During Soviet years, most (about 70%) of the Armenian Swiss cheese sold in Moscow was made in the Ashotsk Cheese Factory located in the Shirak Marz, which sent 300 of the 1,500 tons it produced each year to Moscow. The location of the factory had been carefully chosen - it was built at an altitude of 2,050 meters, and milk was brought in from nearby villages, because Swiss cheese requires milk produced at high altitudes.

Built in 1976, the plant was in operation until the earthquake of 1988.  After that it was shut down for three years, and then partially reconstructed by Ukrainian builders working in the disaster zone partially rebuilt it. In that half-built state it was reopened in 1996. Since then, some parts have been renewed or repaired each year, but the effect of the earthquake is still visible on the sprawling plant.

The cheese factory has never regained its former glory. It is currently operating at 10% capacity, producing five or six types of cheese, as well as a small amount of sour cream, milk, and curds, for local consumption in Gyumri. The majority (70%) of the cheese is sent to Yerevan; the rest stays goes to Gyumri. 

The factory no longer exports cheese for one reason-the currency exchange fluctuations of dram against the dollar render it the endeavor unprofitable.

"In 2004 we exported 20 tons of Lori cheese to Moscow. We were starting to establish relations, but we had to end them. Three years ago it was possible to export Lori for $2 to $2.5  per kilo. Today I have to sell it for $4 in order to make a profit. It's obvious that nobody will pay $4 for Lori cheese in Moscow. There is a good demand for Armenian Lori cheese in Moscow. In recent years, at the initiative of Russian Armenians, several Lori factories were opened in Russia, but Russian Lori will never be like Armenian Lori. The climate conditions in which the milk was made are as important, as the technology and mastery of cheese making," said director of the Ashotsk Cheese Factory Grigori Baghdasaryan, who has worked there for thirty years. 

Baghdasaryan explained that export is very important for the further growth of his business. "If we could export 20 tons of cheese, we would immediately receive a huge sum of money, and wouldn't need to take out a loan. In the domestic market, we don’t even sell two tons in two months. If we do not export, then we have to take out a loan for enough liquidity to pay the villagers in cash. Villagers cannot wait; you have to pay them in cash. But there is a problem here--cheese is not a product that is so lucrative that you can pay interest on a loan. Cheese has a profitability of 7-10%, but I can only get a loan for 14-15% annual interest, not lower. If I don't take out a loan, I'll have to close the factory. We can't grow like this, we barely make ends meet, " he said.

Cheese making in Armenia was most developed in the city of Tashir in the Lori Marz. Cheese makers from Tashir are known for their mastery, and some of them continue to export cheese to Russia and the USA. "They export cheese and raw or partially made cheese product, which afterwards is processed. One thousand tons of raw materials are exported, along with three hundred tons of cheese. Mainly the Lori type, " said Armen Gigoyan, director of the Cheese Producers Union of Lori. Some small amount of goat cheese is also exported. It is considered a delicacy and is sold for twice the cost of production. First, goat's milk is rare; second it is produced only in Yeghegnadzor.

Cheese producers pay simplified tax, at 5-4 percent. If they increase their volume of production they'd have to pay VAT, which is 20%. Export is free from VAT, but in the current conditions it makes little sense.

Nevertheless, cheese making continues to grow in Armenia. It's hard to estimate how much money is involved in the business, because villagers also invest in the market and their contribution is not visible in taxes, even though they have some influence in the market. For villagers it's profitable to sell milk to dairy farms, but some calculate that they can make good cheese out of their own milk and sell it for 900-1000 drams, which is cheaper than factory cheese. In that sense the market is still not mature, not a perfectly tuned mechanism. Employees of the factory, who are villagers themselves, say that villagers are increasingly inclined to produce milk rather than cheese, and that "Each does his own work". Five years ago 70% of the villagers produced cheese from the milk they made, now only 10-12% do it; instead, most sell their milk to a processor. On average, 300 villagers sell 5-40 kilos of milk daily to the Ashotsk Cheese Factory.

Like any other product, cheese struggles to compete with imports. Even though in many cases the imports weigh less than locally made cheese. "For instance, by my calculations the cost of producing Cheddar cheese is 1900-2000 drams. But it takes more raw material to produce it than the Lori type of cheese. Yet the imported Cheddar cheese costs only 1600 drams on the market. I don't know how that happens, but it's a fact, " said the director of the Ashotsk Cheese Factory.

The factory workers are mainly from Gyumri, thirty kilometers away, or the villages of Ashotsk and Musayelyan. The factory is along a bus route, but sometimes on his way to work the director picks up workers who are trying to reach the factory by foot, or by stopping a passing car. Employees say that in the recent years villagers have preferred to tend livestock over working in the dairy plant, since milk has become twice as expensive, and there is stiff competition between milk processing companies. Last year villagers were selling the milk for 80 drams, this year they are selling it for 100 drams. In every village there are five or six dairy farms. Today there are fifteen people working at the dairy plant and the average salary is 50,000 drams. The plant is closed from November till May, because the roads are closed in all directions in the winter due to the heavy snowfall.

The Ashotsk Cheese Factory is in dire need of reconstruction, which would require serious investment. Cheese making has grown and developed in recent years, and continues to do so.  However the internal market is saturated or will soon become saturated, as production of cheese begins to consolidate. As for exporting, the director of this plant doesn’t want to think about it, explaining, "In these conditions it doesn't make sense."