Investment opportunities in Armenia

The Republic of Armenia implements an “open door” policy towards foreign investment and has one of the most open investment regimes among the CIS countries.

The Armenian government has been implementing deep and comprehensive reforms in the business environment, providing favorable investment and business opportunities for foreign investors.

Sectors for Investment

Mining

Armenia has a long history in mining, marked by the beginnings of copper mining at the Alaverdi mine in the 1770s, the Kapan gold mine in the 1840s, and the Kajaran copper-molybdenum mine in the 1950s. After the country gained independence, further development of the mineral sector was hampered by a number of factors, including its geographical location and the difficult conditions for transporting products to markets abroad. The industry was also technologically paralyzed. Reform in the sector began in earnest in the early 2000s with a review of the regulatory framework, liberalization of contractual mechanisms, and privatization of large mining companies.

Mining issues are under the jurisdiction of the Ministry of Territorial Administration and Infrastructure, which was formed in 2019 through the merger of the former Ministry of Energy Infrastructure and Natural Resources and the Ministry of Territorial Administration and Development.

The mining sector is regulated by key legislative acts, including the Mining Code, Land Code, Civil Code, Water Code, Administrative Code, Law on Waste, Law on Environmental Supervision, Law on Payment for Environmental Protection and Use of Natural Resources, Law on Environmental Impact Assessment and Environmental Expertise.

International donors have supported Armenia's efforts to improve legislation in the mining sector in line with In line with international best practices, the Armenian government has identified mining development as a strategic priority. The World Bank financed a strategic assessment of the sustainability of the mining sector, completed in 2016, which focused on key challenges and opportunities in the sector, with an emphasis on developing a regulatory environment that both promotes sustainability and attracts investment.

In May 2023, the Armenian government adopted a strategy for modernizing the domestic mining industry by 2035. The main goals are to create a unified geological database, effectively make decisions on subsoil use and environmental protection, comply with international environmental and sanitary standards, and distribute revenues fairly. The government also approved amendments to various laws overseeing environmental standards, permitting, and construction practices. In 2022, the government approved a package of amendments and additions to the Tax Code and the Law on State Duty, revising the royalty system applicable to mining companies and introducing a two-tier progressive tax system, moving away from royalty price scales and special export duties.

The mining sector accounts for Armenia's gross domestic product and dominates its goods exports. Exports of extracted resources, including finished products based on raw materials such as aluminum foil and diamonds, account for more than half of Armenia's annual goods exports. Extracted copper resources represent the country's largest source of exports. Per capita mineral wealth levels are high compared to similar oil-importing countries in the region.

Armenia's mining industry is centered around the extraction of metals: iron, copper, molybdenum, lead, zinc, gold, silver, antimony, and aluminum. There are valuable reserves of rare metals in gold-polymetallic, copper-molybdenum and copper-pyrite deposits.

In addition to metals, Armenia produces other industrial minerals, including cement, diatomite, gypsum, limestone and perlite. The country also has local resources of building materials such as basalt, granite, limestone, marble and tuff, semi-precious stones. The country also has a developed diamond processing industry based on imported diamonds.

Leading Subsectors

The mining and export of copper and associated molybdenum reserves dominate the mining landscape of Armenia. The leading producer of copper and molybdenum concentrates in Armenia is the Zangezur Copper and Molybdenum Combine (ZCMK), which operates a large mine in Kajaran and is responsible for 60% of the annual turnover in the mining sector. The Agarak mine, located near Armenia's border with Iran, also produces copper. The government has been considering new investments to replace a decrepit copper smelter in the town of Alaverdi.

Gold is the second most important subsector of the mining industry.

In 2023, the Armenian government signed a memorandum of understanding with Lydian Armenia that will allow the massive Amulsar gold mine to restart operations and help raise $250 million for the project. As part of the agreement, Lydian ceded 12.5% of its shares in the gold mine to the government. The Sotk mine in eastern Armenia is also a leading gold producer, but the company was forced to suspend operations at the open pit mine in April 2023, continuing only a much smaller underground mining operation. The second-largest gold mine is the Shahumyan mine near Kapan in southern Armenia.

