How many times have those fateful words been uttered, in English, French, Spanish, or Italian? Close your eyes and you can almost see the glee on the entrepreneur’s face as he imagines himself running this new enterprise. “After all, I know a lot about wine,” he says. “I have the money to make it happen. I have some good connections.” He kicks back in an easy chair, swirling a glass of cabernet, picturing days of entertaining buyers, attending awards banquets, and hobnobbing with restaurant owners. 

If you want to find out where these gleams in the eye have been leading the past few years, head to the Mendoza region of Argentina, where an exploding wine industry and bargain prices have brought a flood of new development. There are supposedly some 16,000 vineyards in Argentina being fed by the runoff water from the Andes Mountains and depending on whom you talk to, some 1,200 to 1,700 wineries. 

“There’s no way to really know how many wineries are here,” says Charlie O’Malley, who edits The Grapevine magazine and runs Grapevine Wine Tours with his partner Kelly Thornhill. “New ones are opening all the time and there’s always the issue of who has officially filed the right paperwork or not.” Then there’s the geography. Mendoza is the main wine province, but good wine is also coming out of Salta Province in the north and Patagonia in the south.

There’s no dispute about the growth path, however. Argentina’s wine exports topped $350 million in 2004 and $400 million in 2005, according to the country's Institute of Wine. Over the past decade, the industry has collectively invested some billion and a half dollars in the latest technology and has been quite successful in marketing their wines, especially their signature Malbec, to the world. The country’s wines have gone from jug wines mostly meant for local consumption to ones that are winning awards against the best from the U.S., France, and Italy. 

The new dreamers are certainly not the first ones to breeze into Mendoza looking to start a winery. The industry has been in place here since the 19th century, with immigrants from Spain and Italy applying their knowledge and hard work in the new world. The Malbec grape was actually brought to Argentina by European immigrants in the 1860s. It rarely performs as more than a blending wine elsewhere, but the climate in the new world has served it well. 

These days the immigrants still come from wine-producing countries in Europe, but others now join them from the U.S., Canada, Chile, and far-flung places around the globe. They are lured by an exploding growth curve and land prices that can still be downright cheap. Listings on EscapeArtist.com often come in under $2,000 an acre. 

More than a few investors have returned home later with their tail between their legs, however. “Buying a little slice of heaven is the easy part,” says O’Malley. “To secure the right conditions and then run and manage the place is a different story.”

One person playing a big part in improving the odds for newcomers is David English, president of Mendoza’s expatriate club. His company, English Associates (), takes potential investors by the hand and not only leads them through the purchase process, but helps them start and run the actual vineyard through the start-up and production phase. 

Finding Local Expertise
“We work with the client to help them find the right property, on a consulting fee basis,” English says. “But then we continue to work with the client after they have made the purchase. We look after their investment and develop it, find the right local people, and become their local eyes and ears on the ground.” 

“The market here is very hot, with foreign investors taking advantage of the gap in values,” he adds. “With prices rising dramatically in some areas and no accurate records of real estate sale prices, it’s easy for someone to get suckered. By looking at hundreds of properties a year, we have a good feel for real values. Since we’re not a real estate agency, we can also be impartial about what’s the best option for the buyer and give the person advice that’s not tainted by commission considerations.”

English hails from Nashville, Tennessee, in a region better known for Jack Daniels and George Dickel American whisky than for wine. There he owned a company that licensed music industry trademarks (such as Gibson and Steinway) and developed licensed merchandise for sale in overseas markets. 

Ten years ago, at a Rotary Club meeting in his home town, he found out about a group study exchange program where participants spend 6 weeks visiting another country, seeing other businesses and staying in homes of business owners. He followed up on it and in 1997, was selected for the scholarship and spent a month and a half in Patagonia. “I fell in love with the country and people,” English explains, “and I kept coming back on subsequent trips, always looking for opportunities.” Eventually he fell in love with another aspect of Argentina—his wife Carolina. 

English got into the wine business by default. He started out offering general business services to foreign investors and foreign corporations, helping people set up locally or form partnerships. He dealt with the locals and mitigated the investment risk. Word soon got out to wine investors and real estate consulting followed. “Because of where we are in Mendoza, most of the companies and individuals who came to us were looking to invest in or partner with the wine business,” he explains. 

English sees his role as helping people find success by keeping them out of trouble. “The most important offering from us has been in keeping people from totally messing up. Sometimes we’re successful by telling people not to buy a property. We keep them from spending $200,000 for something that wouldn’t work out as a vineyard.”

How NOT to Buy a Winery
Hubris often leads to an investor’s downfall in the wine region of Mendoza. The most famous example in these parts is a failed investment by the Kendall Jackson company of California. They came down to Argentina in 1996 with their own staff and an attitude that they knew exactly what it would take to launch a successful winery in the area. They reportedly spent close to 8 million dollars. In 2003 they declared the adventure a bust and ended up selling the winery for $2.5 million. For those not doing the math, that’s a loss of $5.5 million after 7 years of work. 

One of the most common mistakes wine investors make is not making an attempt to understand the people, the culture, and the way things work in a foreign country. “Ideally, you do it methodically and slowly and you don’t need someone like me so much,” English says. “In the best case you would come down here and live for a couple of years first. Then buy when you know the country, the people, the region, and the language. At that point you understand the culture, what the risks are, and what it is really like to live here. Most people do tend to jump into things too quickly.” 

Another common mistake is to underestimate the importance of finding the correct site for a vineyard. Many people don’t learn until after arrival how huge the Mendoza province really is. The wine-producing area of San Rafael, for instance, is 150 miles from Mendoza city, but still a part of Mendoza province. Getting a handle on this vast region is not easy for a newcomer. 

“I personally know several people who purchased property they thought was a great deal and found out the land was close to worthless,” says English. “They were over a geological fault, or they didn’t have water rights, so they were essentially stuck with un-irrigated desert land. People with wine experience come from a country like Italy and think they know everything. Unfortunately they don’t know about local microclimates or local soil characteristics.”

Argentina is in a unique position in both cases. Mendoza vineyards receive plenty of sunshine, but almost no rain. Instead vines are watered through irrigation, from water that comes down from the Andes Mountains. Vineyards take this water and either periodically flood the fields or use drip irrigation systems. 

Unfortunately, this means those without water rights are out of luck from the start. It also means that more than a few plots of land are unsuitable for growing grapes, due to salinity levels in the soil. “Historically, there has been a lot of sharecropping of garlic, onions, and tomatoes in the region,” English explains. If farmers do not properly irrigate the land—which is okay for growing onions—it can be a big problem later if someone buys the land intending to grow grapes. You have to do the proper soil sampling and analysis to know if the dirt will work or not.”
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