(IMI) OVERVIEW OF ARMENIA'S WINE SECTOR

UNCLAS SECTION 01 OF 03 YEREVAN 002319

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SUBJECT: (IMI) OVERVIEW OF ARMENIA'S WINE SECTOR

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SUMMARY
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1. This cable provides a brief overview of Armenia's
wine sector for those considering trade and investment
opportunities in Armenia. It also includes a list of
key contacts. For more information contact the BISNIS
representative or the Economic and Commercial Officer
at the U.S. Embassy in Yerevan. End Summary.


2. In Armenia's growing wine industry local producers
are searching for foreign partners to find new markets
for their products. Some of them need to upgrade their
facilities and are planning to purchase modern bottling
and packaging equipment. Many of them need investments
in working capital due to the seasonal nature of the
industry. U.S. exporters may find many marketing
possibilities as the wine sectors expand.

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WINE INDUSTRY OVERVIEW
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3. Armenia is one of the world's ancient grape growing
and processing societies: Armenian winemaking dates
back at least 3,000 years. Industrial winemaking began
in Armenia during the 1870s. During the Soviet period
Armenia expanded and improved its wine production and
Armenian wines won a number of grands prix and dozens
of gold and silver medals in international wine tasting
events. But the collapse of the Soviet Union heralded
a collapse in Armenia's wine industry. There is less
total area of vineyards under cultivation and less
total wine production today than twenty years ago.
After 1995, the state began privatizing Armenia's
wineries; fourteen out of thirty wineries remain as
joint stock companies. Recently, winemakers have begun
recovering vineyards and establishing new wineries.
The traditional assortment of Armenian wines is
returning to the market and new labels are being
established. According to local experts, wine making
is now one of the most profitable branches of Armenia's
economy with excellent potential for expansion.


4. Currently, according to different estimates there
are 14,000 hectares of vineyards in Armenia.
Approximately 30-40 percent of these are used to
cultivate grapes reserved for wine making, including
the following:

WINE TYPE GRAPE TYPE

Select white table wine: Voskehat, Banants
Ordinary white table wine: Voskehat, Rkatseteli,
Mskhali, Garan Dmak
Table red wine: Areni, Kakhet, Saperavi
Ordinary red table wine: Saperavi, Kakhet,
Cabernet
Select red table wine: Muscat, Voskehat,
Arevik, Kakhet, Areni
Ordinary desert wine: Muscat, Kakhet, Saperavi
Fortified dessert wine: Voskehat, Voskahet

The main grape growing and winemaking areas in Armenia
are the Ararat valley, including the provinces of
Ararat (the towns of Artashat and Vedi) and Armavir
(the towns of Echmiadzin and Armavir),the northeast
region (Ijevan, Tavush province),Aragtsotn province
(the town of Ashtarak and Byurakan village),Vayots
Dzor province (villages of Areni, Getap, town of
Yeghegnadzor,) and Syunik province (Meghri).


5. The largest grape growing and processing center in
the country is the Vayots Dzor province. The province
is famous for its Black Areni variety, which makes red
table and semi-dry wines. As wine making has become
one of Armenia's most profitable businesses, local
farmers are steadily increasing cultivation of grapes
in the province. There are now several wineries in
Vayots Dzor province. In March 1999, the last state-
owned winery was privatized. A number of new wineries
have since opened.


6. Areni Joint Stock Company is the first private
winery in Vayots Dzor. Established in 1994, it
produces a wine from the special Areni grape variety.
The winery has participated in a number of trade shows
and exhibitions both in Armenia and abroad. More
recently established private wineries in Vayots Dzor
include Ginetas, producing a dry red table and a semi-
sweet, Van 777, Kimley's and Gatnatun. Ginekar Company
produces wine kept for aging to be sold outside of
Armenia in luxury hotels.


