APU Company: building a global empire

Erdenebileg Tseveenjav, APU Company’s CEO, is determined to put Mongolia on the global spirits stage. He tells The Spirits Business about mixing traditional elements with cutting-edge distilling methods.

*This feature was first published in the April 2023 issue of The Spirits Business magazine.

APU Company’s CEO, Erdenebileg Tseveenjav, has been in the spirits industry for a long time. “I have put a lot of effort into making APU Company a leader of the spirits industry in Mongolia, with a portfolio of products up to international standards that can be brought to sophisticated international consumers with pride,” he says.

APU Company is a powerhouse in its homeland. In 2001, 51% of APU Company, the national producer of vodka, beer, and soft drinks, was privatised through a government auction. “We inherited only the brand name and the professional expertise of the staff. The equipment was outdated and, in most cases, required replacing.”

In recent years, US$300 million of investment has been put into renovating APU’s brewery, distillery, and beverage plant, installing state‐of‐the‐art equipment from leading European manufacturers. The initial expansion capacity was more than the Mongolian market demanded but made with the intention to replace imported beverages.

“We made a further three rounds of investments to improve capacity and quality, and we were able to provide high‐quality, locally produced beverages to an underserved market,” Erdenebileg adds.

“The 2017 merger [of APU Company] with Heineken was a milestone event in my career in the spirits industry. Heineken became a minority shareholder at APU, and has proven to be a reliable international partner. Its invaluable experience, technology and process improvement knowledge and know‐how have greatly improved our operations.”

Today, APU Company is a public company. Its market capitalisation hit MNT two trillion (Mongolian tugriks), roughly equal to US$566.8m, and accounts for 30% of Mongolia’s capital market.

Mongolian traditions

The alcoholic beverage scene in Mongolia is closely tied to the country’s traditional spirit, Mongol Arkhi, which is made using milk fermentation. Following the revolution of 1921, Mongolia was heavily influenced by Russia and Eastern European countries, and so began the upswing in vodka and beer brands – which grew to become the dominant alcoholic drinks in Mongolia, Erdenebileg says.

“Currently, the majority of Mongolia’s population is young, with most being under 35,” he continues. “Following a global trend, the younger generation is interested in more diverse product types, which we strive to cater for at APU Company.”

There is no denying the depth and breadth of spirits APU Company has to offer. The company owns 19 vodka brands, ranging from ultra‐premium and super‐premium bottlings to more affordable, ‘economy’ expressions. It is also the proud owner of two distilleries, which make APU’s ‘alpha‐grade’ spirits from Mongolian wheat. Locally sourced water from the sacred Bogd Khan mountains, “which is considered one of the purest water resources within Mongolia”, is also used in APU’s vodka production. The water is softened to achieve the optimum pH level for a “perfect and smooth” taste.

“Our vodka plant is equipped with the latest state-of-the-art German technology, and is fully automated,” says Erdenebileg. “Our vodkas are distilled four to six times, and filtered through various filtration materials such as charcoal, quartz, diamonds, pearls, silver, garnet stone, silk, and milk, which makes our vodkas more smooth and unique. What sets our vodka apart from other vodkas on the market is that is it made in Mongolia, and represents 100 years of Mongolian vodka‐making tradition in our super‐premium range,” Erdenebileg says with pride. “To understand our origins, ingredients and craftsmanship, you need to know the unique taste and character of Mongolian vodka. This is the story of Mongolian winter wheat and pure natural water, distilled by timeless process.”

Flagship brand

Chinggis Khan Vodka is one of the company’s flagship brands, and is distilled six times. The brand aims to celebrate ancient distilling traditions and customs with modern flair. The Chinggis Khan brand was the first Mongolian alcoholic drink to expand globally. The vodka is filtered through charcoal, quartz, pearls, silver, and diamonds, before it is left to rest for 21 days to achieve its silk‐like texture. The premium product is placed in a transparent blue glass that resembles the traditional snuff‐bottle shape used in greetings and expressions of respect by Mongolians.

“Chinggis Khan Vodka is the world’s first sophisticated sipping vodka, and the crown in our export portfolio,” Erdenebileg states. In its homeland, APU Company commands 80% of the domestic market.

“I have faith in APU’s portfolio of premium spirits, and I’m confident that it will succeed internationally,” he says. The company’s premium vodkas are being exported to China, Thailand, South Korea, Russia, Poland, the US, “and hopefully more markets to come in future”.

“We are aiming to expand globally,” Erdenebileg adds. “Our pilot markets are China, South Korea, Thailand, the US, and Poland at the moment. Neighbouring countries will be the first to expand, and we are going mostly towards vodka‐cultured countries as well.”

Erdenebileg notes how the past couple of years have seen consumers take a more moderate approach to alcohol, as demonstrated by the rise of no‐and‐low options on the market. It inspired APU to cater for this demand, as Erdenbileg explains.

“Sobriety, health‐conscious movements, and new regulations on alcoholic beverages are driving the demand for more low‐alcohol options. Therefore, we at APU Company have started to produce vodka with less ABV for consumers who are following this trend.” He is confident the premiumisation trend will also continue, as drinkers seek premium products made with natural ingredients.

Strategy for success

New‐product development is evidently an important part of APU’s strategy for success.

“Our company puts a lot of emphasis on product development, as one of the important tools for building a profitable and successful portfolio,” Erdenebileg notes. “The product‐development team focuses on building the brand from the ground up, while co‐operating with the in‐house laboratory to develop specific recipes, and with local and international design agencies. We try to give our consumers the unique feeling of Mongolia, with absolute quality combining the elements of traditional Mongolia with modernity, resulting in brands that are uniquely Mongolian.”

It’s a huge team effort, with more than 2,200 talented professionals contributing to APU Company’s success. “We are now set to bring the best of Mongolian brands to the world market,” Erdenebileg adds.

The next few years will, Erdenebileg hopes, mark an important period of international growth for APU Company and its spirits portfolio. The ultimate goal is to establish APU’s vodkas on the world stage, giving them the platform to champion Mongolia around the world.

To achieve this, Erdenebileg plans to invest in marketing and distribution to ensure APU’s vodkas are readily available to consumers, and that the business builds relationships with key players to increase visibility and credibility.

“In five years’ time, I hope that APU will be an established player in the global vodka market, with a reputation for quality and innovation,” Erdenebileg says. “This means not only expanding our reach to new markets and demographics, but also investing in product development, and staying ahead of the curve in terms of trends and consumer preferences.

“I also hope that APU will continue to be a source of pride for Mongolia, showcasing the unique tastes and traditions of our country to the world.”

Wherever future success leads Erdenebileg and his team, through market adaptations and evolving consumer preferences, he is confident that APU Company will proudly remain true to its Mongolian roots.

Further information about Chinggis Khan Vodka can be found online: www.chinggiskhan.com