Coming of Age.

The Mendoza region in Argentina is fast becoming the next Napa Valley.

THE SOUND OF TRACTORS AND EARTH-LEVELERS CAN BE heard virtually all around the once-sleepy town of Tupungato, a traditional walnut-growing area nestled in the foothills of the Andes near the Argentine city of Mendoza. Where the machines have finished their work, laborers are busy sinking stakes and tending wires. On other the properties, that job has been completed and owners are more concerned about eradicating the ants that have been the first to profit from the sea of vines that is washing across the district.

While the workers are mainly Argentine, many bused in from the country's northern provinces in the face of a growing short-age of locals, the owners of these newly bustling properties are truly international. Chandon, one of France's great champagne producers, is already harvesting grapes in a 300-hectare strip of land that stretches from the town's main highway to the horizon. Dutch, Italian, Spanish, Chilean and U.S. investors have also flocked to the area in four years.

Argentina is already the world's fourth-largest wine producer after Italy, France and Spain. But it is the country's coming of age as a fine wine producer that has made Tupungato and neighboring Tunuyan the hottest properties in Latin American wine.

With Argentine wine consumption down by more than 50 per cent since 1972, the emphasis has turned to higher quality exports, which have soared from $19 million in 1995 to $103 million last year. As a result, the best grapes today trade at a considerable premium.

"A few years ago, there was not much difference in price between ordinary grapes and fine varieties," explains Miguel Gibson, estate manager for los Montes Negros, just one of the newly established local vineyards. "But you could get four times the more common grapes from the same land." According to Gibson, the emphasis on quality means the finest varieties fetch more than $100 for 100 kilograms of grapes, compared with less than $15 for their lowlier cousins.

Thirst for properties. Within this newly accentuated hierarchy, Tupungato's unique agricultural conditions make its grapes the most highly prized. For one thing, the area's poor soil makes its vines work harder, which translates into lower yields but higher quality. The fast-draining sandy soil is also good for the root of the vine. For reds, the rocks and stones that litter the surface favor production because they heat up during the day and continue to release heat throughout the night, which helps to prevent the fruit from catching a chili.

But perhaps the area's major attraction is its location, which, at slightly over 1,000 meters above sea level, is considerably higher than traditional wine-growing areas. At such altitudes, there is a variation between daytime and nocturnal temperatures of as much as 20 degrees, key to producing a grape with a fine bouquet, natural acidity and tannins that make the wines linger on the palate.

Indeed, the thirst for property in Tupungato has pushed prices through the roof. Land that was changing hands for as little as $150 a hectare four years ago is now worth as much as $8,000 a hectare--if you can find it. "All the land has been sold. There is nothing left," Gibson says with a shrug. "In 1995, nobody imagined it. The land was worth nothing."

But acquiring the land is just the start. "It's not enough to buy it, you have to fix it up," says Ricardo Reina, another local grower. He reckons that costs, including planting, machinery and raising the vines for three years before production starts, add another $30,000 a hectare.

While many of the landowners are neophytes who have plowed their money into the land as a simple investment, others have considerable experience in identifying top wine-producing country. These include several French chateaux as well as Kendall Jackson, one of the top U.S. producers.

But experience isn't everything. Many locals believe Kendall Jackson may have been poorly advised in acquiring some of the highest land in the district-at 1,400 meters above sea level--with little water.

The Chileans, who have built their own successful wine industry over the last decade, have also been tempted across the Andes. They are led by Santa Carolina, which has acquired more than 1,000 hectares, while other major wineries such as Santa Rita and Concha y Toro have bought smaller plots at around 150 hectares each.

Although Chile has a longer international track record, such purchases bolster Argentines' belief that their wines will eventually be recognized as clearly superior to those of their neighbors. While the Argentine side of the Andes suffers hailstorms that can wreak havoc with the harvest, it has the advantages of a greater variation in temperatures and less rain, as well as simply having more land suitable for producing fine grapes.

After initial problems with exports of highly variable quality, the Argentines also seem to have sorted out their marketing efforts and their wines already ship at a higher average price per bottle than Chile's. "The Chileans positioned themselves at the low end of the market and they're having difficulty moving up," sums up Carlos Bassos, one of the owners of los Montes Negros.

Local producer Reina expects Tupungato to eventually become one of the world's great wine-producing areas. He compares it to the discovery of the Napa Valley in the 1960s, as growers moved uphill from the San Joaquin Valley, which produced table grapes. He contends that Argentina already produces a fair vintage. "But these will be better," he boasts, surveying his newly planted vineyards. "These will he highest-quality wines." Only time will tell if he's right.