Class act: The sleek new Fasano Hotel

Caught between Argentina, Brazil and the ocean, Uruguay oozes indulgence.

It took a fifth, sixth and even seventh push of the ignition switch before the little car rattled into life. "We have to be patient," said wine producer Maria Irurtia, smiling from the diver's seat. It wasn't just the ignition of the 1927 Chevrolet that was temperamental: the doors were stiff, the interior cramped and, even in first gear, the car struggled to climb minor hills. But driving around a small portion of the Irurtia family's 850 acres of vineyards in western Uruguay in this old classic was a pure and simple pleasure. Local Tero birds scattered as our car rumbled through field after field filled with vines: pinot noir, sauvignon blanc, malbec and Uruguay's national wine, tannat.

Maria's great-grandfather, Lorenzo, started the winery here nearly 100 years ago, but it was her father, Dante, who was later one of the first to see the potential of the French tannat grape in Uruguay. Tannat is now to Uruguay what malbec is to Argentina and carmenère is to Chile.

Dante died last year. As we parked the car and walked into the cool dusty cellars of the winery, Maria's pride in what he created was clear. She swung open a set of grand heavy wooden doors into "The Big Cave", a huge barrelling room that was quiet, cool and serious, like a church (my kind of church). "It's very beautiful," I told her. "My father loved the beautiful," Maria replied, tenderly.

Over a table of empty glasses, Maria told me how tannat and wine production in general has boomed in Uruguay in the last two decades. It has helped put the diminutive nation, squeezed between Argentina, Brazil and the Atlantic, on the map.

The tannat wine is hard to escape here; it's in every restaurant and bar. Even the Four Seasons, where I stay on my first night on a secluded riverfront spot just outside the town of Carmelo, is getting in on the act with newly planted vines ready to start producing next summer.

"Tannat is a French variety," Maria explained. "But in France they have very strong tannat. With Uruguay's climate and rain, we have soft tannat. We're very proud to have the best tannat in the world."

The Uruguayan coast has a reputation for being about the finer things in life. Mostly, that reputation is based around the upmarket capital, Montevideo, and the resort "It-town" of Punte del Este – a place not just to holiday, but to network and be seen.

Robert de Niro, Uma Thurman, Leonardo DiCaprio, Naomi Campbell and Ronnie Wood are a few of the famous folk who've visited in recent times. But to either side of these busy centres, especially crowded through the peak summer months from December to February, there are many hidden gems for luxury travellers to discover. From west to east, this is a very classy coast.

I reached Uruguay by ferry, just an hour across the water from the Argentine capital Buenos Aires. It's a strange drive from the port town of Colonia to Carmelo. Roads lined with sycamores pass through gentle hills and long grassy fields filled with grazing horses, cows, hay bales and tractors. Except for the occasional palm, it could easily pass for the English countryside.

After a few days of countryside food, wine and relaxation around Carmelo, I drove east towards Montevideo, stopping at Casapueblo, the home and studio of 88-year-old Uruguayan painter and sculptor Carlos Páez Vilaró. With spiky towers, domes, arches and strange flowing shapes, it resembles an all-white take on Gaudí's house, high on the wind- and wave-battered coast of Punta Ballena. Inside are Vilaró's colourful paintings, many featuring his regular muses – women, the sun – and drawing on his travels throughout Africa, Asia and Latin America.

I spent little time in Montevideo itself or Punta del Este, choosing instead quieter spots on the coast and in the countryside. The Estancia VIK, a few miles inland from the popular beach town of José Ignacio, is one of my favourite places to stay in South America. The grand white estancia (ranch) was visible on the green hilltop from a distance as I drove in. Inside, it's decorated with paintings and sculptures from Uruguayan and international artists, including an Atchugarry (a well-known Uruguayan artist) marble sculpture in the courtyard. At night, the bottom of the swimming pool lights up with stars to mirror the sky.

The food and wine was excellent, the service very Uruguayan: high quality but not overly formal. My suite, the VIK, was big enough to ride a horse around, while the view from the giant balcony of unending fields where cows and horses grazed next to a glistening river will be an enduring memory of Uruguay.

I took a bike out in the morning. After several days of gastronomic indulgence, it felt good to work the heart and limbs. From the ridge of a hill, I could see the Faro, or lighthouse, on the edge of José Ignacio. The town itself took all of three minutes to cycle around, with almost every building either a uniquely designed holiday home or hotel. I walked along the quiet beach, before lunch at La Huella restaurant. The food was good; the seafront location great.

The good life continued. Next day, I visited the small town of Pueblo Garzón, half an hour from José Ignacio in the Maldonado countryside. An Argentine TV chef, Francis Mallman, helped put the town on the map recently with the opening of his Restaurant Pueblo Garzón. There's very little else here, but that's the point.

