Armenian brandy is reviving
18.04.2011,
17:03
Interview of the executive director of Yerevan Brandy Company, Ara Grigoryan, with ARKA news agency
Interview of the executive director of Yerevan Brandy Company, Ara Grigoryan, with ARKA news agency
ARKA – The last fiscal year was a year of crisis for the company after its sales declined by 35%. What are your expectations for this fiscal year, can you say that the crisis has receded?
A. Grigoryan - The crisis can be said to have abated, but unfortunately we have not reached before-the-crisis levels, having managed to recover only half of our losses. We have not yet reached pre-crisis sales level in the Russian market, the biggest market for our produces. As for all other markets, we have succeeded in recovering to pre-crisis levels. But unless we recover our losses at the Russian market, the overall performance will not be so optimistic. A great deal depends on the Russian market.
ARKA – Nonetheless, despite the crisis, could you list some successes of Yerevan Brandy Company (YBC) during the past calendar year? Were you able to expand the geography of exports and implement plans to expand the products range?
A. Grigoryan - You know, for us the greatest achievement was that even in times of crisis, despite the losses in sales, we managed to maintain the market share. That is, despite the decline in sales volume (in liter equivalent), we were able to strengthen the position of ArArAt brandies. In other words, the market share of ArArAt has increased significantly. I think this is a major achievement. On the export side, I would not call it an expansion of geography, I rather would describe it as an attempt, since we began working towards completely new markets. Although sales in these markets can be considered as symbolic, we expect that after a while we will be able to cover such countries as Vietnam, Uzbekistan and Italy. The main thing was "to drop the anchor’ in these markets. It is important that we started to diversify markets.
ARKA – Did you make trial sales in these countries and what is your position in the Asian markets?
A. Grigoryan – We have had trial sales in these countries. In Italy we have repeat orders, albeit small, but we are pleased with the fact. As regards the Asian markets, the largest markets are China and India. We have been working intensively in this direction for half a year already. There are very great difficulties in entering these markets, but we hope that we can do it, although there are still a number of issues in this regard. The main problem stems from the fact that these markets are focused on French products and are quite polarized in terms of pricing policy.
There is no average price niche there- products are either very expensive or very cheap. We can not compete with very cheap brandy for a variety of reasons. We neither can compete with very expensive products, due to incompatibility of budgetary expenditures, including marketing. So far, we have been trying to enter these markets, to establish distribution channels, and then see what comes next.
ARKA - Late last year, the Union of Armenian Brandy Producers was set up, the chairman of which you now are. What explains the need for such a structure, and what it will put the emphasis on?
A. Grigoryan - The Union of Armenian Brandy Producers comprises 12 companies. Brandy is certainly an important direction for our country. In purely economic terms it can claim to be the most significant trend, but in terms of country image, in terms of recognition of country, it could be termed as "the most important." In this regard, it is a strategic product, as brandy is one of our national symbols. There are more than 30 producers of Armenian brandy now in the country which work independently. The most important thing for me was to create a common platform, where we can protect the interests of everyone, to work together and coordinate efforts for solving common problems. There are so many interests that we can lobby for together. In fact, Armenian brandy sales account for only about 1.5% in Russia, while the share of our colleagues from Dagestan and Moldova is much larger. Thus, our manufacturers have a real opportunity to increase the share of Armenian brandy in the Russian market instead of competing with each other. Therefore, the Union is an attempt to talk openly about our problems, plans and take steps to work together to promote Armenian brandy abroad.
ARKA - Is it related to the problem of counterfeit goods and fighting it?
A. Grigoryan - Establishing some rules of the game within the Union and following them, of course, can be regarded to some extent as an anti-counterfeiting struggle, but the sense of the organization is not in it. It is not our turf. To combat counterfeiting, in my opinion, there are two key players - the government and the buyer. And if the legal and enforcement aspects are the duties of the government, the buyer is responsible for what he/she buys. So, when buying a very cheap drink with a flashy label "Armenian cognac", he/she is well aware that the proposed drink is anything but "Armenian cognac." The goals of the Union is to form moral and ethical standards in the industry mandatory for all.
ARKA - Is there any research on the possible volume of counterfeit products?
A. Grigoryan - There are such researches and very detailed, but we would like to ourselves cope with the problem, because we believe that every negative word about this or that dishonest colleague is more damaging the image of the country and categories of Armenian brandy. But I can say that the situation regarding the category "Armenian brandy " if compared to competitors from other countries is much better.
ARKA – Is there any research on the consumption of brandy in Armenia, and what is the global trend of Armenian brandy consumption?
A. Grigoryan - Consumption of brandy in Armenia is growing, but, unfortunately, our country fellows, for several reasons- objective, subjective, financial are not willing to pay for a brand, for quality, being guided by prices. Half the sales of Armenian brandy are three-and five-star brandies, followed by Ani, Akhtamar, Selected and Nairi brands. There is a tendency of growth of sales, in particular, Nairi brandy - the most expensive serial brandy, but it is so well positioned as a symbol of Armenia, that practically its sales are equal to sales of three stars brandies. We can say that the average per capita consumption of brandy in Armenia is half a liter a year. In Europe and Russia this figure is a little higher. However, it is natural that the world consumption of wine and vodka is several times higher than the consumption of brandy.
