ARMENIA CONSUMER GOODS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Armenia Consumer Goods Market Size and Trends

The Armenia consumer goods market is estimated to be valued at USD 1.64 Bn in 2024 and is expected to reach USD 2.25 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 4.6% from 2024 to 2031.

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Some of the key trends driving the market include rising disposable income of consumers, growing urbanization, expansion of modern retail channels, and increasing internet penetration. Improving economic conditions in the country and growing focus of government on rural development are further expected to boost consumer spending on various goods in the upcoming years. However, geopolitical tensions and economic uncertainties may remain challenging for the market. Overall, increasing spending power and changing lifestyles of Armenian consumers are expected to support the continued growth of the consumer goods sector during the forecast period.

Growing population

The population of Armenia has been experiencing steady growth over the past decade. Data from the national statistical service in 20221, shows that the resident population increased from around 2.9 million in 2008 to estimates of around 3 million currently. This trend of population growth is projected to continue going forward as birth rates remain stable and life expectancy increases. A growing population means there are more consumers in the market each year, thereby expanding the potential customer base for consumer goods. Many products see increased demand simply due to the fact that there are more people who need items like food, clothing, household supplies and other daily necessities. For consumer-packaged goods companies, a growing population translates directly into opportunities for higher sales and revenue if they can attract these new consumers to their brands. However, it also brings pressures to ensure adequate supply levels to meet the needs of the larger population. Consumer goods manufacturers will need to ramp up production capacities or consider expanding their distribution networks to remote areas to tap into demand from rural populations. A growing number of citizens also has implications for future income levels and standards of living in the country. A larger working population could help boost economic growth and wage levels over the long run. This would further stimulate consumer spending power.

Market Concentration and Competitive Landscape

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Rising disposable income

Alongside population growth, another positive factor for the Armenia consumer goods market has been steady increases in household disposable income levels in recent times. Economic indicators show that GDP per capita has been growing year-on-year, driven by low inflation and strong performance from sectors such as agriculture, mining, and tourism. Wage growth in both public and private employment has generally outpaced inflation, leaving consumers with more spending power in real terms. Income gains have been particularly pronounced for younger generations entering the workforce as well as dual income families. Higher income allows households to spend more on non-essential and branded consumer items that provide better quality or experience compared to basic necessities. It provides opportunity for consumer companies to promote premium and value-added products targeting these higher income demographic segments. Rising affluence also leads to evolving consumption patterns like increasing expenditure on recreation, personal care, baby products, and pet care. This diversification in spending moves demand beyond commoditized essentials into newer categories offering potential for innovators. However, consumer goods companies will have to ensure price points on new launches remain accessible to mainstream buyers. Overall, a more prosperous middle class bodes well for current and future demand expansion across a variety of consumer markets in Armenia.

Key Takeaways from Analyst:

The Armenia consumer goods market remains an attractive emerging market driven by steady GDP growth and rising household incomes. The expanding middle class represents growing opportunities for consumer-facing companies. However, a small domestic market size continues to act as a restraint on the potential growth of local and multinational brands.

Western regions like Yerevan and Gyumri offer the largest opportunities due to urbanization and concentration of spending power. Traditional brands have penetrated these areas but room remains for innovative new products. Rural consumption is rising with increased agricultural productivity although distribution challenges remain. Private label products are encroaching on branded goods particularly in commoditized categories like food and beverages.

Online retailers are gradually gaining popularity in the tech-savvy cities while e-commerce penetration of consumer-packaged goods is in early stages offering headroom for market share gains. Rising health consciousness among younger consumers promotes growth of natural wellness products. However, stringent regulations could act as a barrier. Ongoing trade troubles with neighboring countries pose a threat due to reliance on imports for certain categories.

Market Challenge - High unemployment rate

One of the key challenges for the Armenia consumer goods market is the high unemployment rate in the country. For instance, According to the latest statistics in 2024, Armenia has an unemployment rate of about 18%, which is significantly higher than other countries in the region. This high unemployment means that a large percentage of the population has limited discretionary income to spend on consumer goods. With fewer people employed, the demand for consumer products is negatively impacted. Manufacturers and retailers have to deal with smaller target audiences who have restricted purchasing power. This impacts everything from the volumes that can be moved to pricing strategies. The unemployment situation also raises distribution challenges as people have less monetary resources to access goods. Additionally, the unemployed population themselves may not have the means to purchase daily need items, impacting overall market potential. Unless the jobs scenario improves substantially, high unemployment will continue to place downward pressure on the consumer goods industry.

Market Opportunity - Potential of Rural Market

One significant opportunity for the Armenia consumer goods market lies in tapping into the potential of rural markets. While most companies focus their attention on major urban centers, rural regions still comprise a massive consumer base that is relatively untapped. Agriculture and related activities form the mainstay of rural livelihoods. Despite lower average incomes compared to cities, the purchasing power of rural households is substantial when accumulated. Moreover, with better infrastructure like roads now reaching remote villages, accessibility has improved vastly. Rural consumers also have specific requirements and brand loyalties when it comes to daily staples as well as durables. Enterprising companies that devise tailored strategies to address rural needs stand to gain first-mover advantage. Efforts should be made to strengthen last-mile distribution capabilities as well as offer small unit packaging and affordable pricing tailored for rural spenders. With the right marketing initiatives, rural markets offer immense potential for increasing consumer goods sales and volumes in Armenia.

