beginning to worry about the global downturn. What he fears most is not a drop in demand but that more developed markets around the world will crowd out Argentine wine growers.

So far, the Argentine wine industry has been very successful in raising capital investment funds. Mr Joyaux-Fabre hopes the global downturn will not result in funding drying up.

"We are going to carry on needing financing to develop. Wine is an activity which needs heavy capital investment.

"It takes a year to grow the grapes, and then two before we can sell the wine. So we always need three years of financing.

Each time we produce 10 bottles, we need to finance 30," he explains.

Global appeal

Far from the peace of the vineyards, the wine industry grandees are already reacting to the threat.

At a business breakfast in the gleaming glass atrium of an American hotel chain in Mendoza, the local wine-growers chat to representatives and agents of the industry from far afield.

Argentine wine
We want people opening a bottle of wine to think of tango, of football, of the Andes
Michael Halstrick
President of Norton Winery

People from neighbouring Brazil and from further afield in Asia and Africa are among the crisply-suited crowds. Governors, state and national politicians slap backs and shake hands in front of the cameras.

Sponsored by the government, the wine industry has launched a 10-year marketing plan. It is based on reaching more markets and helping smaller producers.

Many like Jose Alberto Zuccardi, director of the Zuccardi winery in Mendoza, are upbeat about the plan and the industry's capacity to survive.

"We are very optimistic, we think Argentina is growing in export sales and the reason is that we offer good value to consumers who may be looking to spend less money for the same or better quality," he says.

'Argentina arrives'

The marketing strategy they have come up with is to keep the prices low on Argentine wines to encourage more growth at a time when consumers may be pulling in their horns financially because of the economic crisis.

"Education is also key," says Michael Halstrick, president of Norton Winery.

"We want people opening a bottle of wine to think of tango, of football, of the Andes. We are no longer just producing a commodity, we are a country that has arrived."

In the vast vineyards of the Norton winery, workers are putting up netting to protect the grapes from Mendoza's ferocious hailstorms.

The wine trade's expansion has given the whole region jobs and prosperity.

This pattern has been repeated across Latin America. Partly because of pockets of regional prosperity, millions of families have risen above the poverty line during this last decade of global prosperity.

When the presidents of Mexico, Brazil and Argentina sit down at the G20 meeting in London, they will ask for this not to be forgotten.

Just as Latin America begins to solve its problems, the door to credit and investment, they will say, cannot now be shut on the region.

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