Other important sub-sectors in terms of export value are diamonds and jewelry.

Opportunities

Armenia is likely to continue to develop copper, gold, and molybdenum processing capacity. Growing recognition of the critical importance of the mining sector to the Armenian economy and the influx of foreign exchange has increased support for new developments, reinforcing the government’s focus on developing a productive, responsible sector.

With increased public and government sensitivity to the potential adverse environmental impacts of mining, as well as interest in the sector serving as a source of sustainable economic growth, new opportunities are emerging to provide services and technologies that can address legacy issues through the reclamation, restoration, or rehabilitation of mines and surrounding areas and sites.

Information and Telecommunications Technology

Armenia has a growing information and communications technology (ICT) sector. The sector has seen significant growth in recent years, with new companies expanding and hiring steadily as Armenia continues to increase its presence in global value chains. The number of firms active in the ICT sector exceeds 3,000, employing over 20,000 people and generating over $1 billion in annual revenue. The ICT sector is growing at 20% per year, which could be further accelerated by the arrival of thousands of new foreign highly skilled IT professionals.

Armenia’s ICT sector has several notable business areas, including: custom software, web design and development, IT services and consulting, mobile app development, chip design and testing, computer graphics and multimedia, and gaming. New business areas that are emerging or already developing include data science, artificial intelligence, quantum computing, and electronic design automation. These are of particular interest to Armenia as ICT companies explore opportunities to sustain aggressive growth.

The Armenian government has been active in supporting the development of the ICT sector. It works closely with international donors to enhance the competitiveness of Armenian ICT companies in the global market. Since 2019, the Ministry of High-Tech Industry has been overseeing the development and implementation of government policies and strategies regarding ICT and related industries. The government also aims to transform Armenia into a digital society more broadly and is implementing its country’s Digitalization Strategy for 2021-2025 in cooperation with international donors. The strategy envisages the digital transformation of the government, economy and society through the introduction and development of innovative technologies, cybersecurity, data policy, e-government systems, coordination of digitalization processes and the creation of common standards.

Armenia has positioned itself as a top destination for investment in the tech sector due to its large talent pool in mathematics and science, good and growing English language proficiency, several good university programs, competitive labor force and operating costs, government support for the sector, a strong diaspora network and existing relationships with large multinational companies within global value chains.

To ensure that the country continues to have a rich pool of highly skilled talent, several local universities and research institutes have increased their offerings of programs related to the ICT sector. Several of them have opened research labs and maker spaces in collaboration with international partners, local industry associations, and leading multinationals, including Microsoft, IBM, and National Instruments. These businesses are typically based in Yerevan, but also have a presence in second-tier cities, including Gyumri and Vanadzor.

According to the latest industry reports, about a third of ICT companies in Armenia claim foreign ownership. International companies account for about half of all employees in the sector. Foreign branches tend to be development centers for parent companies.

Armenia’s technology hubs, innovation districts, and free economic zones are used to support the high-tech sector. Tax incentives are used as a tool to stimulate start-ups. The government also uses other tools, including grants, study tours, educational programs, and the formation of a nascent investment fund, to support high-tech enterprises.

Leading Subsectors

Software, web design and development, mobile app development, systems engineering, and IT consulting services make up the bulk of activity in Armenia’s ICT industry. The country has found a more specialized niche thanks to the local presence of leading electronic design automation firms.

Several large multinational ICT firms operate in Armenia. The firms include Synopsys, NVIDIA, Adobe, DISQO, AMD, Microchip, Apple, Microsoft, D-Link, National Instruments, Siemens, Intel, Cisco, IBM, Oracle, VMWare, ServiceTitan, VOLO, Salesforce, and BostonGene. As of 2022, about 500 Russian tech companies are reported to have relocated or opened branches in Armenia.

The country has hosted a number of major industry events that have attracted international attention. The Armenian Science and Technology Foundation hosts the annual Global Innovation Forum, which attracts major speakers. The Enterprise Incubator Foundation, a local industry group, hosts the annual ArmTech conference, while another industry group, the Union of Advanced Technology Enterprises, organizes the regular DigiTec conference. In recent years, Armenia has held an annual Engineering Week to develop the engineering and industrial component of the Armenian ICT industry.

