major sectors of the economy : jewelry and diamond processing : manufacturing : information technology : natural resources : chemicals and pharmaceuticals : agriculture : food processing : tourism : construction and construction materials : energy : transport : telecommunications : water

Food Processing

The main products are canned fruits and vegetables, milk and dairy products, meat and meat products, mixed feed, flour, bread, alcohol, soft drinks, mineral water, and cigarettes. With modem processing and packaging technologies, Armenia's fruit and vegetable products will have the potential to enter international markets.
Investors have established joint ventures to produce tomato paste, fruit juice, and packaging for domestic and export markets. New packaging technologies and capital for long-term investment are needed to unlock the sector's potential. Most of Armenia's food processing plants and canneries are actively looking for foreign partners to increase their exports. The World Bank and other donors are implementing a program to reconstruct four large canneries at a cost of over US$ 6 million.

Wine and Brandy

Armenia is justly proud of its brandy, which has a long tradition and a high quality. Armenian brandy has its own web site on the Internet.
In 1998 Pernod-Ricard (France) bought the Yerevan Brandy Winery for US$ 28 million, and has since diversified the products and launched a major sales effort. In 1998 and 1999 Pernod-Ricard spent US$ 10 million on developing viticulture and buying grapes, and a further US$ 5 million in developing the winery itself. The Winery produces Ararat brandy (three or five years old) and six branded brandies ranging from seven to 20 years old. Hit by the Russian economic crisis of 1998 and by trademark forgery, the Winery has launched marketing campaigns in the CIS to advertise its products. Ukraine and Belarus are among the first targets for the campaign, which began in Moscow in early November 1999. Ultimately, this advertising will extend worldwide. The Winery's products are now made distinct with bottles from Italy, corks from Portugal, and national symbols on the labels, as well as special seals and holographic stamps to protect against forgery. The idea is to make the public familiar with these features so that they avoid substitutes.
In 1999 the Winery started exporting its product to France, and signed agreements with seven distributors in Moscow. About 15 per cent of production is sold in Armenia, 65 per cent in Russia, and the rest is exported to 20 countries, including the US and Japan. Negotiations are under way for export to Germany, Argentina, Syria, Lebanon and Cyprus among others. Sales of 1.2 million liters of brandy in 1999 are expected to increase by 25 per cent in 2000, rising to 5 million liters by 2009.

Mineral water, Beer and Other Beverages

Armenia has about 700 natural springs producing high quality mineral water. The most famous are at Jermuk, Arzni, Dilijan, Bjni, Hankavan and Sevan. Less than a fifth of the springs have been studied and recommended for use as drinking water. However, Armenian mineral waters have medicinal qualities and the potential to become an important export item. Currently, mineral water products are exported to markets including the US, Europe, the Near East and the CIS. However, despite abundant availability, mineral water production has dropped because of difficulties in exporting and a decrease in domestic demand. Castel Group (France) has invested in production of mineral water plant and also a brewery.
In November 1999 the Yerevan Brewery won the Gold Star at the Geneva Brewers Competition, beating breweries from 54 other countries. The brewery was privatized in 1997 and operates two production lines. It has plans to expand production, but suffers from a lack of opportunity to export its products because of high transport costs.

Tobacco

Armenian tobacco growers sold 7,200 tones of tobacco in 1999 and expect to sell 8,000-9,000 tones in 2000.
Canadian-Armenian enterprise Grand Tobacco controls more than half of Armenia's cigarette market and plans to invest US$ 5 million in its Yerevan joint venture. In December 1999 it also announced plans for a factory in Stepanakert, which is in the disputed region of Nagorno-Karabakh. Grand Tobacco is also planning a joint venture with a Russian finn to produce cigarette packaging, instead of importing it as at present. The same firm would print labels for the confectionery enterprise.
An Armenian-Greek tobacco fermenting and processing joint venture, Masis-Tabak, started operations in January 2000. The founders are Hrant Vardanyan, who heads Grand Tobacco, and Missirian, a Greek tobacco company. Vardanyan has a 51 per cent share and has supplied the premises (acquired from a former timber mill), while Missirian has supplied the equipment. Masis-Tabak is expected to produce 10,000 tonnes of tobacco in 2000, and to achieve full capacity of 13,000-15,000 tonnes in 200 1, processing both imported and locally-grown tobacco. Most of the products will be exported, mainly to Russia. MasisTabak also plans to set up another fermentation and blending plant in Nagorno-Karabakh.