Investments in Wine & Real Estate
Source: Noticias Magazine
By: José Antonio Díaz
Investor Scott Mathis explains his plan to raise USD 60 million in the next five years. Boutique winery and vineyard housing. Scott Mathis has been in the financial business for 26 years now –even in companies that had their golden ages such as Merrill Lynch and Lehman Brothers-, but since 1999 he expanded his scope of action and established his own investment fund: Invest Property Group, IPG, which is dedicated to real estate developments in California, New York and Mississippi. Right in the middle of the Argentine crisis, Mathis, a US citizen, decided to take even greater risks. He saw an opportunity and has already invested USD 25 million in the country. He has recently opened Algodon Mansion in Recoleta, a French-style building built in 1912 which today offers ten luxury suits with all kinds of amenities. In 2005, Mathis purchased a vast 830 hectare land in Cuadro Benegas, 15 kilometers away from the city of San Rafael, Mendoza, which is nowadays internationally known as Algodon Wine Estates. The land features 120 hectares of vineyards, fruit trees, walnut and olive trees. The boutique winery makes premium wines in limited batches. The lodge for tourists includes eight suites divided in two premises. The plots of land of the residential project surround the perimeter from the outside boundaries of the plantations. The trademark Algodon was inspired by Mathis´ grandparents, who cultivated cotton in Mississippi, and by the spirit of the Cotton Club, a music nightclub located in the NY neighborhood of Harlem, famous in the 1920s during times of Prohibition. The investor graduated from Mississippi State University and his first job was with Merrill Lynch. But in 1999, he established his investment fund and a lab specialized in biotechnology, which conducts investigations tending to cure cancer, pancreatic Alzeheimer and leukemia. “That is a risky investment”, he says. NOTICIAS: Why did you choose Argentina instead of California to invest in wines? Scott Mathis: Notice that 35 years ago Napa Valley was not a well-known wine region even in United States. It was only by the mid 70s that its producers participated in a wine competition in France and the phenomenon started to grow. My intention is to create value, for example, with the Argentine Malbec, before it becomes a worldwide celebrity. We bought a small vineyard in San Rafael and my aim is to turn it into a world-class winery. Part of these hectares was planted at the end of the 1940s, which provides us a basis to create spectacular wines. We also bought some 300 plots of land that surround the vineyards so that you can build your house in lots ranging from one to six hectares; you can choose a lot facing the golf course or the polo field or wait until we build the professional tennis complex, which includes a stadium; in this project we are partners with José Luis Clerc. As you can see, I also bet on new opportunities from the real estate point of view…. NOTICIAS: How did you convince your partners to invest their money in a risky country as Argentina? Scott Mathis: We focused in Argentina shortly after the 2001 crisis. My investing group and I are “contrarians” by nature. If the value of Napa Valley is high, I don’t want to be there. Argentina was not so highly valued, but on the other hand, the opportunities were enormous. The potential that Argentina has is worth taking the risk. Not in the short term, of course, but I’m a long-term player. I’m not expecting results in the next two years, but in the next five or ten years. NOTICIAS: I suppose that the highest risk was the world crisis of the last two years…. Scott Mathis: Undoubtedly. I have been in the financial industry for 26 years and for the first time in my life I saw American investors petrified and too scared to react and act. The impact not only affected the market of shares and mortgages (which today is almost extinct) but it also affected the real estate business and the labor occupation in general. It was not just one kind of business that affected investors, but several and at the same time. It was very hard, but we are overcoming the crisis. As regards wine, Argentine trademarks have lately become very popular in United Stated because now there are quality wines at 12 or 15 dollars, quite more affordable than wines imported from France or Spain, especially due to the Euro. The exchange rate peso-dollar is much more convenient for North Americans. NOTICIAS: How are both businesses combined and made functional? Scott Mathis: The wine and the real estate are separate businesses. The plants that we have are the property of the vineyards. And the real estate project is going to be in the surroundings of the vineyards, not inside. We have a beautiful estate in San Rafael and we don’t want to ruin the integrity and the style of the place by building houses in the middle of the vineyard. The houses are going to be located in an area where the view is not blocked and the level of the estate does not decrease. The owners will be able to even produce their own wine. NOTICIAS: What is your strategy for your wine? Scott Mathis: We have a North American importer in Chicago, Jomada Imports, who is importing our wines to United States, and in the United Kingdom we have another importer, Anthony Foster, who will help us to export the wine to all Europe. We also want to be present in Brazil. And we are also present in the local market because the premium segment is very promising in Buenos Aires. NOTICIAS: How much money are you ready to invest? Scott Mathis: We have already invested 25 million and the plan is to reach 60 million in the next five years between Buenos Aires, Mendoza and some properties that we are considering in Bariloche and Rio de Janeiro.