Russian market currently has no real equivalent alternative for Armenian producers

The problem related to Armenian cognac exporters at the Lars checkpoint was another reason to once again draw attention to possible risks and challenges regarding exports to such a crucial destination—the Russian market. The example of cognac is illustrative, as a significant portion of Armenian exports is directed to Russia.

As an example, let us consider the data for January-March 2025. The trade turnover between Armenia and Russia during this period amounted to about $1.5 billion, which is 35.3% of the total trade turnover. Armenian exports alone accounted for 41.1% of the total volume to Russia. It is worth mentioning that almost half of Armenia’s exports are directed to Russia. What is the reason, and is it good or bad? There are a number of objective and subjective factors that determine this situation, including geography, limited logistics options, deep-rooted business ties with Russia, customs benefits within the Eurasian Economic Union (EAEU), and Russia’s accessible and technology-driven market.

For a country like Armenia with the existing problem of economies of scale, of course, the presence of the Russian market is beneficial. Producers aiming to expand and increase production require a high-consumption market. Armenia is a small country and therefore the Russian market for our consumption is a very good opportunity. However, the problem is also that we are highly dependent on a single direction.

Interestingly, under this very government, which talks most of all about “diversification” and about replacing the Russian direction, the dependence on Russia has increased even more.

Therefore, it is crucial to acknowledge that Armenia must explore additional foreign trade opportunities. But does this mean abandoning Russia? True diversification implies expanding existing opportunities. Replacing one direction with another is not diversification.

Returning to the cognac example, we note that in the first half of 2024, 13.6% of cognac exported from Armenia was directed to Russia. The Russian market has no real equivalent alternative for Armenian producers so far. This is not a matter of geopolitical preferences or taste—it is a fact. Ignoring this fact would mean destroying one’s own economy.