Georgia’s Retail Sector Taking Off

Strong growth, expansion, and a major consolidation of market players this year have ushered in a new era for Georgia’s fast moving consumer goods (FMCG) sector’s organized markets, Georgian analysts and business media report. The silver lining for this stage of development? Consumers may feel the benefit in high quality goods and lower prices.

After the disruptions of the 2020 pandemic and the 2022-2023 influx of Belarusians, Russians, and Ukrainians, Georgia’s FMCG sector began to stabilize in 2024. Now, major shifts in the market players and regional expansion over the past few months have created new expectations for the sector’s development in 2025 and beyond.

Market Consolidation Ushers in New Era

On November 5, the Daily Group—a retail supermarket holding—announced its merger with Zedazeni Group, a beverage manufacturer. The deal came at the heels of the Daily Group’s expansion to include Spar, Ioli, Gvirila supermarket chains, resulting it its capture of an estimated 31 percent of the retail (organized) FMCG sector.

“[M]ergers are expected in the market, which is what we are seeing,” retail market specialist Ia Nadirashvili, the co-founder of the business-consulting firm Bewise, told Business Media Georgia in an interview.

“In the studies by Galt & Taggart and TBC Capital, it was clear that the retail sector—the organized fast moving goods market and the overall market—was growing and its growth, especially in the organized market, was characterized by opening new stores. At the same time, the operational costs were sufficiently high…This is positive for the members of the holding. In terms of vertical integration, this enables the effective management of the companies in the holding—the optimization of cost, revenue, administrative costs…It gives them the opportunity to synchronize the sharing of their experience and work to develop the market as a united group.”

SavvY Executive Director of Growth and Expansion Mariam Koyava said the market is moving to a “new stage” in comments on the “Time for Investment” business talk show.

“Over the past six months, this sector has been developing very quickly…previously the unorganized market was leading but now we see a very interesting tendency in the market, especially, since the autumn. This market is moving to a new stage.”

Strong Foundations for Competition, Growth

Two recent studies by TBC Capital have underscored the market conditions for continued growth in the FMCG sector as a whole, and organized FMCG markets in particular.

TBC Capital found that the total FMCG market revenues will stabilize in 2024, and the growth will continue, driven by demand as well as retail market expansion in areas outside of Tbilisi. In addition, the organized FMCG market will continue growing on the back of the unorganized market, reaching 45 percent of the total sector in 2025.

Georgia and International Trends

Nikora Trading Executive Director Temur Aleksandria believes the current trajectory of Georgia’s FMCG market is following the path taken by the sector in other countries.

“I think the it is developing logically, if you look at retail in developed countries. They also have similar tendencies…our market is also developing that way and there is a big potential to continue,” he said on the “Time for Investments” business talk show.

He added that the retail sector is following the evolution seen in Eastern European markets, which gives further optimism for future growth. “They are ahead of us but have not reached their peak yet,” Aleksandria noted.

Expectations for 2025 and Beyond

In Georgia, the shake-up in retail sector players will not upset the market in terms of competition, according to analysts. While the newly expanded Daily Group will hold a third of the organized market share, the unorganized market holds an estimated 59 percent of the FMCG sector as a whole. In addition, the Daily Group’s portion is divided among five brands. The next largest market player, Nikora, holds just over 19 percent as a single brand.

Bewise’s Ia Nadirashvili does not see any risk for competition in the sector or danger for consumers in the latest developments.

“In general, this type of consolidation was expected and I think there are still resources for not only vertical integration but also logistic centers’ mergers. This will make the delivery sector healthier and will benefit consumers through better offers…healthier prices,” she said.

“What is very important in what is happening in this area is, if up until now the only instrument for competition in the organized, and in general, FMCG market was in terms of prices, I think now other instruments are available such as…assortment, offers, which are the results of effective business management.”

Other expectations for the FMCG market include a continued expansion of retail brands to areas outside of Tbilisi and the move away from hypermarkets.

Nadirashvili underscored that this is part of a global trend toward “neighborhood stores” and represents a way for retail brands to gain customers by offering convenience and affordability.

In Georgia, Goodwill’s General Director Giorgi Khabashvili noted the chain’s plans to invest more in online shopping.

TBC Capital found that just two percent of grocery shopping is done online although the high-end segment is substantially larger, with the segment’s share in the “low double-digits.”

“One important trend in retail markets is the hypermarkets, the large retail stores, are moving out. In the US and in the EU, thousands of hypermarkets…are being retransformed or closing.

“The online segment is of paramount importance and we are making it stronger….we are also looking at the online space in general and online in Georgia,” Khabashvili told Business Media Georgia.

“This is around 1.5 to 2 percent today however we are studying the trends and for goods that consumers do not feel the need to touch—something like cleaning products, or chocolates—consumers are buying them online.”

There are signs for potential for growth in the e-commerce area overall: the National Statistics Office of Georgia found that in 2023, 30 percent of the population purchased goods or services online, compared to 69.6 percent in the EU. In Georgia, shoppers aged 15-29 made 41 percent of the online purchases.

For retail shops, however, the numbers are significantly lower in Georgia and the EU: in 2023, 96.2 percent of stores in Georgia did not offer online sales, compared to 80.3 percent in the EU.

Retail specialist Nadirashvili cautions e-commerce has a role in the FMCG sector, but it is unlikely to become a main driver for business.

“While studies show us that social media and online sites are used to spread information [in foreign markets], still over 80 percent of purchases are made in stores,” she says.

“This is will not become the retail market’s main source of revenue but it is a critical element as a channel for deliveries and sales.”