**ARMENIA'S FOOD PROCESSING SECTOR:  INVESTMENT OPPORTUNITIES**

 

19 AUG 1999

SOURCE: U.S. EMBASSYYEREVAN

 

INTERNATIONALCOPYRIGHT, U.S. AND FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE,1999.  ALL RIGHTS RESERVED OUTSIDEOF THE UNITED STATES.

 

THIS CABLE COVERSTHE FOOD PROCESSING INDUSTRY IN ARMENIA - ONE OF THE MOST PROMISING AND GROWINGSECTORS OF THE COUNTRY'S ECONOMY

 

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

 

THE CANNED FOODPROCESSING INDUSTRY INCLUDES 14 PLANTS WITH A TOTAL CAPACITY OF MORE THAN300,000 TONS.  AMONG THEM ARESEVERAL LARGE CANNERIES. THE SARDARAPAT CANNED FOOD FACTORY, LOCATED IN THETOWN OF ARMAVIR, IS ONE OF THE LARGEST IN THE CAUCASUS. IT WAS THE LARGESTSUPPLIER OF CANNED FOOD IN THE SOVIET UNION. CURRENTLY, THE COMPANY PRODUCES AWIDE 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 OF4,500 LITER PACKS PER HOUR. THIS JUICE PROCESSING AND PACKAGING EQUIPMENT WASASSEMBLED IN FINLAND WITH 90 PERCENT OF THE PARTS SUPPLIED BY THE AMERICANCOMPANY PURE PACK (TROY, MICHIGAN). THE EQUIPMENT WAS PURCHASED BY SARDARAPATUSING 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 FRUITSGROWN IN THE ARARAT VALLEY ARE VERY POPULAR IN THE DOMESTIC MARKET.  SARDARAPAT HAS ALSO BEGUN TO EXPORTTHIS LINE OF PRODUCT TO GEORGIA AND RUSSIA. THE COMPANY PLANS TO START PRODUCINGTOMATO PASTE, FOR WHICH IT SEEKS

FOREIGN PARTNERS TOUPGRADE EXISTING FACILITIES. ANOTHER MAJOR CANNERY IS THE ARTASHES ENTERPRISE, ONE OF THE FIRSTPRIVATE FACTORIES IN ARMENIA. ESTABLISHED IN 1988, IT HAS BECOME THE LARGESTEXPORTER OF ARMENIAN CANNED FRUITS AND VEGETABLES TO THE UNITED STATES.  ARTASHES WISHES TO EXPAND ITSPRODUCTION BY INSTALLING

MODERN FRUIT ANDVEGETABLE PROCESSING AND PACKAGING EQUIPMENT.

 

DAIRY PRODUCTION ISA GROWING SECTOR OF ARMENIA'S AGRIBUSINESS. DURING SOVIET TIMES, ARMENIA WASWELL KNOWN WITHIN THE COUNTRY AS A CHEESE PRODUCING REPUBLIC. ARMENIA SUPPLIEDALMOST 8O PERCENT OF THE MARKET IN THE FORMER SOVIET UNION, PRODUCING MORE THAN1,2OO TONS OF SWISS AND SWISS-TYPE CHEESES, 800 TONS OF ROQUEFORT CHEESE, ANDNEARLY 6O PERCENT OF THE COUNTRY'S BLUE CHEESES. AFTER THE COLLAPSE OF THESOVIET UNION, ARMENIA'S CHEESE PRODUCTION SHRANK TO 5 PERCENT OF ITS CAPACITY.DURING THE TRANSITION PERIOD, ARMENIA STARTED TO IMPORT YELLOW AND BLUE CHEESEVARIETIES MAINLY FROM HOLLAND AND GERMANY. THE TOTAL VALUE OF IMPORTS IS AROUNDUSD 1.6 MILLION PER MONTH.  AFTER1991, LARGE STATE-OWNED MILK AND CHEESE PRODUCING ENTERPRISES WERE CONVERTEDINTO SMALL AND MEDIUM SIZED

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

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

 

WINE AND BRANDYMAKING IS WELL ESTABLISHED IN ARMENIA. THE FRENCH COMPANY PERNOD RICARDPURCHASED THE YEREVAN BRANDY FACTORY IN 1998 FOR USD 30 MILLION. THE COMPANY ISPLANNING TO START DISTRIBUTION OF ITS LOCALLY-FAMOUS ARMENIAN BRANDIES INWESTERN EUROPE AND

IN THE UNITEDSTATES. ARMENIA'S WINE PRODUCTION FACILITIES INCLUDE 35 WINERIES, THREE BRANDYDISTILLERIES, AND A SPARKLING WINE PLANT.

 

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

 

ARMENIANAGRICULTURAL PRODUCTS CAN SUCCESSFULLY ENTER INTERNATIONAL MARKETS IF THEY AREEQUIPPED WITH MODERN PROCESSING AND PACKAGING TECHNOLOGIES. MOST LOCAL FOODPROCESSING ENTERPRISES OWN OUTDATED EQUIPMENT, AND ARE LOOKING FOR FOREIGNPARTNERS TO

UPGRADE EXISTINGFACILITIES. THIS SECTOR IS ALREADY BEGINNING TO ATTRACT U.S. INVESTORS, WHO AREPLANNING TO START SEVERAL PROJECTS IN THE NEXT TWO YEARS IN TOMATO PASTE ANDFRUIT 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            IMPORT2,170

1998, EXPORT 1,152            IMPORT1,240

 

WINE AND WINEMATERIALS (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            IMPORTNA

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

OTHER ALCOHOLICBEVERAGES (LITER):

 

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

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

 

**USEFUL CONTACTS**

 

MINISTRY OFAGRICULTURE OF ARMENIA

2 GOVERNMENTBUILDING, REPUBLIC SQUARE, YEREVAN-10,

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

 

U.S. DEPARTMENT OFAGRICULTURE'S MARKETING ASSISTANCE PROJECT

74 TERIAN STREET,YEREVAN, ARMENIA

TEL: (374-2) 525-562

FAX: (374-2) 151-696

E-MAIL:[email protected]

ARMENIAN DEVELOPMENTAGENCY

19 KHANDJIAN STREET,YEREVAN, ARMENIA

TEL/FAX: 542-272

E-MAIL: [email protected]

 

AGRIBUSINESSDEVELOPMENT CENTER

12 VAGHARSHIANSTREET, YEREVAN-12, ARMENIA

TEL: (374-2) 505-995

FAX: (374-2) 277-647

E-MAIL:[email protected]

 

ARTASHES CANNERY

VILLAGE OFOZORAGHPYUR, KOTAYK PROVINCE, ARMENIA

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

 

DUSTER MELANYACOMPANY (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 POULTRYFACTORY

ECHMIADZIN REGION,ARMAVIR PROVINCE, ARMENIA

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

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

 

MAP COMPANY (WINERYAND 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)