Armenia failed to increase winemaking export attractiveness - study

ArmInfo. We have not much to boast of, our winemaking industry has not become more export-oriented. Tigran Jrbashyan, Partner, Director of Management Advisory Services at Ameria  said, ppresenting the results of the  "Ameria" company's "Alternative Wine Export Markets" study.

Analyzing the situation over the past 5 years, he noticed that the  growth rates of wine production and its export are proportional and  show almost equal dynamics. In particular, over the specified period  of time, wine production in Armenia increased by 25%, with an  increase in export supplies by 23%.

"When we try to understand our readiness to export wine, we come to  the conclusion that our producers are not yet ready to export on an  industrial scale. And one of the limitations is not the rules of the  game, but the producers themselves," the expert said, noting that the  volume of wine produced in Armenia does not account for even 10% of  the volume of wine production in Georgia.

In this regard, he explained that the practice of certification in  Armenia is at a very weak level, and there are also serious problems  related to wine branding and labeling. As Jrbashyan noted, in  fairness, we note that the situation with branding and labeling has  improved somewhat in recent years, but there are still some problems  associated with compliance with international standards. In addition,  he also pointed out shortcomings in meeting market requirements,  positioning in niche markets (organic, biodynamic wines).  Among  others, the expert also pointed out the importance of developing  digital technologies in the field of e-commerce.

At the same time, Jrbashyan considers the insufficient quantity of  high-quality grapes from which high- quality wine could be produced  to be the main challenge of Armenian winemaking.

At the same time, he noted that according to the study, only 15-18%  of grapes in Armenia are used for wine production, the rest goes to  the production of brandy, because a significant part of the grapes  are brandy (fortified) varieties. 

At the same time, according to him, the business of Armenian  winemakers meets food security requirements only to a limited extent;  there are limited resources to control the quality of production of  small distilleries, the number of which is steadily growing. Also,  transport and logistics costs are too expensive to enter the  international market. There are problems with access to inexpensive  financial resources, the marketing skills of winemakers are low, the  level of application of Good Agricultural Practices (GAP) at the  grape growing stage is insufficient, and fragmented land is used  inefficiently.

Speaking about what the state is doing to develop and expand the  sector, Tigran Jrbashyan noted that today winemakers can take  advantage of the state leasing promotion program to purchase the  necessary techniques, equipment, etc. There is also a subsidy program  for intensive vineyard construction for wineries, while the VAT  exemption system and certain tax incentives for newly established  vineyards are still in effect.

According to the data of the Statistical Committee of the Republic of  Armenia, 12.5 million liters of wine were produced in Armenia in  January-November 2023, which is 14.1% higher than the previous year's  figure (compared to a 2.7% decrease from the previous year).

According to the Customs Service data, , Armenia increased its wine  export volumes by 17.6% to 1.9 million liters in H1 2023, with  customs value increasing by 12% to $6.9 million.

The main volume of exported wine goes to the Russian market with a  share of 85.5%. The main volume of exported wine goes to the Russian  market with a share of 85.5 percent. Followed by a wide margin: the  USA (4.2%), Belarus (2.4%), Belgium (1.3%), France (1.2%), Italy  (0.9%), Lithuania (0.7 %), Georgia, Poland, Kazakhstan (0.4% each),  China (0.3%), Czech Republic (0.2%), UAE (0.1%). Over 1 thousand  liters were exported to Estonian, Australian, Kyrgyz, Japanese,  Ukrainian, Israeli, Greek, Danish, German, Canadian, and British  markets. Less than 1 thousand liters were sent to Bulgaria,  Switzerland, Latvia, Cuba, Malta, the Netherlands, Sweden, Finland,  Spain, Benin and Portugal.