ARMENIA'S FOOD PROCESSING SECTOR:  INVESTMENT OPPORTUNITIES

 

19 AUG 1999

SOURCE: U.S. EMBASSY YEREVAN

 

INTERNATIONAL COPYRIGHT, U.S. AND FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 1999.  ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

 

THIS CABLE COVERS THE FOOD PROCESSING INDUSTRY IN ARMENIA - ONE OF THE MOST PROMISING AND GROWING SECTORS OF THE COUNTRY'S ECONOMY

 

ARMENIA, WITH ITS UNIQUE SOIL AND CLIMATIC CONDITIONS, PRODUCES HIGH QUALITY AND FLAVORFUL FRUITS AND VEGETABLES, WHICH GROW MOSTLY IN THE FERTILE AND WELL-WATERED ARARAT VALLEY BETWEEN MOUNT ARARAT AND MOUNT ARAGATS. AFTER THE 1991 LAND REFORM ACT, UNDER WHICH 80 PERCENT OF AGRICULTURAL LAND AND THE MAJORITY OF STATE AND COLLECTIVE FARMS WERE PRIVATIZED, ARMENIA'S AGRICULTURAL PRODUCTION HAS INCREASED 15 PERCENT. THE MAJORITY OF FOOD PROCESSING ENTERPRISES ARE IN PRIVATE HANDS AND LOCATED NOT FAR FROM THEIR SUPPLIERS - LOCAL AGRICULTURAL FARMS.

 

THE CANNED FOOD PROCESSING INDUSTRY INCLUDES 14 PLANTS WITH A TOTAL CAPACITY OF MORE THAN 300,000 TONS.  AMONG THEM ARE SEVERAL LARGE CANNERIES. THE SARDARAPAT CANNED FOOD FACTORY, LOCATED IN THE TOWN OF ARMAVIR, IS ONE OF THE LARGEST IN THE CAUCASUS. IT WAS THE LARGEST SUPPLIER OF CANNED FOOD IN THE SOVIET UNION. CURRENTLY, THE COMPANY PRODUCES A WIDE RANGE OF CANNED FRUITS AND VEGETABLES, JAMS, AND MARINADES. IN MARCH 1999, THE COMPANY LAUNCHED A USD 185,000 JUICE PRODUCTION LINE WITH A CAPACITY OF 4,500 LITER PACKS PER HOUR. THIS JUICE PROCESSING AND PACKAGING EQUIPMENT WAS ASSEMBLED IN FINLAND WITH 90 PERCENT OF THE PARTS SUPPLIED BY THE AMERICAN COMPANY PURE PACK (TROY, MICHIGAN). THE EQUIPMENT WAS PURCHASED BY SARDARAPAT USING WORLD BANK CREDITS (USD 350,000) ALONG WITH A LOAN PROVIDED BY THE U.S. DEPARTMENT OF AGRICULTURE. SARDARAPAT'S ARARAT-NEKTAR JUICES, MADE FROM FRUITS GROWN IN THE ARARAT VALLEY ARE VERY POPULAR IN THE DOMESTIC MARKET.  SARDARAPAT HAS ALSO BEGUN TO EXPORT THIS LINE OF PRODUCT TO GEORGIA AND RUSSIA. THE COMPANY PLANS TO START PRODUCING TOMATO PASTE, FOR WHICH IT SEEKS

FOREIGN PARTNERS TO UPGRADE EXISTING FACILITIES.  ANOTHER MAJOR CANNERY IS THE ARTASHES ENTERPRISE, ONE OF THE FIRST PRIVATE FACTORIES IN ARMENIA. ESTABLISHED IN 1988, IT HAS BECOME THE LARGEST EXPORTER OF ARMENIAN CANNED FRUITS AND VEGETABLES TO THE UNITED STATES.  ARTASHES WISHES TO EXPAND ITS PRODUCTION BY INSTALLING

MODERN FRUIT AND VEGETABLE PROCESSING AND PACKAGING EQUIPMENT.

 

DAIRY PRODUCTION IS A GROWING SECTOR OF ARMENIA'S AGRIBUSINESS. DURING SOVIET TIMES, ARMENIA WAS WELL KNOWN WITHIN THE COUNTRY AS A CHEESE PRODUCING REPUBLIC. ARMENIA SUPPLIED ALMOST 8O PERCENT OF THE MARKET IN THE FORMER SOVIET UNION, PRODUCING MORE THAN 1,2OO TONS OF SWISS AND SWISS-TYPE CHEESES, 800 TONS OF ROQUEFORT CHEESE, AND NEARLY 6O PERCENT OF THE COUNTRY'S BLUE CHEESES. AFTER THE COLLAPSE OF THE SOVIET UNION, ARMENIA'S CHEESE PRODUCTION SHRANK TO 5 PERCENT OF ITS CAPACITY. DURING THE TRANSITION PERIOD, ARMENIA STARTED TO IMPORT YELLOW AND BLUE CHEESE VARIETIES MAINLY FROM HOLLAND AND GERMANY. THE TOTAL VALUE OF IMPORTS IS AROUND USD 1.6 MILLION PER MONTH.  AFTER 1991, LARGE STATE-OWNED MILK AND CHEESE PRODUCING ENTERPRISES WERE CONVERTED INTO SMALL AND MEDIUM SIZED

PRIVATE COMPANIES. TO HELP REINVIGORATE ARMENIA'S CHEESE PRODUCTION, THE U.S. DEPARTMENT OF AGRICULTURE HAS PROVIDED FINANCIAL AND TECHNICAL ASSISTANCE -- AS WELL AS MARKETING AND PROMOTIONAL ASSISTANCE -- TO THESE COMPANIES. CURRENTLY, SUCH LOCAL CHEESE PRODUCERS AS DUSTER MELANYA, LIPO, AND OTHERS SUPPLY THE LOCAL

MARKET WITH A WIDE RANGE OF HIGH QUALITY CHEESE AND OTHER DAIRY PRODUCTS.