Educational institutions and innovation districts are opening up new opportunities in the ICT industry, developing talent and creating ecosystems in which new companies can establish themselves. Work is underway to create an Engineering City on the outskirts of Yerevan. Once completed, this multi-million dollar facility will house local firms, facilitate startup incubation, and provide access to cutting-edge tools and technologies.

Opportunities

As Armenia seeks to move up the value chain and remain competitive in the ICT sector, a number of new areas and opportunities are emerging. To the extent that Armenia can be successful in developing new technologies, it may become a more desirable location for contract research and development. Armenia is well positioned to continue providing such services, including software testing and prototyping, to clients abroad. Specific sub-sectors identified as having potential include pure AI research (and eventually engineering), semiconductor design and electronic design automation, and data science.

Software Development

Armenia has a strong reputation in the software development field. Many companies in Armenia specialize in creating custom software solutions, mobile applications, web, and enterprise software development.

Artificial Intelligence and Machine Learning

Armenia is making strides in the field of AI and ML. The country boasts talented data scientists, researchers, and engineers who are actively working on cutting-edge AI technologies.

Cybersecurity

With the increasing reliance on technology, cybersecurity has become a critical area of focus for Armenian IT companies. They specialize in every aspect of cybersecurity solutions.

Fintech

The country has seen the emergence of innovative fintech startups offering services such as online banking, digital payment solutions, peer-to-peer lending, and blockchain technology.

Games and Animation

Armenia has a growing gaming and animation industry. The country has talented game developers, designers, and animators who have contributed to successful international projects.

Tourism

Armenia offers excellent opportunities for tourism: cultural, religious, ecological, agricultural, recreational, culinary, natural, adventure, genealogical.

The country has many cultural, natural and historical sites, 6 UNESCO World Heritage Sites, medieval monasteries, churches and fortresses. Hospitality companies in Armenia include hotels, guest houses, restaurants, transportation companies, tour operators and travel agencies. Armenia's major markets for foreign tourists include France, Germany, Russia, Iran and the United States.

Yerevan serves as the main gateway to Armenia for tourists. The capital of Armenia offers an ever-growing network of restaurants, cafes and wine bars with traditional and international cuisine. Accommodation options continue to expand. The city has many museums, festivals, concerts, cinemas, green spaces. Yerevan is home to cultural, historical and religious sites.

Tsaghkadzor is a ski resort town located an hour's drive from Yerevan. It attracts a significant number of foreign and domestic tourists, especially in the winter. New ski resorts are planned in the Aragatsotn and Shirak regions. In 2023, a new mountain resort opened on the slopes of the mountains east of Mount Aragats, in the Aparan region of Armenia. Dilijan is another popular getaway from Yerevan, with small hospitality establishments. Nearby is the Dilijan National Park, which has recently seen dozens of hiking trails improved.

Lake Sevan, one of the largest high-altitude freshwater lakes in Eurasia, is a popular summer destination for foreign and domestic tourists. It offers opportunities for active recreation and entertainment, as well as sites of cultural and religious significance. Vayots Dzor Province is Armenia's wine region. The region also offers cultural and religious destinations, as well as hiking trails. Jermuk is a leading health resort, famous for its mineral waters and sanatoriums.

Various festivals have also become increasingly popular in Armenia, with various events dedicated to Armenian national characteristics.

A number of other initiatives have been implemented to restore and preserve interesting landmarks in the country. One notable example is the Tatev Revival project, a public-private partnership between the government and a private foundation that has restored a major monastery complex in southern Armenia and organized the construction of the world's longest reversible aerial tramway.

Opportunities

Several regions of Armenia with high-quality tourism potential still lack modern accommodations, restaurants and services. International partners have focused their recommendations on the need to develop hotels and guesthouses to a sufficient level to attract and accommodate foreign tourists. The government has developed investment master plans around strategic corridors. Of particular interest may be the picturesque but underdeveloped southern regions of Syunik and Vayots Dzor, as well as Gyumri and Dilijan in northern Armenia.

