After years of growth, production of Armenian brandy and wine, major export items mostly sold in Russia, has decreased considerably in recent months due to the sharp depreciation of the Russian currency, the ruble.
Data from the National Statistical Service (NSS) show that show the production volumes shrinking by just over 8 percent last year. The downward trend seems to be accelerating this year, with output in Armenia’s export-oriented brandy industry plummeting by as much as 32 percent year on year in January 2015.
Industry executives say the Russian ruble, which has depreciated by almost half over the past year, is the main factor behind the production losses. Russia has long been the main market for brandy and wine distilled in Armenia from locally grown grapes.
The weak ruble seems to have also affected other Armenian exporters specializing in the Russian market. According to the NSS, overall Armenian exports to Russia fell by about 8 percent to $308.5 million in 2014.
“With the Russian ruble much weaker now, our products are not competitive in the Russian market in terms of their price,” said Aleksan Petrosian, the owner of MAP, a major Armenian brandy producer based in the southern Armavir.
“This is a very bad thing,” Petrosian told RFE/RL’s Armenian service (Azatutyun.am). “We have spent 20 years gaining a market share in Russia and now risk losing it just because of the exchange rate.”
Alik Gasparian, the deputy director of the Proshian Brandy Factory near Yerevan, also reported major production losses. “We still export brandy to Russia but on a small scale,” he said. “We have shipped only five truckloads [of the alcohol] so far this year.”
“We keep sending stuff there only to make sure that we don’t lose the Russian market,” added Gasparian.
Another, smaller liquor firm, Aregak, claims to have stood idle in recent months for the same reason. “That is to do with the collapse of the Russian ruble and low [dollar-denominated] prices,” said Naira Papoyan, the Aregak owner.
“We will somehow meet our contractual obligations for April and May at old [ruble] prices, just to avoid being left out of the market,” she said.
Both Papoyan and MAP’s Petrosian agreed that the production fall could force distilleries to cut back on grape purchases from Armenian farmers this fall. Tens of thousands of farmers are dependent on those purchases
Vineyards occupy a large part of agricultural land in southern Armenia and some other parts of the country.