Does South America make great wine?

South American wine must have something going for it. Those who own or make four out of the seven Bordeaux first growths, wine's highest official echelon, have investments in Chile or Argentina.

The Rothschilds of Château Lafite were the first to leap into the southern hemisphere, in 1988 taking over a large estate Los Vascos ('the Basques', a nod to the family who had owned it since the 18th century) in Colchagua, Chile. For years the wines seemed distinctly unworthy of the five arrows symbol of this branch of the banking family, but the fruits of serious investment and vineyard upgrading are starting to be evident in the bottle.

Baroness Philippine de Rothschild of neighbouring Pauillac rival Château Mouton-Rothschild followed much later, in 1997, but much more dramatically in the form of Almaviva, a joint venture with one of the biggest and best Chilean wine producers Concha y Toro, complete with a spectacularly wavy wooden winery.

The connection between Château Margaux and Chile is not quite as direct but no less a commendation of the potential for wine there. The highly respected Paul Pontallier who is in charge of winemaking at Château Margaux set up Viña Aquitania in the eastern suburbs of Santiago as long ago as 1993 with Bruno Prats, then owner of second growth Saint Estèphe Château Cos d'Estournel no less.

And now we have evidence that Bordeaux's elite has faith in the other side of the Andes too. The owners of Château Cheval Blanc recently unveiled the fruits of their winemaking adventure in Argentina, Cheval des Andes 2001 made jointly by Cheval Blanc winemaker Pierre Lurton and Roberto de la Mota of Terrazas de los Andes, another part of Bernard Arnault's tentacular LVMH empire.

The Rothschilds of Lafite have responded with another Argentine joint venture, Caro, between themselves (the 'ro') and Argentina's answer to Robert Mondavi, Nicolas Catena (the 'ca'), a thoroughly French blend of Cabernet with the velvety local Malbec grape.

Other Bordelais who have invested in wine enterprises in Chile and/or Argentina include the ubiquitous oenologist Michel Rolland of Pomerol who has put his own money into an ambitious new 850 hectare/2100 acre vineyard up in the Vista Flores region with six (down to five now that one has dropped out) other French investors; Jacques and François Lurton who travel almost as frenetically as Rolland with operations on both sides of the Andes; the talented Saint-Emilion winemaker Patrick Valette who now makes both El Principal and Domus Aurea in Chile; and many more.

From Chablis, both William Fèvre and Michel Laroche have their own eponymous Chilean ventures and from the French spirits business the family behind Grand Marnier has established Casa Lapostolle in Colchagua as one of Chile's most consistently successful wine producers, with Rolland as consultant, while the Alsace distiller Massenez has invested in Château Los Boldos further north.

So how good are these heavily French-influenced wines? And how do they compare to the best that are made by 100 per cent local enterprises?

In Chile I would cite Almaviva (about £35-50/$50-75 a bottle) as the country's most consistently successful wine. Even the current vintage, the 2000, the 'almost El Niño' vintage, is beautifully made, combining the ripeness of Puento Alto's famous Cabernet fruit with a lightness of touch and real French savour.

Casa Lapostolle may not have a direct line to a Bordeaux first growth but this has proved no bar to producing sensational wines from Apalta much further south which is proving a bit of a Merlot mecca.

Or rather it would if what the Chileans used to call Merlot really were Merlot. In the last few years they have had to admit that most of it is in fact Carmenère, a variety now defunct in Bordeaux which needs to be fully ripe if it is to be free of a certain offputting green-leaf aroma. The evidence is that after a few hesitant vintages, winemakers in Chile have generally mastered this historic variety.

Lapostolle's flagship Clos Apalta (£35-50) is also pretty good in 2000 but the 2001 will be sensational. Arguably better value at about a third the price however is Casa Lapostolle's Cuvé Alexandre Merlot 2000 which is already a thoroughly satisfying drink.

Patrick Valette's El Principal won my heart with its debut vintage in 1999 (£24) and the all-Cabernet 2000 is quite respectable, but the 2001 (£18), seems to have been picked too late to provide refreshing drinking and is a disappointment. The Lurton brothers on the other hand have reached new heights with their 500-case debut 'garage wine' Alka (an unfortunate name perhaps) Gran Carmenère 2002 which will be released at the end of the year.

Lafite's Le Dix 1999 (£20), made to celebrate the estate's 10 years under Rothschild control, is by far the most ambitious wine to date from Los Vascos but it lacks the sophistication of the wines I rave about above. More subtle reds from the long, thin country to my palate are the all-Chilean likes of Aresti's Family Collection Cabernet Sauvignon 1999 (£12), Casa Silva's Altura (£35), Haras' Elegance Cabernet Sauvignon 2000 (£14-20 from a producer with whom Antinori of Italy is now in cahoots), Pérez Cruz's unreleased Liguai 2002, and, especially, the top 2001s from Montes (leading up to Montes Folly Syrah £25-45) – a real step up for this energetic bodega – as well as the first wine from Errazuriz's prime site in Puente Alto, the stunning Viñedo Chadwick 1999 (£35-50).

Argentina's finest wines tend to have more stuffing and less sophistication than Chile's best which have already established themselves as, in very general terms, an appetising blend of Bordeaux style with northern California lusciousness. But then Argentina is a much more recent player on the world wine stage.

I tasted and was impressed by Caro's first vintage, 2000, from cask but the most aristocratic Argentine bottle to have come my way so far, made with or without French influence, is the brand new Cheval des Andes 2001, the Cheval Blanc joint venture.

Of the first, 2002, vintage from Michel Rolland's vast new Vista Flores development, I enjoyed the plump, Pomerol-like blend made from all seven sections of Clos de los Siete (£11), more than any of the more expensive vanity bottlings of the individual owners such as Rolland's Val de Flores, the d'Aulan family's Finca Navarrita Winemaker's Selection Malbec and the extremely luscious Lindaflor made by the family behind both Pomerol's Château Le Gay and giant glassmaker Sieur d'Arques.

Other distinctly superior top-quality Argentine wines include Susanna Balbo Brioso 2001, Catena Alta Cabernet Sauvignon 1999 (£25), Catena Zapata 1999 (£55-65), the Spanish-owned O Fournier's A-Crux bottlings, Terrazas de los Andes Gran Malbec 1999 (£30) and Trapiche Iscay Merlot Malbec 2000 (£20-25). But I am sure we will see more and better from Argentina over the next few years.

In my view Chile has shown it can make great wine and I have no doubt that Argentina will. But, as is often the case elsewhere, the best value – as opposed to quality – lies one or two notches down the ladder.