ARKA - Armenian brandy is often associated with the name of the British prime minister Winston Churchill, who liked to say that consumption of Armenian brandy was a condition of good health. Is there any important figure now, who could be associated with our brandy and is there any new marketing plan in that regard?
A. Grigoryan - We had this idea, but the modern world is too commercialized. And such marketing moves require a very long, careful preparation and regulation of a number of legal issues. I would not say we have abandoned that idea as such, but now it is not among our priorities. But let's not jump the gun too long. I would not like to disclose the card.
ARKA - Should we expect changes in an already established scale production?
A. Grigoryan - We are now restarting the Dvin brand along with developing a new packaging design for this brandy, which will be presented to buyers in late September. In addition, approximately by that time we are preparing the launch a commemorative series dedicated to the 20th anniversary of Armenia's independence.
ARKA - How the redesign ArArAt packaging has helped increase sales and how did the market react to this innovation?
A. Grigoryan – A little problem came with redesign in the category of super-premium brandies Nairi and Holiday.
Unfortunately, there were some difficulties with the timely provision of gift wrapping, so we do not have a complete picture of the results of the rebranding of Nairi, Holiday and Vaspurakan brandies and will be able to talk about its effects by the autumn only. But sales of standard and premium class brandies went uphill. Sales in Armenia alone have increased 11%-17%. In the first place, a push was given to three and five stars brandies. Feedbacks were also positive. During my career with Ararat in different countries I have ‘survived’ 3-4 rebrandings. I would like to note that people are not quick to forget the old and become quickly accustomed to the new. We spent a lot of effort, money and energy, and to our delight, no one even remembers now how the old bottle looked like. The redesign cost us about 2 million euros.
ARKA – The "Golden Age" of Armenian brandy was in the Soviet Union. How would you describe the current period of time in terms of production?
A. Grigoryan - In my opinion, we are having now the most difficult period. The flourishing period was in the Soviet times, but then it was not difficult to be successful. Then YBC’s sales were three times more than all 30 plants together sell now, but it was completely the merit of the Soviet planned economy. Then Soviet Armenia ceased to exist, and the country was declared an independent republic, we had to survive the chaos of the war. In 1998-99, when the French company Pernod Ricard bought the YBC, the era of development came with it. I would call it the era of revival of Armenian brandy.-0-
ARKA – The last fiscal year was a year of crisis for the company after its sales declined by 35%. What are your expectations for this fiscal year, can you say that the crisis has receded?
A. Grigoryan - The crisis can be said to have abated, but unfortunately we have not reached before-the-crisis levels, having managed to recover only half of our losses. We have not yet reached pre-crisis sales level in the Russian market, the biggest market for our produces. As for all other markets, we have succeeded in recovering to pre-crisis levels. But unless we recover our losses at the Russian market, the overall performance will not be so optimistic. A great deal depends on the Russian market.
ARKA – Nonetheless, despite the crisis, could you list some successes of Yerevan Brandy Company (YBC) during the past calendar year? Were you able to expand the geography of exports and implement plans to expand the products range?
A. Grigoryan - You know, for us the greatest achievement was that even in times of crisis, despite the losses in sales, we managed to maintain the market share. That is, despite the decline in sales volume (in liter equivalent), we were able to strengthen the position of ArArAt brandies. In other words, the market share of ArArAt has increased significantly. I think this is a major achievement. On the export side, I would not call it an expansion of geography, I rather would describe it as an attempt, since we began working towards completely new markets. Although sales in these markets can be considered as symbolic, we expect that after a while we will be able to cover such countries as Vietnam, Uzbekistan and Italy. The main thing was "to drop the anchor’ in these markets. It is important that we started to diversify markets.
ARKA – Did you make trial sales in these countries and what is your position in the Asian markets?
A. Grigoryan – We have had trial sales in these countries. In Italy we have repeat orders, albeit small, but we are pleased with the fact. As regards the Asian markets, the largest markets are China and India. We have been working intensively in this direction for half a year already. There are very great difficulties in entering these markets, but we hope that we can do it, although there are still a number of issues in this regard. The main problem stems from the fact that these markets are focused on French products and are quite polarized in terms of pricing policy.
There is no average price niche there- products are either very expensive or very cheap. We can not compete with very cheap brandy for a variety of reasons. We neither can compete with very expensive products, due to incompatibility of budgetary expenditures, including marketing. So far, we have been trying to enter these markets, to establish distribution channels, and then see what comes next.
ARKA - Late last year, the Union of Armenian Brandy Producers was set up, the chairman of which you now are. What explains the need for such a structure, and what it will put the emphasis on?
