Issue 2, 2018. April-May

   

BUY LOCAL: GEORGIAN COMPANIES TARGET THE DOMESTIC MARKET

Georgia's trade balance is import-heavy, with consumers offered a wide range of products from the exclusive to the mundane. Today, the government is partnering with local entrepreneurs to manufacture and produce goods for domestic consumption.

Lika Jorjoliani

Last year, Georgia exported 2.72 billion lari worth of goods, a fraction of the country's imports, which were worth 7.98 billion lari, according to official statistics.

To bridge that gap, the government is supporting businesses in a myriad of ways, with projects directed at helping local entrepreneurs increase exports - and substitute imports.

The state-run Produce in Georgia program is working to support Georgian businesses and attract foreign companies to produce and manufacture goods in Georgia, as well.

'We have a program that provides financing from 150,000-5 million lari if an entrepreneur is proposing to expand his or her production or to start producing a new product,' Executive Director of Produce in Georgia Zviad Kvlividze told Investor.ge.

In addition to the loans, which come with a subsidized interest rate, the program also offers other services for entrepreneurs, including providing land at the nominal cost of one lari - based on the volume of investment pledged by an entrepreneur's company.

Produce in Georgia also offers microgrants of 5-15,000 lari, he said.

To date, Produce in Georgia has provided funding and other benefits to 335 projects, with a total investment of 815 million lari. More than 13,300 new jobs have been created across the economy, including in the manufacturing, agricultural, hotel and real-estate sectors.

One such company is Georgian-founded Sharavandi, a label and packaging producer. With assistance from Produce in Georgia, Sharavandi has expanded its production line, is employing more people and has started providing international-standard packaging and labels to Georgian companies, according to the company's commercial director, Lado Chanturia.

Founded in 1999, today the company employs 20 people and supplies products to major Georgian brands like Ipkli (bread), Pharmadepo, Carrefour, Goodwill, PSP and Barambo (chocolate and candy).

'With the support of the state program, we bought additional equipment and expanded our production. About 90% is sold on the local market,' he told Investor.ge.

'We proposed lower prices and higher quality to the companies, which enabled us replace the importation of packaging materials for these local products,' he said, noting that under the Produce in Georgia program, Sharavandi received 4 million lari in loans to purchase more equipment.

'We expanded our assortment and added new products in the production. Today, we are focused on expanding the volume of our production and increasing the export of our products to Armenia and Azerbaijan,' he added.

Italian-Quality Coffee, Made in Georgia

The Produce in Georgia program helped one importer expand to become a local producer as well. BB Company, founded in 2002, originally focused on importing Italian coffee and professional equipment for kitchens and bars.

With a two-year, 4.3 million-lari loan from the state agency, BB Company decided to use its knowledge about coffee to improve the local market as well. The financing helped it to open Mondo, a Tbilisi-based packaged-coffee production company.

'First of all, I would like to state that we have 15 years of experience importing coffee produced by leading brands. As a result of this, we decided to create our own enterprise. For the purpose of creating new standards of coffee consumption in Georgia, in 2017, the company decided to open a coffee production facility,' BB Company Executive Director Nodari Komakhidze told Investor.ge.

'We obtained an ISO 22000 certificate of quality for our production. We worked hard and provided training for our employees,' he said.

Komakhidze noted that a combination of low prices and quality has helped Mondo break into the local market and make headways in export markets like Russia. There are also plans to export Georgian coffee to Azerbaijan and other countries.

'We have already completed negotiations for delivery to Turkey and are conducting negotiations for exporting of our product to Spain, Bulgaria and England. Its price is very attractive, and Georgia has low tax rates and cheaper production. We offer 17 kinds of coffee, representing all segments, and regularly introduce new innovations,' Komakhidze added.

The European Bank for Reconstruction and Development helped bring a Dutch coffee specialist to assist Mondo as it developed its flavors and products.

'Our technologist is developing the blend in our own laboratory. We use different sorts of coffee from Brazil, Colombia, Kenya and Nicaragua,' Komakhidze said.

New Life for Waste Paper

Georgian Paper Production has been manufacturing toilet paper and other products from domestic waste paper since 2009. The company has an official license from a Ukrainian paper manufacturer to produce under the Obukhov brand.

'We need 100-300 tons per month. Locally, toilet paper costs 50 tetri. We sell from 600,000 to a million toilet paper rolls per month,' company manager Giorgi Khachaturov told Investor.ge.

'The aim of our company is not to use imported raw material. To that end, we opened wastepaper receiving stations in three Georgian cities: Tbilisi, Gori, Batumi and Kutaisi,' he said, noting that the company has received financing from the Bank of Georgia and other financial institutions.

Khachaturov said the company is planning to open paper collection points near Tbilisi metro stations to meet their production demands.

Georgian Designs for Local Market

Kaba, a local shop specializing in selling the works of Georgian designers, as well as made-to-order pieces, opened a year ago, according to director Khatuna Jincharadze.

She said that local demand for high-quality clothing as well as the growing interest in Georgian designers, both at home and abroad, inspired her to open the shop.

'Kaba is located on Pekin Avenue and at Tbilisi Mall. We produce women's clothes under this brand, and aim to develop clothing manufacturing in Georgia. Today, our company employs 40 workers, 11 tailors and two designers,' she said, adding that they also sell clothing made by other Georgian designers.

'Our company is small, but our styles attract consumers. We have many consumers from Russia and Azerbaijan, and tourists buy our products as well,' she said.

'Georgian fashion is developing very quickly ... it makes a real difference if the label reads 'Made in Georgia.' For many consumers, that the product is made in Georgia is a motivation to purchase it. The number of our consumers is constantly increasing. Now, there is strong competition among Georgian companies, and many producers of high-quality Georgian clothes on the market. It is becoming competitive, we are taking on a lot of foreign competitors,' Jincharadze said.

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