 

WINE AND BRANDY MAKING IS WELL ESTABLISHED IN ARMENIA. THE FRENCH COMPANY PERNOD RICARD PURCHASED THE YEREVAN BRANDY FACTORY IN 1998 FOR USD 30 MILLION. THE COMPANY IS PLANNING TO START DISTRIBUTION OF ITS LOCALLY-FAMOUS ARMENIAN BRANDIES IN WESTERN EUROPE AND

IN THE UNITED STATES. ARMENIA'S WINE PRODUCTION FACILITIES INCLUDE 35 WINERIES, THREE BRANDY DISTILLERIES, AND A SPARKLING WINE PLANT.

 

WITH MORE THAN 1,000 NATURAL SPRINGS, ARMENIA PRODUCES A LARGE VOLUME OF HIGH QUALITY MINERAL WATER.  PLANTS IN JERMUK AND BJNI, EQUIPPED WITH MODERN BOTTLING EQUIPMENT, SUCCESSFULLY DISTRIBUTE THEIR PRODUCTS IN ARMENIA, RUSSIA, AND WESTERN COUNTRIES, INCLUDING THE UNITED STATES.

 

ARMENIAN AGRICULTURAL PRODUCTS CAN SUCCESSFULLY ENTER INTERNATIONAL MARKETS IF THEY ARE EQUIPPED WITH MODERN PROCESSING AND PACKAGING TECHNOLOGIES. MOST LOCAL FOOD PROCESSING ENTERPRISES OWN OUTDATED EQUIPMENT, AND ARE LOOKING FOR FOREIGN PARTNERS TO

UPGRADE EXISTING FACILITIES. THIS SECTOR IS ALREADY BEGINNING TO ATTRACT U.S. INVESTORS, WHO ARE PLANNING TO START SEVERAL PROJECTS IN THE NEXT TWO YEARS IN TOMATO PASTE AND FRUIT JUICE PRODUCTION AND PACKAGING.

 

STATISTICS

FRESH FRUIT (TON):

 

1997, EXPORT: 945                        IMPORT: 11,740

1998, EXPORT: 1,325             IMPORT: 7,850

 

FRESH VEGETABLES (TON):

 

1997, EXPORT: 1,130            IMPORT: 3,815

1998, EXPORT: 388                        IMPORT: 1,420

 

PRESERVES (TON):

 

1997, EXPORT 1,261            IMPORT 2,170

1998, EXPORT 1,152            IMPORT 1,240

 

WINE AND WINE MATERIALS (LITER)

 

1997, EXPORT: 1,800,000            IMPORT: 580,000

1998, EXPORT: 813,000            IMPORT: 390,000

 

SPARKLING WINE / CHAMPAIGNE (LITER):

 

1997, EXPORT: N/A,             IMPORT: 65,000

1998, EXPORT: 17,000             IMPORT: 122,000

 

BRANDY (LITER):

 

1997, EXPORT: 4,145,000            IMPORT NA

1998, EXPORT: 2,350,000            IMPORT: NA

OTHER ALCOHOLIC BEVERAGES (LITER):

 

1997, EXPORT: 1,600,000            IMPORT: 2,955,000

1998, EXPORT: NA,             IMPORT: 1,136,000

 

USEFUL CONTACTS

 

MINISTRY OF AGRICULTURE OF ARMENIA

2 GOVERNMENT BUILDING, REPUBLIC SQUARE, YEREVAN-10,

ARMENIA, TEL: (374-2) 520-641, FAX: (374-2) 523-793

 

U.S. DEPARTMENT OF AGRICULTURE'S MARKETING ASSISTANCE PROJECT

74 TERIAN STREET, YEREVAN, ARMENIA

TEL: (374-2) 525-562

FAX: (374-2) 151-696

E-MAIL: USDAES@ARMINCO.COM

ARMENIAN DEVELOPMENT AGENCY

19 KHANDJIAN STREET, YEREVAN, ARMENIA

TEL/FAX: 542-272

E-MAIL: GY@ADA.AM

 

AGRIBUSINESS DEVELOPMENT CENTER

12 VAGHARSHIAN STREET, YEREVAN-12, ARMENIA

TEL: (374-2) 505-995

FAX: (374-2) 277-647

E-MAIL: ADC@MBOX.AMILINK.NET

 

ARTASHES CANNERY

VILLAGE OF OZORAGHPYUR, KOTAYK PROVINCE, ARMENIA

TEL/FAX: (374-2) 644710, CELL PHONE: (374-1) 403-123

 

DUSTER MELANYA COMPANY (CHEESE PRODUCER)

346 KIROV STREET, TOWN OF TASHIR, LORI PROVINCE, ARMENIA

TEL: (374-54) 21-594

FAX: (374-2) 151-550 (ATTN: G.ISAYAN, BISNIS)

 

JRARAT POULTRY FACTORY

ECHMIADZIN REGION, ARMAVIR PROVINCE, ARMENIA

TEL: (374-1) 404-274 OR (374-2) 271-400

FAX: (374-2) 271-400 OR (374-2) 151-550, (ATTN: G. ISAYAN, BISNIS)

 

MAP COMPANY (WINERY AND CANNERY)

LENUGHI VILLAGE, ARMAVIR REGION, ARMAVIR PROVINCE, ARMENIA

TEL: (374-47) 66-219; (374-1) 406-358 (CELL PHONE)

FAX: (374-2) 151-550 (ATTN: GEORGE ISAYAN, BISNIS)