Armenian Alcoholic Beverages and Industry Market Overview
“Avenue Consulting Group” continues its series of research on various sectors of Armenia’s economy.
We have already had the opportunity to present a survey of the meat market in Armenia. This time, Avenue Consulting Group touched upon the Armenian market of alcoholic drinks, analyzing its production potential, export and local market opportunities.
The consultant of the company Kristina Hovsepyan told Banks.am that the study is aimed at preparing a basis for more profound and comprehensive analysis that will direct Armenian businessmen to start or develop their business in this field. “Besides, this study is also interesting for consumer behavior analysis, in particular, it will help to understand how the solvency or preference of Armenian consumers has changed.”
Kristina Hovsepyan informed that the company’s study was summed up in the “Review of the Armenian Alcoholic Beverages Market” report, which will soon be available on the website of “Avenue Consulting Group”.
And before that we present some sections of the company’s report to Banks.am.
Domestic brands prevail:
More than 56.5 million liters were produced in Armenia in 2014, 11.5 million liters were imported, and 24 million liters of alcoholic beverages were exported. The volume of alcoholic drinks market was 44 million liters or more than $ 228 million. In Armenia mainly such alcoholic beverages as vodka, wine, beer, cognac and champagne are produced.
Armenian consumers prefer traditional types of alcoholic beverages, with dominating share in Armenian market, which is conditioned by the competitive price of Armenian drinks. For example, 95% of brandy market belongs to Armenian brandy, 88% to beer market and 50% to vodka market.
The risk of dependence on one market on the signal makers
The import volumes increased at a much slower pace than export volumes during 2009-2013.Average annual growth rate of import volumes in 2009-2013 was from $ 42.1 million to $ 56.6 million, and exports to 24 percent from $ 72.7 million to $ 212.9 million. Alcoholic beverages are imported mainly from the Russian Federation, Spain, Ukraine, Georgia and Finland.
As for exports, in many other areas, the degree of geographical concentration is very high here. The overwhelming majority of exports are directed to the Russian market, for example, in 2013. 80% of exported alcoholic beverages went to Russia. This is an impetus for exporters of alcoholic beverages to discover and attract new markets in order to reduce the dependence on the Russian market. It should be taken into consideration that the RF market is not stable, it changes regularly to qualitative and technical requirements for imported Russian goods, which can hamper the export of alcoholic beverages from Armenia. Additionally, the high level of dependence on one market triggers additional risk for exporters.
Vodka is in leading export growth rate
During 2010-2014 wine production has considerably increased in Armenia. Particularly in 2010 about 5 million liters of wine was produced, and in 2014, more than 6 million liters, recording a 20.6% increase. The volumes of wine export have also grown during the same period, whereas import volumes have declined.
Brewing imports dropped by around 40%, while the export increased by 1.4 times.
In the case of vodka, 2010-2014 has registered a sharp increase in exports. it has grown 26.8 times, and the combined annual growth rate was 93.1%. This is the largest increase in the export of alcoholic drinks. The volumes of imports of vodka have also grown and production volumes have dropped from about 12 million liters to 9.5 million liters a year.
Brandy import volumes make a small share. During 2010-2014 only 366,000-liter cognac was imported in total.
Whiskey, tequila, rum, gin …
Among Armenian consumers, the interest in such drinks as whiskey tequila, rum and gin is increasing year after year. Most of the drinks are consumed with whiskey. The whiskey consumption market is about $ 1.3 million. The most popular brands are UK and US imported brands. And the gin, on the contrary, is not common among Armenian consumers. Its consumption is 1.35 thousand tons.
The consumption of alcoholic drinks in Armenia is comparable to the same indicator for other countries. Thus, consumption of wine per capita in Armenia is about 1.63 liters, vodka – 5.6 liters, beer – 4.4 liters. For comparison, wine consumption per person in France is 44 liters, and in Vatican, 72 liters. In the world of vodka consumption, consuming 10 liters of vodka per capita in Russia.
“To summarize, the production of alcoholic drinks since 2009 shows a tendency of growth, the same applies to the export of alcoholic drinks. This is a serious opportunity for Armenian entrepreneurs to start new business projects or to develop existing ones in the field of alcoholic drinks, told Kristina Hovsepyan to Banks.am.