Issue 5, 2019. October-November

   

DELICIOUS, NUTRITIOUS AND LOCAL - HELPING SMALL PRODUCERS ACCESS THE GEORGIAN MARKET

Small producers have much to offer, but need help in getting their products onto store shelves and in front of the eye of consumers - the union of georgian entrepreneurs is trying to do just that.

Lika Jorjoliani

Locally produced Georigan products have been making their way with increasing frequency onto store shelves in recent years, with the appearance of local goodies such as Gurieli tea to Nugbari Churchkhela (think Georgian Snickers).

But this is the luck of just a few. Due to difficulties in financing, advertising and other issues, many small Georgian business owners still struggle to get their goods not only into stores, but in front of the eye of the consumer.

President of the The Union of Georgian Entrepreneurs Goga Tsitskishvili told Investor.ge that his organization is trying to change that.

"Our main aim is to provide small and medium sized businesses and startups the opportunity to promote their products. These business owners have a number of problems - from getting the opportunity to sell their products in large retail stores to affording loans, all of which makes it very difficult for them," Tsitskishvili said.

To address the issue of brand visibility, the Union of Georgian Entrepreneurs regularly organizes product displays and festivals throughout the year.

"We hold our event Gaicani Kartuli [Geo. Meet Georgian] about once a week, where we bring together local producers and give them the opportunity to promote their goods. They are involved in a number of areas of production - food, alcoholic and non-alcoholic beverages, crafts and jewelry," says Tsitskishvili.

At the event, Georgian producers display their wares at various venues - malls, parks and other public spaces where they can interact with customers on a personal level and raise awareness of their products.

"This series of exhibitions seems like a simple enough idea to implement, but it would be unthinkable without the help of commercial centers, malls and other public spaces with a high degree of corporate responsibility and the goodwill of private business owners.

"As a result, about three hundred local entrepreneurs are able to present their products to reach a wider audience, all of which contributes to raising awareness of their products and a noticeable increase in sales," Tsitskishvili claims, noting that small business owners rarely have the opportunity or the means to sell their products in large retail chains, which often ask for large sums of money up front in exchange for shelf space.

Documentation, product testing and other procedures are another issue that increases the financial burden on businesses trying to get off the ground.

Investor.ge spoke to the owner of jam-producing company Murabela, Iva Gruzinsky, about the challenges he faces in promoting his company both in Georgia and abroad.

"We visited over 100 villages all over Georgia to get our recipes, we spent a particular amount of time in the Kartli, Kakheti and Adjara regions to find our favourite flavors of jam, of which we've over 50. We started with jams from oranges and citrus fruits, which are particularly popular in Georgia. Then we moved onto more traditional jams, made from quince, black plums, walnuts, and offered some unusual flavours as well, such as basil, mint or tarragon," Gruzinsky says.

Though Murabela's beginning was sweet, the path forward to expanding the business has been a sticky one:

"We have the visibility. We're invited to talk on TV. The media writes about us. But the problem is we don't get much out of the sale of our products in retail chains. This is why we're trying to sell our goods electronically, through Facebook and our website. It would help us a lot if we could sell abroad. I don't want to scare companies that are just starting out, but the fees for accreditation, laboratory testing, a bar code and other necessary documentation, both for sale in Georgia and abroad, really hamper our development."

Gruzinsky says the fact that his company has a hard time selling abroad makes maintaining the business even more difficult, given that it makes it more susceptible to fluctuations in the lari.

Small business owner Sergo Davituliani has also run into difficulty promoting his adjika company, Bebishi Nakaka.

"We cooked up a number of old Megrelian recipes that weren't being used. Our brand name comes from Megralian, and means 'Made by Granny.' We've original packaging made of clay, a quality certificate, our products are tested twice a year," Davituliani says.

Bebishi Nakaka's issue is that it can't afford to have its products displayed in shops or supermarkets.

"There is a rather frustrating system in our country of having to pay an exorbitant amount of money, sometimes as much as 5,000 or 10,000 GEL, to shops and supermarkets for them to agree to display our products. We've just started our business seven months ago and of course we're still in the red. How are we supposed to start making money if we first have to shovel out such ludicrous amounts of money?", Davituliani says.

But that's where the Union of Georgian Entrepreneurs has been of great help:

"Here at these events, a consumer gets to not only see, but to taste our product, and meet its producers in person. They can see the attention to detail, and the thought put into it. Later, if they do see our products somewhere, they already have a better idea of what they're purchasing."

Blue cheese producer Bagrat Mezurnishvili has problems of his own.

"...this pungent delicacy used to be produced in Georgia, but later it came to be considered the heritage of the capitalists in the Soviet Union, and thus lost its popularity. Now, I have to tell every customer I meet in detail about blue cheese. Advertising is expensive. I have a store here where I sell, but exhibitions and festivals like the ones put out by the Union of Georgian Entrepreneurs help us find more clients," Mezurnishvili says.

"I used to work in the cheese business in the US. There, it's difficult to open a business, but it is easy to develop it once you do. In Georgia, things are different. Since my business isn't a startup, nor a cooperative, I'm ineligible for preferential lending programmes, which are mostly available in the regions."

"Small businesses are on a very unequal footing with large businesses in this country. A big business can protect itself from the depreciation of the lari. But a small business can't.

"When I started production, I took out a $100,000 loan, having calculated my project per the exchange rate of $1 to 1.63-1.65. And if I raise the price of my products, then I will not be able to compete with large manufacturers. This means you are constantly concerned and dependent on the fluctuations of the lari." Mezurnishvili says.

Changes in the lari aside, other aspects of Georgian business culture are in need of a change as well, says head of the Union of Georgian Entrepreneurs Goga Tskitsishvili.

"With several exceptions for which we're very grateful, unfortunately right now, the level of corporate social responsibility is rather low in the country. But we are beginning to see some groups push forward initiatives to even the playing field," Tskitsishvili says.

One such initiative is being pursued by the Georgian Retailers Association along with the Union of Georgian Entrepreneurs, and wants to see the establishment of quotas for the presence of products of smaller producers in larger chains and supermarkets.

Head of the Georgian Retailers Association Luka Chelidze told Investor.ge:

"This is a common practice in European states. The idea is still in the discussion phase, and we're waiting for our European partners to provide us with examples of how this has worked out elsewhere. But we're confident that just this small change can make a big difference for local producers," Chelidze says.

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