Armenia’s exceptional culinary and wine culture is an increasingly popular attraction for food and wine enthusiasts and a thriving sector for investments seeking high returns.

International partners, including the World Bank and the United Nations Development Programme, have invested in supporting the development of Armenia’s tourism sector through market analysis. Various studies have looked at infrastructure investment, skills development, product development, investment potential, and access to human capital as key factors in selecting potential tourism development sites and creating tourism corridors or routes.

There are ongoing opportunities for investment and commercial expansion to support robust growth in tourism numbers. Well-known foreign franchises, especially restaurants, are in demand, and the sector is showing signs of growth. Most foreign hotel chains have entered or expanded their operations in Armenia.

Textile Industry

Armenia’s textile industry has a rich historical heritage that dates back to the Middle Ages, when the country gained recognition for its silk production. Today, the industry continues to thrive and demonstrate steady growth. From 2018 to 2023, the sector demonstrated an impressive growth of 48%. The industry primarily focuses on the production of high-quality clothing to meet the needs of both domestic and export markets. It includes a diverse mix of businesses, including small and medium-sized enterprises, as well as several large companies. This dynamic mix contributes to the overall competitiveness and flexibility of the industry.

Armenia has a highly skilled and educated workforce that has the technical knowledge and creativity needed to design and produce high-quality garments.

Armenia's relatively low labor costs and favorable business environment make it an attractive destination for textile manufacturers.

Armenia's home textile industry offers promising investment opportunities. The production of bedding, towels, curtains and other home textile products has gained significant recognition.

While technical textiles are increasingly in demand across various industries, the technical textile sector in Armenia is steadily growing, driven by innovations in materials and technology.

Armenia has access to a variety of raw materials and the necessary infrastructure to support yarn spinning and fabric weaving, and offers a variety of investment opportunities in this area.

Investing in Armenia’s growing footwear industry offers opportunities to leverage the country’s skilled workforce, access to quality materials and growing expertise in footwear manufacturing.

Energy

Armenia’s energy sector has moved from a state of severe crisis in the early 1990s to relative stability today. A combination of political, legal, regulatory and institutional reforms has yielded good results.

Armenia has limited energy resources and can meet only a portion of its total energy demand from domestic sources. The country has no oil or natural gas reserves and thus relies heavily on imported energy. It imports oil and oil products from Russia, Georgia, Iran and Europe. Natural gas is imported primarily from Russia via Georgia, and a limited amount of natural gas is imported from Iran under a power-for-gas agreement. Nuclear fuel is imported from Russia. Armenia’s energy efficiency is low compared to developed countries. The government has adopted several laws aimed at developing domestic, especially renewable, energy resources and implementing energy efficiency measures.

The Energy Law regulates relations between legal entities involved in the energy sector and provides a legal basis for the production and supply of electricity, heat and natural gas to consumers. The Energy Efficiency and Renewable Energy Act aims to define mechanisms for improving energy efficiency and developing additional sources of renewable energy. The Act promotes the development of renewable energy sources and stipulates that all renewable energy produced must be purchased by the electricity distribution company. The energy sector regulator, the Public Services Regulatory Committee (PSRC), has set attractive tariffs for newly built small hydro, wind and solar power plants. It also stipulates that the tariff rates for electricity offtake apply for at least 15 years from the date of issuance of the operating license for the new plant.

The government amended the Energy Act in 2017 to facilitate greater market liberalization and has implemented all the reforms envisaged by it. Energy supplies are now guaranteed based on existing power purchase and sale agreements. Generators selling on the market are required to pay the electricity grid only for distribution. The new amendments to the law also introduce competition between electricity suppliers, removing the control exercised by one firm, Electric Networks of Armenia (ENA), over distribution across the country. With the changes to the law, consumers can now purchase electricity from other suppliers. Large wholesale consumers can enter the market and purchase and consume electricity generated outside Armenia. The reforms came into force on February 1, 2022.

