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Source: Financial Times
By: Camila Bretón

Love brought Torey Novak to Mendoza. The US national met his girlfriend at university four years ago and decided to move to Argentina. Now he speaks fluent Spanish with a Mendocino accent, and runs a tourist attraction that capitalises on a sideline to Mendoza’s better-known culinary and oenological attractions: olive oil.

“We’ve planted an Italian variety of olive tree that grows better here than anywhere else in the world,” he says of the premium oil served as part of a broader tourist offering at Bodegas Zuccardi, a winery which, like so many in Mendoza, offers its visitors a mix of drink sampling, food and, of course, olive oil.

Diversification into the kind of attractions that visitors might more often associate with, say, Italy, is characteristic of Mendoza’s end-of-the-world cosmopolitanism. It also shows how local businesses are seeking to broaden the state’s appeal beyond its world-famous wines.

“Most people come here because of the wine, especially Malbec. But then they arrive and are struck by the Andes and its rugged scenery,” says Pedro Rosell, founder of Discover the Andes, a tour company that offers visitors private excursions into the snow-capped mountains that line the state’s western border.

As one saying goes, Punta del Este for its beaches in the summer, Mendoza for its polo and wine in the winter. To those core attractions should also be added skiing, rock climbing and white water rafting.

“Over the past 10 years, the number of tourists coming here has doubled,” says Cecilia Gatta, head of planning and innovation at Mendoza’s tourism ministry. “Last year, we had 2.7m visitors; in 2003, we had 1.2m. To meet that increase requires better infrastructure.”

To some extent, Mendoza is already fairly well-endowed with tourist infrastructure. A province with 1m inhabitants, which in some ways still has the air of a small village where a summer siesta remains almost obligatory, Mendoza has 130 wineries that are open to the public, a plethora of restaurants and budget hotels, and six five-star establishments.

Indeed, the bigger challenge for potential investors is less a want of physical infrastructure than a desperate need for better institutional infrastructure, especially when it comes to national economic policy.

“Today the biggest investment risks are the country’s broader economic policies,” says David English, another North American who came to Mendoza out of love – this time for the state’s climate, people and the business opportunity of helping other foreigners who felt the same way as he did to set up small vineyards and hotels. “Inflation and the constant changing of the tax rules ... can make buying properties a difficult and confusing process,” he adds.

Rodrigo López, managing partner at NB Travel, a Mendoza-based travel agency, points to the same problem, which makes “us less competitive against Chile, which has many of the same attractions and is only four hours away”.

High inflation and lack of competitiveness are a common bugbear cited by all Argentine businesses, which frequently bemoan the erratic state of national economic policymaking.

Indeed, such factors might help explain why the majority of Mendoza’s visitors are Argentines for whom there can still be good value in travelling within the country, especially as low interest rates and high inflation mean there are few opportunities to save their pesos – so better to spend them instead.

About 75 per cent of Mendoza’s visitors are Argentine nationals, while the largest other groups are Chileans, at 12 per cent, and Brazilians, at 3 per cent. All told, in 2012, the sector brought in 6.8bn pesos, about $680m at black market exchange rates or $1.15bn at the official rate.

But it could bring in more still if there were direct flights from São Paulo that would bring in additional Brazilian tourists, who still enjoy the spending power of the highly valued real. Aerolíneas Argentinas, the state-owned airline, did have plans for a direct flight to Mendoza’s small airport, which caters for 140 flights a week. In the end, a compromise was reached, with a cheaper onward flight from Buenos Aires organised for Brazilians flying from São Paulo.

“It’s not quite what we hoped for, but it was better than nothing,” says Francisco Pérez, the state governor, who lobbied hard for the route.

Despite such drawbacks, and the bigger macroeconomic obstacles, the tourists keep coming – to drink, eat well, bask in desert sunshine, watch one of the eight polo tournaments that take place each year, or even learn to play themselves.

“First we take visitors to the Club de Campo, where a professional teaches them polo. Then we take them for a premium wine tasting at the Bodegas Escorihuela Gascón, followed by lunch,” says Gabriel Casals, a director of tour organiser Wines & Polo.

With that kind of mix, it is no wonder that some visitors end up buying a few hectares of vines for themselves.

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