Searching for the new El Dorado

On my last wine visit to Argentina in 2002, devaluation had just struck, which was fine for me but less good news for the locals.

On my last wine visit to Argentina in 2002, devaluation had just struck, which was fine for me but less good news for the locals. I was sorry on that occasion to have missed out on a meal at La Marchegiana, but the Mendoza favourite was razed to the ground shortly after a sign announcing "no politicians" had appeared in the window. So it was satisfying to find the good old Marchegiana back in business last month. While it's the last place on earth for fancy food, Mendoza is destino número uno for the best hormone-free bife de chorizo, a rump bigger and better than you'll find anywhere, washed down with a mouthwatering Argentinian malbec, and all for a derisory fiver.

Apart from the resurrection of La Marchegiana (and a glut of poncho and leather salesmen), not much has changed on the surface. Mendoza is the same vibrant provincial capital, a charming example of neo-colonial Spanish architecture with tree-lined avenues, busy shoppers and crazed taxis. The effects of devaluation make life expensive for city dwellers, but the wine industry, which sprawls for 200 kilometres to the south of the city, has benefited. Despite expensive imported goods, such as oak barrels, the cost of producing wine is seven to 10 times cheaper than in France. The lure of the dollar, pound and euro is a strong incentive to sell its wines abroad. So why is Argentina still stuggling, when its Andean rival Chile is steaming ahead?

At the time when Chile made its presence felt in the UK, Argentina was still making oceans of plonk, and old-fashioned oxidised plonk at that. With a fragmented industry of 1,200 wine companies compared with Chile's 200, Argentina lacks economies of scale, and it's only since the mid-1990s that it has come out of its shell. Even then, the predominant grapes they used in Argentina, such as malbec and bonarda, were still regarded as third-rate varieties. Nicolas Catena, wine-maker and head of Bodega Catena Zapata, one of Mendoza's leading wineries, admits that he started making wine from malbec to please his father and only began to feel confident about its future in 1996.

It is now clear that this football and barbecue-loving nation is rapidly shifting gear in the right direction, even if this is taking a while to filter through to the UK. Producers are now much keener to exploit existing plantations of malbec and to make better use of Mendoza's natural advantages of intense sunlight and melted snow water. The result is improving wine styles, primarily from malbec, and to an extent from tempranillo, bonarda and barbera. Progress is also being made with chardonnay at Terrazas, with the native torrontés at Alta Vista and even sauvignon at Doña Paula.

Because of potential problems with frost, hail and sun damage, and lack of water in the right location, the most canny investors have drawn on the invaluable resource of local experience. In this way, the Lurton brothers have made great strides, especially with their excellent value pinot gris. And at the $50m Clos de los Siete, the ubiquitous Michel Rolland has persuaded his wealthy French friends to invest in one of the world's most ambitious projects ever, a big volume, £10 brand from scratch, no less.

Investment in big new projects has also come from the three local Pulenta brothers. Most encouraging of all, respected Mendoza family firms like Zuccardi and Catena, building from the bottom up with value brands like Santa Julia and Argento, believe that the pyramid they're constructing is the cornerstone of a 21st-century El Dorado.