I had the privilege of attending the launch party for Dragonback Estate late last month. While there’s really little that gets between me and an invitation for free wine, I was especially interested to learn about the exciting ownership opportunities for investors to buy property in a new “stewarded” vineyard estate, nestled in the idyllic hills of Mendoza, Argentina.
As an Argentine politics geek, my first question was the most obvious to me (and least frequently asked among others at the reception). “Buying land in Argentina as a foreigner: Are you crazy!?”
Several years ago, Argentina established a nationalistic (and arguably unnecessary) land policy to prevent an Asian land grab in the region. The regulations state that foreigners are not allowed to own more than 15 percent of land within 569 rural subdivisions in the country. Going further, the law stipulates that any one group of foreign nationals (e.g. Americans, Chinese, Brazilians) may not own more than 4.5% of the national total.
Not to be deterred, Young Woo & Associates have figured out how to navigate that situation, and one of the project developers of the Estate was able to explain the ownership structure to me.
Adam Zucker, Director of Business Development at Young, Woo & Associates, explained:
“Owners of the property receive a boleta that provides full commercial rights to the land – the process for the title or an “escritura” takes time to complete, but we facilitate the entire process for owners. Although receiving a deed in Argentina may take a bit, Dragonback will grant full access to the land prior to delivery of the official deed.”
Argentina’s wine is a lifestyle as much as a product
While many “old world” European countries have an established market for wine, Argentina has had to work assiduously for many years to build a reputation and market for its mighty Malbec, and introduce global oenophiles to the tart Torrontes and bold Bonarda produced in the famous Mendoza region. The exports of these other varietals are building upon the already measurable success of Malbec abroad, but there’s a long way to go and a lot of opportunity to capture market share. Given Argentine wines still only comprise 6% of the value of US imports (vs. 30% for Italy, 24% for France and a similar 6% for Spain), there is a lot of room for growth in both sheer volume and price point.
But the full-bodied reds and sparkly whites produced in the region are only part of the draw for tourism to Mendoza. Indeed, few major wine regions in the world have the mild weather, high-end hotel infrastructure and exotic cachet of Mendoza. These factors have contributed to the overall boom in tourism in the region, which received a record 3 million tourists last year alone. Even John Paul Rathbone of the Financial Times took note of the region’s opportunity late last year, demonstrating how the opportunity and appeal of Mendoza stretches far beyond winemaking.
For those interested in investing in the lifestyle of the region, Dragonback’s innovative vineyard estate enables would-be owners a headache-free “entry point” of $250,000. Aside from being the largest vineyard estate in the world, the quality of the soil is known to be the best in the region. This coupled with the exciting winery and a top tier hotel being built onsite reinforces the idea of Mendoza as a winemaking and high-end leisure destination, and ties it into a digestible investment with all the infrastructure necessary to run a winery. This combination of factors, at the end of the day, is the project’s real market strength.
But what about the wine?
Now that I know that the folks at Dragonback will guide me through each step of the purchase and ownership process, I can stop worrying about the logistics of owning property in Argentina. But how do I, a New York based economics and policy geek with no previous wine making experience, actually make wine?
Unless you’re an expert in winemaking or have a secret family history with the Mondavis, you’d probably lose a lot of money, produce a crappy wine and wish you had spent it on other things. But the mere idea of having a vineyard of one’s own is pretty appealing, particularly if you could devise a way to learn more about the fascinating world of winemaking in the process.
Dragonback has come up with a solution to enable oenophile investors – be they novices or experts, access to the staff on site to create a blend and develop a style based on personal tastes that investors can add to their own collection, give as gifts, or re-market as a private label brand. They will even help arrange the shipment/export of the wine.
Bryan Woo, Director of Acquisition for Young Woo & Associates and one of the main project developers, explained:
“We’re building a team of experts to help people realize their dreams of owning their own vineyard. Owners can be as involved or hands off in the creation of their wine as they want. An investment starting at $250,000 provides owners with full use of one hectare of prime wine-making land, access to a personal concierge service and variety of luxury amenities, preferred hospitality rates as well as hands-on guidance from a leading viticultural and agricultural team.”
Members at Dragonback Estate pay an annual maintenance fee that is proportionate to the size of the property (roughly $5,500 per hectare, the first two years of which is included in the purchase price). The maintenance fee covers cultivation of the land, maintenance and harvesting of vines and general upkeep of the common areas across the sprawling 820 hectare estate. For additional fees, the team can work with you to design your label and then manage the bureaucracy of the Argentine and international regulatory processes to register, export, import and ship your bottles to a worldwide location of your choosing.
A hectare can produce anywhere between 6,000-8,000 bottles per year. And while it takes typically 3-5 years for vines to produce bottle ready wine, in the first years Dragonback Estate gives members a starter kit of 300 bottles of Estate produced house wine (they gave it out at the event – it’s pretty darn good).
In a culture that tends towards the traditional in winemaking, this could be a signal of an interesting shift, where the market starts to get to know new Argentine blends from the wide variety of grapes through influential tastemakers that are keen to promote their small piece of Mendoza.
Argentina is by no means in a viticultural funk, but there is a lot of value to unlock in the combination of the country’s solid brand for good wines and foreign routes to market. And there’s always bragging rights of having your own winery in Mendoza. I think with the right combination of marketing and a good first round of investors, this project could produce an innovative Argentine entrepreneurial twist combining tourism and wine — two of the country’s greatest and most enduring exports. I’ll be saving up.