Volunteer Helps Armenian Dairy Increase Revenue and Penetrate Russian Market

As a Soviet republic, Armenia was well known for its cheese, 90 percent of which was exported to other republics. But with the fall of the Soviet Union, the dairy processing industry suffered a sharp decline. In the last decade, however, the industry has made a steady comeback, and today the country is home to approximately 40 small and medium-sized cheesemakers.

Elola Dairy is a fixture of the industry, at peak season collecting 25 tons of milk per day from 500 farmers and employing 40 workers. Its products are stocked by the leading echelon of hotels, supermarkets and restaurants throughout the capital city, Yerevan.

Despite success at home, Elola had been unable to capture a share of the lucrative Russian market. However, in 2005 Elola managers saw an opportunity when they learned that a semisoft Finnish cheese called Oltermanni was gaining popularity with Russians. Oltermanni is a smooth, mild and creamy cheese with a tangy, yet gentle taste. In Finland, it is referred to as a "baby Muenster," but most consumers attribute to Oltermanni a more buttery, fuller taste than that of most Muensters.

Elola requested assistance developing an Oltermanni from the USAID Farmer-to-Farmer Armenia program implemented by ACDI/VOCA.

Dr. Poul Hansen, a professor of food science and nutrition at Ohio State University, was identified as a good fit for the assignment and spent two weeks volunteering his expertise at in Armenia. During his consultancy, Dr. Hansen demonstrated small-scale Oltermanni production and otherwise advised Elola on processes and on technology upgrades. The company began producing large quantities of Oltermanni.

There was a hitch, however. The new product had quality and shelf-life problems. In 2007 Elola approached the Farmer-to-Farmer project again, requesting Dr. Hansen’s remedial assistance with Armtermanni—the name given to the Armenian version—and with the introduction of Gouda.

After observing Elola’s production, Dr. Hansen determined that there was excessive CO2 formation by the cheese culture and that the packaging was too tight. Also, analysis of Armtermanni samples at Yerevan State University revealed that the milk’s high fat content yielded an overly soft and pasty structure. Dr. Hansen recommended non-gas culture, more suitable packaging film, and standardized fat content of the milk at 3.2 percent and the dry matter fat at 45 percent.

During his assignment Dr. Hansen also demonstrated how to make Gouda and recommended new equipment for ramping up its production. In addition to his originally assigned tasks, Dr. Hansen helped the company improve sour cream production and explore other new product lines. To assist with quality control Dr. Hansen donated to Elola a dual-point pH meter.

Soon after Dr. Hansen completed the second assignment, Elola resumed production of Armtermanni implementing the prescribed improvements. The changes resulted in a superior cheese with assured quality, and sales of Armtermanni rose by about 50 percent. As the only local producer of Armtermanni, Elola not only enjoys lucrative sales to hotels and top supermarkets, but also has started exporting Armtermanni to Russia, where the cheese continues to gain popularity.

Elola also began producing Gouda and put into practice Dr. Hansen’s other recommendations. Overall, those have resulted in 50 percent higher sales and 30 percent higher revenue. Recently Elola was able to secure a $150,000 business expansion loan from Converse Bank.

The firm participated in the October 13 VII International Exhibition ArmProdExpo 2007 held in Yerevan, which showcased the innovation and quality of a wide variety of foodstuffs from local and foreign producers. Elola’s offering included various types of cheeses including Armtermanni, Gouda, traditional Chnakh and Lori, smoked Suluguni (a local type of mozzarella), Indian-type panir, sour cream and butter. Elola was awarded a coveted Diploma of Honor for the high quality and superior taste of its products. With the help of two key visits from an expert U.S. volunteer, the company seems positioned for continued growth and success.