The main bodies involved in the governance of the energy sector in Armenia are the Ministry of Territorial Administration and Infrastructure (MTAI), which is responsible for overall energy policy development; the Ministry of Environmental Protection; the PSRC; and the Nuclear Safety Regulatory Committee (ANRA). The Statistical Committee (ArmStat) is the main provider of energy-related data and statistics.

In January 2021, Armenia adopted a 20-year Energy Sector Development Program, which aims to create a transparent, diversified and energy-efficient system for sustainable development. The program will identify new power generation capacities, power transmission systems, as well as institutional issues related to market liberalization and related legislative gaps.

Armenia has sufficient electricity generation capacity to meet current domestic needs, but electricity demand is projected to grow by three percent per year. Armenia's electricity is generated primarily by the Armenian Nuclear Power Plant (ANPP), hydroelectric power plants, and thermal power plants. Solar power provides less than two percent of current electricity generation.

Operating on 220 volt alternating current (AC) at 50 Hz, the country's grid is currently synchronized with Iran, retaining small seasonal "island" connections to Georgia. Planned increased interconnections with Georgia via a series of high-voltage direct current (HVDC) stations and with Iran will help form a proposed "North-South Corridor" facilitating trade with Russia and possibly other countries. With an operating capacity of 385 megawatts (MW), the ANPP covers about 40 percent of Armenia's electricity needs. On September 14, 2023, the Armenian government approved an action plan to extend the life of the Armenian Nuclear Power Plant (ANPP) until 2036 from the current 2026 deadline through continuous improvements recommended by international nuclear experts. The Armenian government has announced plans to build a new nuclear power plant by 2036. In 2023, it created an interagency working group to analyze various options for building a new facility, including a small modular reactor (SMR) option.

Hydroelectric power plants generally provide an additional 20% of Armenia’s electricity generation, but generation levels depend on seasonality and precipitation patterns. Thermal energy provides most of the remaining generation.

High-voltage electric networks, a state monopoly operating as a closed joint-stock company, manages the assets of Armenia’s transmission network, performs operation and maintenance functions, and implements the necessary investment programs. Electricity System Operator CJSC is responsible for the strategic functioning of the energy system of Armenia.

The Public Services Regulatory Commission establishes tariff setting and revision procedures. The Settlement Center conducts commercial settlements between generators and ENA; manages electricity imports and exports; and supervises metering and billing services to wholesale market participants. The Public Services Regulatory Commission has issued a license to the Settlement Center to act as a market operator within the liberalized electricity market.

The Renewable Energy and Energy Efficiency Fund of Armenia is a government agency responsible for creating a favorable environment for the development of renewable energy and energy efficiency projects. This organization studies the potential opportunities and promotes investments in the development of solar, wind and geothermal energy in Armenia.

Leading Subsectors

Armenia could derive significant economic benefits from improving energy efficiency. Armenia’s electricity system is considered to have significant potential for sustainable energy due to the presence of hydroelectric power plants, solar, wind and other renewable energy sources.

The total installed capacity of all hydroelectric systems is 1,293 MW. Hydroelectric power could provide an even larger share of Armenia’s electricity needs if producers could address the inefficiencies of small hydroelectric power plants, which lack modern control technologies, rely on unreliable equipment and materials, suffer from poor design and are not engineered to meet modern environmental requirements.

Armenia also has significant solar energy potential. The average annual solar flux per square meter of horizontal surface is approximately 1,720 kilowatt-hours (kWh), which is high compared to the European average of 1,000 kWh.

The government has recently prioritized the construction of solar power plants over other types of renewable energy. The new solar tenders cover 210 MW of capacity. The government expects solar PV capacity to reach 100 MW by 2024 and 1,000 MW by 2030.

According to MTAI, which oversees the energy sector, Armenia’s wind energy potential is around 450 MW. Mountain passes estimated to have large wind resources include Karakhach, Pushkin, and Jajur in the Bazum Range, Sevan in the Areguni Range, and Sisian in the Zangezur Range. In recent years, the government has entered into memorandums of understanding with developers and made decisions to provide assistance to companies for wind projects with a capacity of up to 150 MW.

