"Luding" created a joint "Aivazovsky" brand with the Armenian MAP  plant and will promote it in Russia

ArmInfo. The Armenian brandy  segment remains attractive to large alcohol distributors. Thus,  Luding Group of Companies has created an Aivazovsky brand jointly  with the Armenian plant MAP CJSC for its promotion in Russia. In two  years, the partners intend to invest $ 10 million and bring the  product to the top three in the segment. Experts doubt success: many  consumers of such drinks switch to whiskey, and it will be difficult  to promote a new brand in conditions of advertising restrictions.

The Luding distribution group agreed with the manufacturer of  Armenian brandies CJSC MAP on the joint development of the new brand  Aivazovsky, a representative of the Russian company told Kommersant.  The product, sales of which will begin in Russia in mid-July, is  owned by partners on an equal footing. MAP operates an enterprise in  Armenia with a capacity of up to 14 million liters of drink per year.  The brand portfolio includes brandies "Arame", "Gyumri", "Armavir",  and the company also produces wines.

Aivazovsky will be bottled at the MAP's facilities, and Luding will  be engaged in distribution in all channels, including federal chains,  specialty stores, and food service outlets. By the end of 2021, the  company expects to sell more than 3.5 million liters of the drink,  and by 2023 put Aivazovsky into the top three in the category of  premium Armenian brandies.

In the store, the drink in a 0.5 liter bottle will cost up to 900  rubles depending on the chain. In general, over two years, Luding and  MAP will invest $ 10 million in cooperation, a representative of the  Russian company said. The MAP did not answer questions from  Kommersant.

According to the marketing director of Luding, Andrei Ushakov, in  2020 the company plans to increase turnover by 8% year-on-year,  including through a deal with MAP. "In times of crisis, consumer  loyalty to old brands decreases, and customers start looking for new  products on the shelves," he argues. In the future, partners plan to  create a joint venture for the production of brandy, said a  representative of Luding.

The deal with MAP is Luding's second attempt to add premium Armenian  brandy to its portfolio after the loss of distribution rights in  Russia for the Noy brand, which were transferred to Beluga Group  owned by Alexander Mechetin. Then Luding wanted to acquire 50% of the  Ararat Brandy Factory, becoming a co- owner of the Urartu brand, but  the deal did not take place. CIFRRA Director Vadim Drobiz notes that  Armenian brandy is in demand in Russia, which together with  Kazakhstan and Ukraine account for more than 80% of the beverage's  sales.

According to Nielsen, from May 2019 to April 2020, brandy sales  (analysts also include Armenian brandy in this category) in the  Russian Federation grew 6% in volume terms and 7% in money  year-on-year.

Stanislav Kaufman, the owner of the Kaufman agency, notes that such  partnerships can be built in different ways. "Often, the distributor  pays for the bottling service to the plant, while for the company,  additional capacity utilization is an opportunity to reduce costs,"  he says. But it will be extremely difficult to bring a new brand of  brandy to the market, warns Mr. Kaufman. According to him, the  consumers of this drink are very conservative, and there are a lot of  Russian brands and relatively affordable French cognacs. In addition,  cognac consumers often switch to whiskey. In addition, the promotion  of a new product will be difficult due to restrictions on alcohol  advertising in the Russian Federation, says Stanislav Kaufman.

"Luding" was founded in 1993 by Arthur Varzhapetyan and Armen  Shahazizyan. The portfolio includes Kentucky Gentleman, Lambay  whiskey, Finsky vodka, Naliboki vodka, Chateau Fonplegade wine, G7  and others. The company also owns a winery in the Krasnodar Territory  and a chain of Drinx stores. According to its own data, the turnover  of Luding in 2019 was 20 billion rubles, sales - 76 million bottles.