Armenia's alcoholic beverage sector, one of the important contributors to GDP and employment in the country, is mulling the formation of "seven or eight" cooperatives comprising of grape farmers and wine and brandy makers, according to Avag Harutyunyan, chairman of the Union of Armenian Winemakers. The cooperatives would solve some of the problems arising from a mismatch between the types of grapes farmers harvest, and what the wine and brandy industry needs.

Harutyunyan expects the country's exports of wine and brandy to increase by up to 50% and 15% in 2016 respectively on the back of a bumper grape crop this year.

However, exports of brandy declined by 50% y/y and of wine by 42% in January-August because of the economic recession in Russia, the largest destination for Armenian wine and brandy. Russia reportedly purchases 80% of Armenia's alcoholic beverage exports, and the remaining 20% goes to Central Asian countries.

The drop in exports prompted wine makers to purchase smaller amounts of grapes, which in turn led to social unrest among grape farmers, whose grape harvest was 30% larger in 2015 compared to 2014, and part of which went bad. Farmers resorted to exporting 36% more fresh grapes y/y to offset the lower demand from the wine industry.

The Armenian Agriculture Ministry is also seeking to diversify export markets, and is planning to send a delegation to India in February to promote the country's wine exports.