THE COMPANY: The name APU comes from Arkhi Pivo Undaa (vodka, beer, drinks). Established in 1924, three years after Mongolia’s communist revolution, APU is the country’s largest beverage producer, and its first national brand. The company was partially privatised in 1992, with 51% of its shares being retained by the state and 49% sold through the Mongolian Stock Exchange. In 2001 the remaining state-owned shares were sold through public auction, and the firm was 100% privatised. APU Joint-Stock Company (APU JSC) currently has a share of around 52% of the Mongolian beer market (down from 55% in 2011) and a 64% share of the vodka market (up from 58% in 2011). The company produces five different brands of vodka, from standard to premium quality, and six brands of beer. APU also produces juice, milk, bottled water and soft drinks, although its share of these markets is small (approximately 2% in juice and soft drinks). The company has one of the most extensive distribution networks in the country: its products are sold at over 6000 locations around Mongolia, and it employs more than 800 people. APU is one of the few Mongolian beverage producers with a certificate of quality ISO 9001:2001. It has also enhanced its management systems by adopting ISO 22000 (certification in 2011), and made its operations more environmentally friendly by adopting ISO 14001 (also in 2011). Borgio, one of APU’s brands of beer, is now available in aluminium cans, which means it complies with all international standards. The company imports some raw materials from China, and it exports its products to Korea, Japan and Germany. APU JSC directly manufactures its products at its five manufacturing plants. The vodka plant has a production capacity of 20m litres per year. The beer plant has recently been refurbished, and now has a production capacity of 50m litres per year. The water and soda plant was refurbished in 2003/04, and has a production capacity of 11m-13m litres per year. The milk and juice plant operates with equipment made in New Zealand, and has a production capacity of some 6m-7m litres annually. Finally, the newest facility, the Nature Agro spirit plant opened in 2008. It uses German and Italian equipment, and can produce around 15 tonnes of pure spirit per day.

A holding company, Capital Group LLC, was established in 2006 to manage APU’s projects, provide administrative support and develop APU’s strategy. It owns 83% of APU JSC. Moreover, APU Trading LLC, which has around 200 employees, has been responsible for APU’s marketing since 2003. Depod LLC is responsible for its recycling, and produces over 70% of the bottles used in production.

APU had MNT116bn ($81.2m) in assets as of the second quarter of 2012. The company has been quite successful in the vodka and beer markets in recent years. In 2009 APU produced 45.6m litres of beverages and sold 43.4m litres. In 2010 it produced 63.3m litres and sold 61.7m litres. Production in 2011 was 79.5m litres, and estimated production for 2012 is 96.2m litres. Revenues increased from MNT122bn ($85.5m) in 2010 to MNT223bn ($155.8m) in 2011. Net income (after our accounting adjustments) was MNT18.1bn ($12.7m) in 2010, and MNT27.3bn ($19.1m) in 2011. During the first half of 2012 revenue was MNT126.2bn ($88.3m) and net income was MNT12.1bn ($8.5m).

DEVELOPMENT STRATEGY: To date, APU has invested $60m in production and distribution facilities. In 2012 the company’s fully automated warehousing centre was completed. APU is planning aggressive growth in existing markets of beer in polyethylene terephthalate bottles and aluminum cans. It is also targeting the Russian, Chinese, European and US markets with its premium vodka brands.

Moreover, APU has plans to greatly expand milk production, using milk powders imported from New Zealand, and increase its market share in soft drinks.