ARARAT COGNAC NOT DELIVERED TO RUSSIA

Kommersant, Russia
March 28 2006

Yerevan Cognac Distillery has terminated Russia’s deliveries of its
product on failure of Central Excise Customs to provide new excise
stamps to alcohol importers. According to the analysts, the alcohol
import will be paralyzed for two months from April 1 even if the
stamps are given already tomorrow.

Yerevan Cognac Distillery (owned by French Pernod Ricard) was forced
to terminate shipment of product to Russia, as all new stamps had
ended and no new stamps were provided, said Zara Nazaryan, who heads
the foreign ties department at the distillery. Armenia exported to
Russia 9.78 million liters of cognac worth $250 million in 2005;
Yerevan Cognac Distillery covered over a half of the exports.

The problem faced by Yerevan producers is common to all importers
of alcohol. The Central Excise Customs set to accepting excise
applications and payments only past week and no one knows for sure
when the first stamps will be given. Pursuant to the revised act on
government’s control over the alcohol production and sales, which took
effect January 1, 2006, all import of alcohol with old excise stamps
is banned from April 1 and no alcohol product with such stamps could
be sold from July 1.

The imported product covers 10 percent of Russia’s market of alcohol,
which overall turnover was roughly 200 million decalitres, or $19.7
billion, in 2005.
From: Baghdasarian