YEREVAN BRANDY COMPANY INCREASES GRAPES PURCHASE BY 21.7% IN 2006

ArmInfo News Agency, Armenia
Oct 23 2006

Yerevan Brandy Company (YBC) has increased grapes purchase volume
by 21.7% in 2006 to 28,000 tons as against 23,000 tons in 2005,
YBC Director General Herve Caroff says in an interview with ArmInfo.

He says, in addition, YBC purchased materials equivalent to 2,000
tons of grapes in Nagorny Karabakh Republic. This year, the purchases
in Ararat region were by 500 tons less than envisaged. The harvest
ripened earlier than usually and the company was late for 2-3 days to
open its purchase point in the region, the director general explains.

However, this shortage was successfully compensated in Tavush region,
where about 3,000 tons of grapes were gathered. In the north of Armenia
another sort of grapes with low sugar and high acidity content are
grown. Due to this, another quality of spirit is made, which is notable
for its special taste. We’ll think over increasing the reserves of
these spirits, he says. If the sugar content in grapes grown in Ararat
is some 20%, in Tavush this figure ranges between 16-17%. Herve Caroff
says grapes purchases in 2006 amounted to $10 million as against last
year’s $8.5 million. At the same time, the purchase prices for Armenian
farmers were left at last year’s level – 130 AMD per kg in Ararat, 123
AMD per kg in Tavush. In addition, the farmers the company has dealt
with for long years received bonuses (additional 15 AMD per kg for
last year’s purchases). The director general thinks it is a good price
given the appreciation of the Armenian dram within the year. However,
the company has suffered losses as its incomes and expenses are in
terms of U.S. dollar. H. Caroff says the company is ready to further
suffer losses without reducing the payments to farmers.

In addition, the company invested about 1 million EUR in the technical
modernization of the purchase points in Aygevan and partially in
Armavir. Due to these investments, the company purchased by 4.5
thousand tons of grapes more than in 2005. The novelty are electronic
scales that weight grapes more precisely, which is, undoubtedly,
within the interest of farmers. The company also took other measures
that allowed it to purchase up to 1,000 ton of grapes in one purchase
point instead of the 300-500 tons two years ago. Due to it, there
were no lines in front of the purchase points.

Herve Caroff says the purchases were increased to secure further growth
of brandy sales volumes in the long-term outlook in such traditional
markets as Russia, Ukraine, Belarus, Kazakhstan, Baltic states. The
company tries to boost sales in the USA, England, to enter the Asian
market, particularly, China. He assures that the spirit reserves of
YBC are replenished. The situation was difficult only in 2002-2004
when there was grapes deficit due to the poor harvest. However,
the situation has radically changed during the recent years and the
company controls over the sales volumes comparing them with spirit
reserves. The brandy to be made of the grapes we purchase now will
be sold only 5 and even 20 years ago, Herve Caroff says.

YEREVAN BRANDY COMPANY CONSIDERS POSSIBILITY OF RESUMING PRODUCTION OF
"OLD YEREVAN" WINE

Yerevan Brandy Company (YBC) is considering a possibility of resuming
the production of "Old Yerevan" wine.

In an interview with ArmInfo, YBC Director General Herve Caroff
says talks are underway with the YBC shareholder, French Pernod
Ricard, for this purpose. The idea of resuming the production of
"Old Yerevan" wine belongs to Armenian President Robert Kocharyan who
visited the company two weeks ago together with Romanian President
Traian Basescu. H. Caroff says the president stressed the importance
of YBC’s work with Armenian winegrowers, which enhances the given
economy branch. He says Armenian wines are highly in demand in the
Russian market now due to ousting of Georgian wines from the Russian
market. However, the problem rests upon the high quality grapes
necessary for production of red wine. He believes it necessary
adopting the standards of the Armenian wine like it was done in
the case of brandy in 1999 on the initiative of YBC. A wine can be
called Armenian if it is produced from the grapes grown in Armenian,
while many wineries in the country import wine materials from other
states and pass the wines made of these materials for Armenian,
H. Caroff says.

YEREVAN BRANDY COMPANY TO CELEBRATE ITS 120TH ANNIVERSARY IN 2007

In 2007 Yerevan Brandy Company will officially celebrate its 120th
anniversary, says Herve Caroff, YBC Director General, in an interview
with ArmInfo.

He says that next year the company intends to issue a book telling
about the history of the Armenian brandy production launched in 1887.

Throughout the year 2007, YBC intends to make surprises for
consumers. The production of 50% strong 10 year-old ultra premium
brandy "Dvin" will be timed to the 120th anniversary of the company.

It is a good chance to show the old product in a new packaging, he
says. The packaging is currently prepared. It will be an exclusive
and very expensive brandy, Herve Caroff says.