ArmInfo.The deal announced by the alcohol distributor "Luding" on acquisition of 50% of the Ararat Cognac Factory was canceled, Kommersant newspaper informs. The reason could be an insufficient number of vineyards owned by the enterprise, so that brandy produced by it could be called Armenian. Recently, the Armenian authorities have been conducting an audit of the raw materials base of local manufacturers.
The deal on the purchase by Luding of 50% of the Ararat Cognac Factory (ACF) did not take place by mutual agreement of the parties, the Armenian company told Kommersant. They clarified that 100% of the enterprise will remain in the ownership of its current owner Sargis Varzhapetyan. It was assumed that after the transaction, Luding will become a co-owner of the premium brand "Urartu". But now the parties plan to create and promote their own brands of Armenian brandy separately from each other, the Armenian company noted. Before that, Luding had another Armenian brand in its portfolio - Noah. Now the Beluga Group delivers this brandy to Russia.
Neither Luding nor ACF disclose the reasons for the refusal of the transaction. According to the Director of Regional and Federal Alcohol Markets Research Center Vadim Drobiz, Luding could refuse to acquire a stake in the Ararat Cognac Factory due to the fact that the existing production volume of the enterprise does not allow the importer to fulfill its needs for Armenian cognac. As noted at the ACF itself, in 2019, the plant produced about 5 million bottles of Armenian brandy. Moreover, the enterprise owns only 255 hectares of vineyards, which, according to Vadim Drobiz, allow only 500 thousand bottles of 0.5 l. Obviously, most of the products are made from imported raw materials.
However, this is the problem of the entire cognac market of Armenia. According to Mr. Drobiz, in 2019, 4 million decaliters of brandy were produced in the republic - 20% more than a year earlier. Almost half of this volume could be produced from imported raw materials, because there is no necessary number of vineyards in Armenia, the expert notes. Moreover, according to local legislation, only products that were made from local raw materials can be called Armenian cognac.
Law enforcement practice tightened in 2018 when Nikol Pashinyan became Prime Minister. Then, in Armenia, real tests of the cognac produced began on the subject of whether the raw materials used in its manufacture are imported or local. In addition, as local media reported last week, the State Commission of Armenia intends to study in which particular vineyards and at what cost producers buy the necessary raw materials.
was founded in 1993 by Arthur Varzhapetyan and Armen Shahazizyan. The company is the second largest wine importer in Russia with a share of 7%. In 2019, it imported 1.8 million decalitres of this product. The company owns a winery in the Krasnodar Territory with adjacent to it over 1.2 thousand hectares of vineyards. In addition, the portfolio of includes whiskey Kentucky Gentleman, Lambay, vodka Finsky, Naliboki, etc. According to its own data, the turnover of "Luding" in 2019 was 20 billion rubles., Sales - 76 million bottles.
According to the Director of Regional and Federal Alcohol Markets Research Center Vadim Drobiz in 2019, cognac sales in Russia increased by 4%, to 11 million decalitres. Of these, about 7 million decalitres were accounted for by Russian products, but at the same time market participants note the growing popularity of Armenian cognac. So, its share already exceeds 20% in the category.
A Kommersant source in a Russian alcohol company believes that now Luding will search for a new potential asset in Armenia. Vadim Drobiz also believes in this. The volume of deliveries of the Noah brand that left the Luding's portfolio was about 300 thousand decalitres per year, this brand is one of the most popular in the premium brandy category, a Kommersant source said. In his opinion, it is possible to replace it only with a brand of similar quality.
After publication of this topic in the Russian daily of Kommersant, Ararat Brandy Factory informed the latter that the reasons of the deal failure are not related to the volume and the origin source of the raw used at the enterprise. However, as the newspaper reads, there at the factory they refused to state the real reasons (those existing by the Company’s version)