Just down from the restaurant, I met Mario, a local gaucho with a knife tucked into the back of his leather belt. We took a few horses out for the morning, riding out of town on sandy trails, the route taking us through eucalyptus forests, shallow rivers and deep muddy pools. The air was cool and fresh, and from the hilltops, the only sounds were the clopping of hooves, birdsong and the wind. We saw many other horses, but not another person until we arrived back in town.

Mallman happened to be at his restaurant and came over to sit with us for lunch. Over a beetroot, goat's cheese and almond salad and lots of a local merlot, he told me why towns such as Pueblo Garzó* are becoming popular with the sort of high-end travellers that visit Punta del Este. "It's off the beaten track," he said. "Luxury has changed in the world. In the past, it was all about candles, white linen and china. Now, it has more to do with silence, space and peace."

That definition could apply to Fasano, the year's most talked-about new hotel opening in Uruguay. The sleek, modern, hillside-hugging bungalows are spacious and extremely comfortable; mine had a soft rug so deep you could lose a leg in it.

I relaxed for an hour in the hilltop spa's pool and steam room before eating dinner in their restaurant, decorated with shelves filled with books on art, literature and philosophy, accompanied by a soundtrack of dusty old jazz. But it's the seclusion and tranquillity of the setting that is the big draw here.

I sat on my private balcony and watched the hazy sunset over the La Barra countryside, as the lights came on in the distant towns of San Carlos and Maldonado. I spotted one rabbit on the hillside; that was about as rambunctious as it got.

My last day in Uruguay was a very different experience. I met a local guide, Maria-Louisa. Together we set out from the coastal town of Barra de Valizas in the far east of the country. A local fisherman ferried us from the beach across the Valizas river to the starting point of a seven-mile hike to Cabo Polonio, a small town established in the 1940s by sea-lion hunters, but now populated by wealthy people from Montevideo who've chosen a simpler life, as well as hippies and what Maria-Louisa calls "crazy people", those who don't want to live in "normal" society. The town has no electricity or lighting. It's a basic way of life, although the occasional well-designed structure shows there is money here.

The walk to Cabo Polonio was enjoyable, up and over high sand dunes. The dunes aren't kept in place by plants, as in other areas, and are therefore constantly shifting with the elements; the dunes have been known to cover houses and other buildings. Maria-Louisa and I hiked along the ridge of Fisherman's Hill, a large dune that shifts regularly but is kept in roughly the same area by the river and the sea. We climbed up to a collection of rocks with a view out to sea. From there, we could see five islands – four inhabited by sea-lions – and the houses and lighthouse of Cabo Polonio.

Alejandro, a local artist, showed us around town, describing Cabo Polonio as "a small family. A crazy family, but a family." The settlement's isolation (no cars are allowed; access is on foot or by a special truck for crossing the dunes) maintains its unique atmosphere.

I asked Alejandro why he came here. "I need peace, no civilisation," he said. "I need my mind. I love Cabo Polonio." He knows the area well. On a walk around the coastline, he picked up plants with medicinal properties and pointed out a heavy rock that works as a giant see-saw.

After a week of gourmet food, fine wine and some of the finest hotels in the country, every comfort met, this day of simple pleasures felt refreshingly different. Up on the dunes, with salt air, the chirruping of birds, ankle deep in soft gold sand, the wild ever-shifting landscape is a reminder of the many things that are beyond money: luxuries open to all.

Uruguay facts

Population: 3,500,000
Capital: Montevideo
Area: 8.5 times the size of Wales
Year of independence: 1825
Opening lines of national anthem: Orientales, la Patria o la Tumba!Libertad o con gloria morir! (Easterners, our Fatherland or the Grave! Liberty, or with glory die!)

Travel essentials: Uruguay

Getting there

* The fastest connections to Uruguay's capital, Montevideo, are via Madrid on British Airways (0844 493 0787; and its partner, Iberia. There is a much wider range of flights from the UK to Buenos Aires; BA goes non-stop from Heathrow, while many other airlines offer regional connections via a range of hubs from Amsterdam to Frankfurt.

* The writer travelled with Last Frontiers (01296 653 000;, which offers an 11-night, luxury highlights of Uruguay package from £1,890 per person. The price includes a hire car and accommodation with breakfast including stays at the Four Seasons (00 598 4542 9800;, Estancia VIK (00 598 94 60 5212; and Fasano (00 598 42 670 000;

* Ferries from Buenos Aires to Colonia are operated by Buquebus (; prices from 230 pesos (£34).

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