7. Armenia's largest wine enterprise is Getap. It is
a part of the Ararat province-based company Vedi-Alko
JSC, which is the leading producer of wine and vodka in
Armenia. The company was established in 1999 as a
result of a merger of two large Armenian wineries Vedi
and Getap, and the largest vodka producer Vedi llc.
Currently, it produces more than 30 varieties of table
and dessert wines, sparkling wines, and vodkas. The
company's Vernashen semi-sweet wine is one of the most
popular brands in Armenia. Vedi-Alko exports its
products to Russia, Ukraine, France, the United States,
United Kingdom, and Poland.


8. Established in 1976, the Ijevan Winery became an
open joint stock company in 1995. This winery has
successfully converted a Soviet winery into an
efficient modern shop. The winery is equipped with
modern grape processing and wine bottling lines
imported from Germany. It produces several types of
wines, including dessert red, semi-dessert, white dry
table, red dry table, and rose dry table. In 2003, the
company's sales increased six-fold to 234,000 bottles
from its 1999 level. The company exports its products
to Russia, Japan and the United States.


9. Established in 1877, the Yerevan Ararat Cognac-Wine-
Vodka Factory is one of the oldest enterprises in
Armenia. Nationalized in 1921, the enterprise grew to
become the Ararat trust, Armenia's central vintage
wine, cognac and vodka production center, whose sales
accounted for 25 percent of Soviet Armenia's state
revenue. Privatized in October 1996, the Yerevan
Ararat Wine Factory recently became part of a large
Armenian company Multi Group. Currently, the company
produces various vintage Armenian wines and aged
Armenian cognacs. The enterprise owns a rich stock of
wines, wine materials, Armenian cognac and cognac
spirits.

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STATISTICAL INFORMATION
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GRAPE PRODUCTION (tons)

YEAR VOLUME

2000 115,800

2001 116,500

2002 104,000

2003 81,600

WINE PRODUCTION (thousand liters)

YEAR VOLUME

2000 3,620

2001 6,390

2002 6,541

2003 2,042

SOURCE: Armenia's National Statistical Service

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MAJOR WINE PRODUCERS
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Areni jsc
Contact: Rafayel Simonyan, Director
Areni village
Vayots Dzor province
Tel: (374-81) 22-222
Fax: (374-1) 58-79-28

Getnatun LLC
Contact: Nairi Baghdasaryan, President
Yerevanyan Ave.
Yeghegnadzor
Vaots Dzor province
Tel: (374-81) 25-565
Fax: (374-1) 58-79-28
Ginekar LLC
Contact: Yervand Sardaryan, Director
Aghavnadzor village
Vayots Dzor Province
Tel: (374-81) 22-271
Fax: (374-1) 58-79-28

Ginetas
Contact: Vardan Khalatyan, Director
39 Levonyan street
Yeghegnadzor
Vayots Dzor province
Tel: (374-81) 20-160
Fax: (374-1) 58-79-28

Kimley
Contact: Mikayel Grigoryan
Areni village
Vayots Dzor province
Tel: (374-81) 22-222
Fax: (374-1) 58-79-28

Van 777
Contact: Mihran Manaseryan, Director
Taperakan village
Ararat province
Tel: (374-9) 42-13-07
Fax: (374-1) 58-79-28

Vedi-Alco
Contact: Manvel Ghazaryan, President
Vedi village
Ararat province
Tel: (374-1) 28-80-20
Fax: (374-1) 28-80-20
E-mail: info@vedi-alco.am
www.vedi-alco.com

Ijevan Winery JSC
Contact: Avetis Galstyan, president
9 Yerevanyan street
Ijevan
Tavush province
Tel/fax: (374-1) 22-13-47
Fax: (374-1) 26-81-71
E-mail: iwf@netsys.am
www.ijevanwine.com

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KEY CONTACTS
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U.S. Department of Agriculture's Marketing Assistance
Project
74 Teryan street, Yerevan, Armenia
Tel: (374-1) 52-55-62
Fax: (374-1) 58-79-28
E-mail: map@usda.am
Web site: www.usda.am

Armenian Development Agency
Contact: Vahagn Movsisyan, Executive Director
17 Charents street
Yerevan-25
Tel: (374-1) 57-01-70
Fax: (374-1) 54-22-72
E-mail: info@ada.am

GODFREY