Friday, May 29 2015 11:14

Armenian winemakers are compensating for losses of sales on the Russian market through export diversification to new markets - China, USA, and Europe.  The Armenian producers are planning to export to India, Mexico and Brazil. 

Chairman of the Armenian Association of Winemakers Avag Harutyunyan has told ArmInfo journalist that the decrease of private transfers has resulted in low purchasing power and slowed the Armenian internal market sales. The recession of the wine market is particularly conditioned by the situation in Russia whose economy is experiencing hardships caused by the international sanctions. Harutyunyan believes that market and export monopolization is another reason for the slowdown of the market.  Unlike the 2008 crisis the 2014 was conditioned by the national currency crash, which in turn was caused the ruble crash. In fact, history repeated itself for 2014 was the repeat of the 1998-1999 economic crises. "Back in the day Russia was neither hindered when trying to come out of the crisis nor plunged deeper into it. In 2008 Russia was mainly helped out of the crisis for at that time the whole world was facing the same challenge. All countries were trying to solve the crisis by joint efforts. The war of sanctions against Russia can drag on. Every single negative change will have its impact on us", said Avag Harutyunyan. He has also added that 80% of Armenian wine is exported to Russia, while only 3.5% - to Ukraine, Belarus and Kazakhstan - these countries are also facing currency instability. In other words, the Armenian market mostly depends on the aforementioned ones.

"The West is trying to drag Ukraine out of the crisis. Belarus and Kazakhstan are trying to drag themselves.  However, these three countries do not make a significant change for their export share is little", said Harutyunyan. 

However, he believes that certain tendencies can shed some light on the future of the Armenian wine export. At the beginning of 2015 the export volume dropped by 70%. However, compared with 2014 this figure has now "hardened" at a 20%-fall. Speaking of the expediency of exporting to the weak Russian market, Harutyunyan has said that Armenian winemakers are to maintain their presence there. They have to work at distress prices to remain on the Russian market. Driven by the situation, Armenian winemakers are seeking diverse distribution areas. According to Harutyunyan, in Q1 2015 winemakers have expanded the sales geography particularly to China, Europe and the U.S. "We are hoping to expand our export to Indian, Brazilian and Mexican markets, too", he said.  As for Armenia's EEU membership, Harutyunyan believes there have been neither positive nor negative impacts on the current situation. The impact is estimated +/- 10-15% - this is within the framework of acceptable statistical discrepancy. 

He believes that the accession to the Eurasian Economic Union has been mostly of political character.  "The EEU will be definitely important. Especially, taking into account the fact that countries that are not in the Trade Agreement have nothing against Armenia". (The U.S. has signed a Trade Treaty with Armenia and Armenia-EU scheme of association agreements are being elaborated).  Harutyunyan  has drawn attention to the fact that Georgia has 10-15% tax advantages on the European market that is why Armenia is to export expensive good wines. Over the past 5 years the Armenian market has seen the emergence of rival wine products. Some 5-6 producers make really good wine - no worse than European ones. The bottle is 7-10 EUR. According to Harutyunyan, some 10 years ago this seemed impossible. He has also added that Armenian nature gives birth to a variety of grapes whose "language" is still foreign to us.  "The Armenians had mastered these varieties for thousands of years, but the traditions were lost some 150 years ago. As a part of the Russian empire Armenian producers were paying more attention to brandy and vodka. This was conditioned by "differentiation of labor".  However, these brandy and vodka varieties are of lower quality than the wine ones". According to him, we have 20-30 good varieties of grapes, however, we have not got down to them yet. 

According to the data provided by the National Statistical Service of Armenia in 2014 wine production totaled 6.1 mln liters with a 8.2% y-o-y decrease against the 12.3% growth in 2013.