The government has taken steps to develop the country’s geothermal resources. Recent studies estimate that Armenia has approximately 150 MW of geothermal potential. Potential geothermal sites are concentrated in the southern part of the country, including Karkar, Sisian, and Jermahbyur. Each of these sites has an estimated capacity of up to 30 MW. However, further studies are needed to assess the feasibility of potential projects.

Biomass is not widely used as a source of electricity generation. International donors are working to improve Armenia’s landfills in the coming years, which may delay any near-term prospects for using landfill gas to generate electricity.

Opportunities

The energy sector offers a number of promising opportunities, particularly for renewable energy projects. The government has pointed to potential for developing medium-sized hydropower plants, including Lori Berd (60 MW) and Shnogh (76 MW) in northern Armenia. Of Armenia’s two large hydropower plants, the Sevan-Hrazdan Cascade, built in 1936, needs tens of millions of dollars in renovation. There are new opportunities for solar energy development, as the government plans to hold tenders for seven solar photovoltaic power plants with a total installed capacity of about 520 MW. There are also opportunities for smaller solar projects and wind projects. Investments in geothermal and biomass energy.

Agriculture

Agriculture is one of the most important sectors of the Armenian economy. The country was one of the first former Soviet republics to privatize land after the collapse of the Soviet Union. Investments from both the private sector and international organizations have improved the agro-industrial sector. The sector is still adapting to a market economy, and government efforts are focused on increasing efficiency, product competitiveness, and diversification of production. Several local companies compete in both domestic and international food markets and are investing in expanding production. Increased foreign demand for Armenian agricultural products provides incentives for local farmers to improve their efficiency and increase production and quality to meet other markets.

Despite the nominal growth potential in the agricultural sector, there are several limiting factors. There are over 335,000 farms, with the average land holding per household being 1.4 hectares. Relatively small land holdings do not facilitate an efficient and diversified production system that includes both crops and livestock. The extent of soil degradation is also a notable problem. While approximately 70% of Armenia’s land area is classified as agricultural land, arable land accounts for only 15% of the total area.

The livestock sector faces significant challenges, such as unsustainable pasture management and underutilization, persistent livestock diseases, processing and marketing constraints, and declining productivity. Imported meat currently accounts for half of the national meat consumption due to low productivity in the livestock sector and unreliable supplies of meat and milk. There are also noticeable fluctuations in the supply of dairy products, with most milk produced in the summer months and almost none in the winter and spring. These challenges limit Armenia’s ability to take advantage of opportunities arising from rising domestic and external demand.

The government has unveiled a 10-year strategy to boost the development of Armenia’s agricultural sector, aiming to increase the sustainability of agriculture, introduce innovative solutions and new technologies, and move Armenian agricultural products up the value chain for export abroad. More specific measures include increasing the availability of arable agricultural land, improving irrigation systems, improving access to finance, improving the quality of seeds and planting materials, promoting modern livestock management practices and facilities, consolidating farms and developing wholesale markets.

Continued government support to facilitate access to subsidized credit, continued development of value chains and improvements in agricultural productivity and efficiency are expected to reverse the downward trend. Greater private sector interest in investing in agriculture and adopting new technologies could further boost growth.

Livestock farming is a central component of the Armenian agricultural sector. In recent years, almost 40% of the country's gross agricultural product comes from livestock farming. Almost all cattle raised in Armenia are of the Caucasian Brown breed, which is well adapted to local climatic conditions. Holstein, Brown Swiss, Simmental, and Black breeds are also raised in Armenia. Armenia produces about 18 tons of lamb annually. Armenia has the capacity to export 180,000 to 200,000 heads of sheep per year. Commercial pig farms produce up to 18 tons of live weight pork per year. Poultry production has reached almost 700 million eggs and eight tons of poultry meat per year.

Armenia has favorable climatic conditions for year-round commercial fish farming. About 14 tons of commercial fish, most of which are trout are raised every year in more than 200 fish farms across the country. Commercial fish farms are significant users of water, and there may be opportunities for the sector to adopt more water- and energy-efficient technologies.

