Ruble devaluation negatively hits Armenia's alcohol export

/AzeNews/

By Mushvig Mehdiyev

Unpromising forecasts of several influential organizations, including the IMF, World Bank, for Armenia's economic growth are realizing step by step. The wine industry in the country has greatly suffered from the ongoing economic hardship.

Brandy export from Armenia dropped by 4.1 percent in the first nine months of this year, said Head of Armenian Winemakers Union, Avag Harutunyan on November 17.

Potent devaluation of the Russian ruble in recent months can cause 30 percent loss in brandy export from Armenia to Russia in 2014, according to Harutunyan.

"Ruble decline strongly hits the Armenian winemakers, who lose about $86,000 a day due to large share of brandy and wine exports to Russia. Wine export is also expected to decrease amid the sustainable fall of the ruble," he said.

Russia receives nearly 85 percent of the overall brandy export from Armenia, while about 90 percent of the total wine export is directed to the northern giant's markets.

The average income of the Armenian alcohol producers in Russia dropped to 15 percent since a sharp devaluation hit the ruble in September, causing it to lose roughly 30 percent in value.

"Armenian exporters can face serious outcomes, unless ruble regains its value in the next 15-20 days," Harutunyan said.

Brandy export from Armenia to foreign markets dropped by 4.1 percent in January to September this year to 9.4 million liters, being 0.4 million liters less than the figure in the same period of the last year.

Harutunyan believes that exchange of bottles, labels, sugar, and other consumables and goods would be the best option if the Russian partners fail to pay off. He said several producers, who feared the ruble's devaluation can kill their business, tried to step in the Chinese and European markets.

Alcohol is the second most exported goods of Armenia after mining products. Armenia produces a lot of brandy, but the local market consumes only the tiniest portion of it to make it export-oriented. The major brandy producer in the post-Soviet state is the Yerevan Brandy Factory, privatized by the French Pernod Ricard group in 1998.