The Grapes of Wrath: Why Napa’s Loss Is Argentina’s Gain

Patrick Archer average prices, foreign investment, real estate, wine & vineyards

There’s nothing like a recession to test the limits of discretionary spending and consumer willingness to downshift to more affordable products and services.

This has been especially true for U.S. wine lovers who, according to Bloomberg’s Dan Levy, are often passing up Super Premium and Ultra Premium wines in favor of “cheaper imports from countries such as Chile, Argentina and Australia.”

In light of shifting preferences, the Wall Street Journal recently featured a video taste test of several “good $10 bottles of wine”…many of them malbecs from Argentina. To be sure, 2009 was a banner year for the Argentine wine industry where global exports actually increased 10% to $585 million while U.S. sales jumped 20%.

Sales of bargain wine imports have had an impact on Napa Valley where Bloomberg says land values have fallen 15% since 2007 and no fewer than 10 wineries will change hands this year in distressed sales. Still, don’t expect the recent drop in Napa’s property values (average price of $150,000 per acre planted with red varietals) to erode Argentina’s attraction for foreign investors and wine enthusiasts.

For the same $150,000, you could buy a private vineyard estate in Mendoza complete with 1999 Cabernet Sauvignon or 2001 Malbec grapes, a homesite with underground utilities for your personal residence and luxury amenities like golf, tennis and polo.

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