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Insights by product type: Changing Lifestyles Fuel the Demand for Convenient Food and Drink Options

The food and beverages segment is expected to contribute 54.5% share of the Armenia consumer goods market in 2024 due to powerful lifestyle shifts among Armenian consumers. As more people live busy lives with less time to cook at home, demand has grown for packaged, processed, and ready-to-eat foods that offer convenience without sacrificing taste or nutrition. An evolving workplace culture also means that meals are often consumed on the go. Beverages have similarly benefited as thirsty consumers seek hydrating drinks regardless of location.

Changing dietary habits play a role as well. Exposure to Western cuisines has popularized snacks, desserts, and beverages once considered treats. Market offerings have diversified to meet these new preferences. Functional foods promising health or energy benefits especially attract time-strapped urban professionals. Extended families have also become smaller and more dispersed, diminishing the traditional focus on home-cooked meals shared among loved ones. Brands compensating for this loss of community with comforting, familiar products find success.

Rising disposable incomes allow for improved quality and variety within the segment. Premium and specialty items proliferate as customers can more readily treat themselves or their families. International brand recognition likewise influences spending decisions, with many seeing foreign products as aspirational status symbols. As Armenia grows its economic ties worldwide, global flavors will continue inspiring local tastes and transforming the country’s relationship with food.

Overall, rapid shifts toward modern lifestyles centered around convenience and indulgence fuel the outsized importance of Armenia’s food and beverage industry. Savvy companies realizing these evolving demands gain valuable market share as everyday routines change. Those offering upgraded experiences through premium ingredients or nostalgic comforts especially resonate in the current consumer environment.

Insights by distribution channel: Supermarkets/Hypermarkets Drive Overall Distribution

Based on distribution channel, supermarkets/hypermarkets is expected to hold the leading position in Armenia owing to their ‘one-stop-shop’ convenience with 35.6% of the market share in 2024. As urban density increases and families shrink, many lack the time or inclination for multiple errands at smaller specialty stores or markets. Shoppers instead flock to large format retailers where they can efficiently purchase all of their needs under one roof.

Supermarkets excel at creating a pleasant shopping experience that retains customer loyalty. Spacious, well-lit stores stocked with a vast selection create a sense of abundance that appeals both practically and psychologically. Sophisticated marketing and loyalty programs reward regular patronage with savings. Complimentary services like free WiFi, coffee shops, and play areas for children further sweeten each visit.

Beyond atmosphere, efficiency remains key to their dominance. Supermarkets leverage massive bulk purchasing power to offer competitive pricing difficult for smaller chains to match. Private label goods broaden affordable options. Checkout lines powered by latest scanning technology mean reduced wait times. Well-organized aisles get customers in and out as quickly as their busy days demand.

As modern life continues propelling time-starved lifestyles, large retail formats facilitating convenient, low-effort shopping will maintain their stronghold in Armenia’s consumer goods landscape. Only by matching or surpassing supermarkets’ one-stop efficiency will alternate channels hope to earn a larger slice of this lucrative market segment.

Market Report Scope

Key Developments

• In June 2024, the International Monetary Fund (IMF) Executive Board completed the third review under the Stand-By Arrangement (SBA) with Armenia, granting the country access to Special Drawing Rights (SDR) amounting to 18.4 million, equivalent to approximately US$24.5 million. This financial support is part of the ongoing efforts to stabilize Armenia's economy and promote sustainable growth.
• In 2023, Ozon, a prominent e-commerce platform in Russia, announced its expansion into Armenia, marking a significant milestone in its growth beyond the Russian market. This launch allows Armenian customers to access Ozon's extensive product range, enjoy competitive prices, and benefit from reliable delivery services. By entering the Armenian market, Ozon aims to enhance its international presence and cater to the increasing demand for online shopping in the region.
• In 2023, the Armenian government has been actively promoting new entries and investments in the consumer goods sector through various initiatives aimed at enhancing the business environment and encouraging foreign direct investment. However, the market also faces challenges such as monopolistic practices and complex standardization systems within the Eurasian Economic Union (EAEU).
• In 2021, Wildberries, Russia's largest online retailer, established a significant foothold in Armenia shortly after its launch. The platform has rapidly ascended to become one of the top taxpayers in the country, contributing over US$67 million in taxes. This financial input underscores Wildberries' substantial impact on the Armenian economy.

*Definition: The Armenia consumer goods market primarily caters to the daily needs of consumers in Armenia. It comprises a wide range of household items like food and beverages, personal care, home care, and other small appliances. As one of the key economic sectors, it attracted significant investments over the past few years. However, demand was disrupted due to the COVID-19 pandemic and ensuing lockdowns. The market is slowly recovering as restrictions ease and consumer confidence revives with improving economic conditions.

Market Segmentation

• By Product Type Insights (Revenue, USD Bn, 2019 - 2031)
• • Food and Beverages
    • Packaged Foods
    • Fresh Foods
    • Beverages
  • Personal Care Products
    • Skincare
    • Haircare
    • Oral Care
  • Others
• By Distribution Channel Insights (Revenue, USD Bn, 2019 - 2031)
• • Supermarkets/Hypermarkets
  • Convenience Stores
  • Online Retail
  • Specialty Stores
  • Wholesale Retailers
• Key Players Insights
• • K-Town (K-Town Food)
  • Alex Holding
  • Grand Candy
  • Kotayk Brewery
  • Ararat Brandy Factory
  • Dargett Brewery
  • Erebuni Brewery
  • Kilikia Brewery
  • Pico
  • Shamshyan
  • Gini Group
  • VivaCell-MTS
  • Ararat-Nairi Group
  • Ginevra
  • Golden Gate
  • Rovshan
  • Taron
  • Teghut Brewery
  • Ararat Food
  • Harsnakar