The Company

Established in 1924, three years after Mongolia’s communist revolution, APU – which comes from the name Arkhi Pivo Undaa, meaning “vodka, beer, drinks” – is the country’s largest beverage producer and its first national brand. APU was partially privatised in 1992 with 51% of its shares retained by the state and 49% floated on the Mongolian Stock Exchange. In 2001 the remainder of the state’s shares were sold in public auction.

APU has a market share of around 52% in the Mongolian beer market, down from 55% in 2011, and a market share of 64% in the country’s vodka market, up from 58% in 2011. It produces five brands of vodka, ranging from standard to premium quality, as well as six brands of beer. APU also produces juice, milk, bottled water and soft drinks; however, APU’s market share in these business lines remains relatively small – at around 2% for juice and soft drinks.

APU benefits from one of the most extensive distribution networks in the country – its products are sold at over 6000 locations and it currently employs more than 1800 people across its production, distribution and sales chains.


APU’s financial results for 2014 fell far short of the previous exercise. While sales revenue was up 2.5% over 2013, at MNT198.5bn ($30m), gross profit was down from MNT4.97bn ($2.97m) to a loss of MNT14.25bn ($8.55m), and net income dropped from MNT4.02bn ($2.41m) to a loss of MNT14.17bn ($8.5m).

This was largely due to the deterioration of the tugrik, which depreciated by around 13% against the US dollar over the course of the year. As a result, APU recorded MNT21.5bn ($12.9m) in foreign exchange losses in 2014, nearly 10 times more than in 2012 and 42.4% greater than in 2013. Higher expenses and an 11.3% year-on-year (y-o-y) increase in the cost of goods sold were also contributors.

For its part, the company’s share performed better than expected. At end-2014, APU shares were trading at MNT3751 ($2.25), down 8.5% y-o-y from MNT4099 ($2.46). As of late March 2015, the share price had fallen 9.4% year to date, roughly in line with the benchmark MSE top-20, which was down 10.5%. APU’s price-earnings ratio fell from 78.1 in 2013 to -18.8 for 2014, with earnings per share down from MNT54.2 ($0.03) to a loss of MNT190.8 ($0.11).

Development Strategy

APU recently opened a new dairy factory with a 45m-litre annual capacity to celebrate the company’s 90th anniversary. The new factory was designed according to European hygienic engineering and design guidelines and has been fully equipped by GEA Group – a leading agricultural systems provider from Germany.

The facilities were constructed by 26 local companies, and 60 engineers from five countries worked on the equipment installation. Investment in the new facility came to MNT46bn ($27.6m), with roughly 100 new jobs created in the process.

APU has placed 12 milk collecting units in Ulaanbaatar city and in Tuv province, which has created opportunities for more than 340 herders and dairy farmers in the area. These milk collecting units receive 60-80 tonnes of fresh milk each day, on average. The collected milk is then delivered to the factory, where 21 types of dairy products are produced under the brand names Maamuu, Sain and Tsever Suu.

Maamuu is Mongolia’s first dairy and juice brand, and uses modern technology to combine milk and real fruit. For its part, Sain’s branding largely relies on the company’s use of fresh milk and high-quality natural ingredients from Europe and currently carries product lines in milk, yoghurt and sour cream.

Packaging, storage and transportation are important for dairy production. To ensure food safety, the Sain and Maamuu brands are produced in high-quality, Swedish Ecolean packaging, which creates a gas, light and aroma barrier to secure the quality and freshness of the products. Using Ecolean packaging also saves energy and improves waste management.

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The Report: Mongolia 2015

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