A. Grigoryan - The Union of Armenian Brandy Producers comprises 12 companies. Brandy is certainly an important direction for our country. In purely economic terms it can claim to be the most significant trend, but in terms of country image, in terms of recognition of country, it could be termed as "the most important." In this regard, it is a strategic product, as brandy is one of our national symbols. There are more than 30 producers of Armenian brandy now in the country which work independently. The most important thing for me was to create a common platform, where we can protect the interests of everyone, to work together and coordinate efforts for solving common problems. There are so many interests that we can lobby for together. In fact, Armenian brandy sales account for only about 1.5% in Russia, while the share of our colleagues from Dagestan and Moldova is much larger. Thus, our manufacturers have a real opportunity to increase the share of Armenian brandy in the Russian market instead of competing with each other. Therefore, the Union is an attempt to talk openly about our problems, plans and take steps to work together to promote Armenian brandy abroad.
ARKA - Is it related to the problem of counterfeit goods and fighting it?
A. Grigoryan - Establishing some rules of the game within the Union and following them, of course, can be regarded to some extent as an anti-counterfeiting struggle, but the sense of the organization is not in it. It is not our turf. To combat counterfeiting, in my opinion, there are two key players - the government and the buyer. And if the legal and enforcement aspects are the duties of the government, the buyer is responsible for what he/she buys. So, when buying a very cheap drink with a flashy label "Armenian cognac", he/she is well aware that the proposed drink is anything but "Armenian cognac." The goals of the Union is to form moral and ethical standards in the industry mandatory for all.
ARKA - Is there any research on the possible volume of counterfeit products?
A. Grigoryan - There are such researches and very detailed, but we would like to ourselves cope with the problem, because we believe that every negative word about this or that dishonest colleague is more damaging the image of the country and categories of Armenian brandy. But I can say that the situation regarding the category "Armenian brandy " if compared to competitors from other countries is much better.
ARKA – Is there any research on the consumption of brandy in Armenia, and what is the global trend of Armenian brandy consumption?
A. Grigoryan - Consumption of brandy in Armenia is growing, but, unfortunately, our country fellows, for several reasons- objective, subjective, financial are not willing to pay for a brand, for quality, being guided by prices. Half the sales of Armenian brandy are three-and five-star brandies, followed by Ani, Akhtamar, Selected and Nairi brands. There is a tendency of growth of sales, in particular, Nairi brandy - the most expensive serial brandy, but it is so well positioned as a symbol of Armenia, that practically its sales are equal to sales of three stars brandies. We can say that the average per capita consumption of brandy in Armenia is half a liter a year. In Europe and Russia this figure is a little higher. However, it is natural that the world consumption of wine and vodka is several times higher than the consumption of brandy.
ARKA - Armenian brandy is often associated with the name of the British prime minister Winston Churchill, who liked to say that consumption of Armenian brandy was a condition of good health. Is there any important figure now, who could be associated with our brandy and is there any new marketing plan in that regard?
A. Grigoryan - We had this idea, but the modern world is too commercialized. And such marketing moves require a very long, careful preparation and regulation of a number of legal issues. I would not say we have abandoned that idea as such, but now it is not among our priorities. But let's not jump the gun too long. I would not like to disclose the card.
ARKA - Should we expect changes in an already established scale production?
A. Grigoryan - We are now restarting the Dvin brand along with developing a new packaging design for this brandy, which will be presented to buyers in late September. In addition, approximately by that time we are preparing the launch a commemorative series dedicated to the 20th anniversary of Armenia's independence.
ARKA - How the redesign ArArAt packaging has helped increase sales and how did the market react to this innovation?
A. Grigoryan – A little problem came with redesign in the category of super-premium brandies Nairi and Holiday.
Unfortunately, there were some difficulties with the timely provision of gift wrapping, so we do not have a complete picture of the results of the rebranding of Nairi, Holiday and Vaspurakan brandies and will be able to talk about its effects by the autumn only. But sales of standard and premium class brandies went uphill. Sales in Armenia alone have increased 11%-17%. In the first place, a push was given to three and five stars brandies. Feedbacks were also positive. During my career with Ararat in different countries I have ‘survived’ 3-4 rebrandings. I would like to note that people are not quick to forget the old and become quickly accustomed to the new. We spent a lot of effort, money and energy, and to our delight, no one even remembers now how the old bottle looked like. The redesign cost us about 2 million euros.
ARKA – The "Golden Age" of Armenian brandy was in the Soviet Union. How would you describe the current period of time in terms of production?
A. Grigoryan - In my opinion, we are having now the most difficult period. The flourishing period was in the Soviet times, but then it was not difficult to be successful. Then YBC’s sales were three times more than all 30 plants together sell now, but it was completely the merit of the Soviet planned economy. Then Soviet Armenia ceased to exist, and the country was declared an independent republic, we had to survive the chaos of the war. In 1998-99, when the French company Pernod Ricard bought the YBC, the era of development came with it. I would call it the era of revival of Armenian brandy.-0-