Armenia produces a wide variety of vegetables, nuts, fruits, and berries, including: green peas, black and red peppers, radishes, carrots, pumpkins, pomegranates, quince, plums, various varieties of cherries, mulberries, apricots, peaches, apples, pears, walnuts, pistachios, hazelnuts, currants, raspberries, blackberries, and strawberries.

According to government reports, there are approximately 1,600 food production companies in Armenia, including: fruit and vegetable processing, dried fruit and spice processing, grape processing, milk processing, meat processing and slaughterhouses, fish processing, bread baking, confectionery production, mineral and drinking water production, soft drink production, alcoholic beverages.

Several key pieces of agricultural and food legislation include: the Food Safety Act, the Veterinary Act, the Animal Feeding Act, the Phytosanitary Measures Act, the Trade and Services Act, the Act on Ensuring Sanitary and Epidemiological Safety of the Population, the Act on Ensuring the Uniformity of Measurements, the Consumer Protection Act, the Standardization Act, and the Conformity Assessment Act. The Organic Agriculture Act, based on Codex Alimentarius guidelines and EU regulations, sets out the requirements for the labelling of organic products.

Several government bodies are responsible for agricultural and related matters. The Ministry of Economy has primary responsibility for policy matters relating to agriculture. Other key bodies include the State Food Safety Service and its subsidiary veterinary, phytosanitary and food safety inspectorates; the National Standards and Metrology Authority under the Ministry of Economy; and the State Health Inspectorate under the Ministry of Health.

Leading Subsectors

Processed food products are Armenia’s leading agricultural export, accounting for more than one-fifth of Armenia’s total merchandise exports annually. Important segments include processed food products and the production of alcoholic beverages, especially wine and cognac made from local grapes. Armenia’s main exports of processed products are alcoholic beverages, fish, cheese, canned fruits, jams, coffee, and mineral water. Some exporters also supply frozen fruits and vegetables. Armenia’s soil and climate conditions, high altitude, and limited use of chemical fertilizers contribute to the excellent taste of its products. Food products can be successfully supplied to international markets with the help of modern processing and packaging technologies, which are currently used for the export of Armenian products such as soft drinks, mineral water, alcohol, canned fruits and vegetables, milk and dairy products, meat and meat products.

Significant recent investments have focused on the construction of modern greenhouses along with more advanced drip irrigation systems. Such investments have grown rapidly and have yielded a noticeable increase in productivity. In July 2023, the government approved a plan to support the construction of modern greenhouse farms on a total area of about 35 hectares between 2023 and 2026.

Armenia has traditionally had a good reputation for the production of high-quality alcoholic beverages, especially cognac. The Yerevan Brandy Factory has been producing world-famous cognacs since 1887. About 90% of the cognac produced in Armenia is exported abroad, mainly to Russia. Armenia is looking for new export markets for this drink.

Armenian wine has developed significantly in recent years, fueled by Armenia’s growing recognition as the birthplace of wine and several recent major investments aimed at producing high-quality wines. There are now several dozen wineries in Armenia. The area of working vineyards has increased dramatically in recent years, reversing the decline seen since Armenia’s independence. More than 10 million liters of wine are produced annually, about half of which is exported abroad. The value of wine exports has doubled in the last five years. Several wines are noted as being of particularly high quality, and the Areni Noir grape has begun to gain wider international recognition.

Opportunities

Armenia’s agricultural sector offers a number of interesting opportunities. The government has focused on developing the sector, developing policy reforms, and expanding incentives such as subsidized credit lines and tax and customs exemptions. Armenia is seeking to adopt more modern technologies to move agricultural products up the value chain, increase exports (especially to Europe), and expand economic opportunities for the rural population. Armenia’s inability to meet local demand for some foodstuffs, particularly wheat, through domestic production alone means that securing investment is also important for food security. Wine stands out as an exciting opportunity, given Armenia’s combination of indigenous varieties, moderate land and labour costs, favourable climate conditions, and excellent terroir. There are opportunities for foreign companies to sell agricultural and food products, machinery, and technology to Armenian businesses.