IN TWO YEARS WE MAY FACE SERIOUS PROBLEMS
Norair Hovsepian

Azat Artsakh, Republic of Nagorno Karabakh
Nov 2 2006

While highlighting the necessity of developing wine growing in
Armenia we often forget about the major problems we might be facing
when the grapes ripen. There are no many processing factories in
Karabakh. For instance, Karabakh Gold, one of the biggest companies
in Karabakh, producing about 30 brands of wine and vodka, bought
about 6000 tons of grapes in 2005. The company had foreseen to buy
7000 tons in 2006, but the harvest was poor, and the company bought
only 1000 tons. In 2005, 700 tons of grapes was used for wine,
2000 tons was sold to Yerevan Brandy Factory, and 2300 tons is kept
in the factory to produce brandy. Vladik Alibabayan, the production
manager says, "Presently, the production of grapes in Karabakh must be
limited. Armenia produces the amount of grapes it needs, and does not
need to import more." A. Harutiunian, a shareholder of Karabakh Gold
says, "In two years we’ll be facing serious problems in processing
grapes. The potential of the existing factories doesn’t correspond
to the rates of development of the production of grapes. Even today
the factories are unable to keep up," he says. Another major problem
is the sale of the production of processing factories. The consumers
of Karabakh cannot consume this much. A. Harutiunian says Karabakh
can consume the production of hardly 10 percent of grapes grown
in Karabakh. Nevertheless, the company seeks to increase the sales
and the volume of processing. Karabakh Gold increases the volume of
grapes by an annual 500 tons. The company is also planning to make
new brands. In 2007 the company will produce brandy. The company
is likely to operate another factory in Stepanakert, but it will
not start buying more grapes from farmers. Arthur Gabrielian, CEO
of Artsakh Alco says, "How can the entrepreneur buy more grapes if
he is not sure what will happen to his production?" "The grapes we
produce is too much for the market in Karabakh, and Armenia doesn’t
need to import grapes." Artsakh Alco focuses on the production of
eau de vies, and only 15 percent of its production is consumed on the
local market. The rest is exported to Armenia, Russia, Ukraine and the
United States. Arthur Gabrielian says the only way out is to produce
competitive products, but the conclusion is not encouraging because no
Karabakh-based company has this possibility. "The factories inherited
from the USSR cannot guarantee a high quality, and new technologies
are costly and take time," he says. For instance, he says, if the
company has considerable achievements in the production of eau de
vies, the same cannot be said about wines. "We can also export some
amount of wines but we are not sure that it will be competitive,"
Arthur Gabrielian says. The representatives of both companies said
their companies, nevertheless, attend to the problems of the farmers,
and Karabakh Gold, which rents 100 hectares of vineyard, helps the
owners of vineyards with chemicals. The CEO of Artsakh Alco said in
2006 they opened offices in the villages of Sos and Machkalashen to
buy grapes. Next year Artsakh Alco is likely to provide farmers with
chemicals. "Buying a small amount of chemicals and having it tested
in a laboratory may be a problem for a farmer because he has to waste
considerable time, whereas for the company it is a matter of finance
but we do not suffer losses because it is included in the price of
the grapes," says Arthur Gabrielian. In other words, both the producer
and the processor are interested in the quality of their production.