First Visit - YBC considerations Highlights 06 September, 2004

Reasons of success Traditional French Cognac technology that uses oak constituents in the aging process.

Reasons of success The very special climate of the Ararat Valley, that due to its elevation (high UV) and dry air (enhanced metabolism) and soil delivers exclusive high quality produce, particularly grapes with inherently high sugar content record.

Reasons of success Correct management and marketing, albeit these notions were not that developed at those times…

Privatization What do you think? Positive: New, western style of management by an experienced company. Negative: 100% shares are out of Armenia. If we were smarter we could have gotten a better deal.

Plant Specifics Long lasting technological processes – longer is the ageing – better, but more expensive is the product, thus…

Plant Specifics … huge inventory – like work in process. This gives opportunities for optimization of the product mix.

Plant Specifics Huge “inventory” of different brands of cognac of different ages. All spread in more than barrels of different sizes. A need for automated MIS (e.g. through bar-code or RF microchip).

Plant Specifics Different aspects of transportation… … through the plant floor, pipework organization, barrel layout, and… … driving between grape farmers, distillers and main operation.

Plant Specifics - Bottling Bottle quality represents the “face” of the company, and is very important from the Marketing point of view

Plant Specifics - Bottling The idea of profitability of bottle production in Armenia is not certain Italian bottle makers produce such huge amounts, thus the cost is so much less, that it is cheaper to even transport them from Italy, rather than make them here in Armenia in small quantities. A need for more investigation in this issue.

Research Plant has a laboratory, where the new types of brandies are developed. However, there is a need for: More technological research to minimize the losses, e.g. angels’ share; To implement IE (EM) concepts and approaches.

Infrastructure What does this plant add to Armenian infrastructure? Positive example of success in general and particularly in the area of alcoholic beverages. Experience of specialists, knowledge. Testing and quality check facilities (equipment) and traditions. Produce collection system, contracting with big amount of farmers.

You have to pay attention to: %-age of the used capacities; Times: Yields: Yields of spirit from the raw material – grape; Yields of oak barrels from oak material; Yields from oak barrels – how much brandy you can expect from an oak barrel until it is exhausted?