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Sunday, 10 February, 2002, 05:46 GMT
Argentine wine unspoilt by crisis
Vineyard worker with a tray of grapes
Devaluation will help exports
As Argentina prepares for the free flotation of its currency, the BBC's Stephen Cviic visits the western province of Mendoza, home of the wine industry - one sector of the economy that has been doing well despite four years of recession.

The setting is perfect. In the shade of a small patio, we sip rose wine and nibble bruschettas of sun-dried tomato.

Fruit picker
The wine industry is not big enough to defeat the crisis
A few metres away, a fierce barbecue is roasting the hunks of beef and chicken we will shortly be eating for our lunch.

All around us, the sun beats down out of a clear blue sky on row after row of grapevines - laid out not vertically, as in most of Europe, but horizontally, forming a canopy of leaves from which bunches of grapes hang.

It is the height of summer in the southern hemisphere, and my hosts at La Agricola winery have just started their annual harvest, when their workforce of 450 people expands to take in extra fruit pickers.

To look at this thriving business, you would never know that Argentina was being ravaged by an economic crisis.

Insulated

La Agricola is a family firm, and over lunch the managing director, Jose Alberto Zuccardi, chats easily in English with his other guest, an Australian wine consultant.

They talk about blends, about Shiraz, Tempranillo and Merlot. The crisis is never mentioned.

La Agricola winery, in the background the Andes
The winery is as insulated as possible from Argentina's problems
That is probably because La Agricola is about as insulated as it's possible to be from Argentina's problems.

It exports more than three-fifths of its production - a very high proportion by Argentine standards - and therefore has no difficulty getting hold of dollars.

Mr Zuccardi and his senior managers are particularly enthusiastic about the British market.

One says: "It's like a benchmark for us. The consumer of wine in the UK market is willing and keen to try new things, and Argentina being a new player in the world of wine, we had an easier way in through the UK market."

Unused to competition

In theory, the devaluation of the peso should make life even better for this export-driven firm, but Jose Alberto Zuccardi is cautious.

"We hope the devaluation will help exports," he says. "But there are some points the government has to clear up in the future, like the policy in relation to taxes, and what we really don't know yet is what domestic inflation will be like."

The bad news for Argentina is that the wine industry is not big enough to pull the country out of crisis.

Even in Mendoza province, wine accounts for less than 10% of the economy.

The government is hoping that other businesses will start exporting more.

But economists say most Argentine firms are unused to international competition, and those products which are competitive - like wheat and beef - face stiff trade barriers in Europe and the United States.

Still, for the small number of people lucky enough to be enjoying dry summer days in the vineyards of Mendoza, it is possible to be relatively sanguine about the future.

See also:

28 Sep 01 | Business
High hopes for Bolivian wines
09 Feb 02 | Americas
Argentina overhauls political system
08 Feb 02 | Business
Argentina to resume IMF talks
04 Feb 02 | Business
Argentina unveils crisis package
11 Jan 02 | Business
Argentine exporters set to benefit
21 Jun 01 | Business
New world wins the wine war
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