The FINANCIAL -- Admirable packaging is known to trigger consumers to buy any given product mostly the same way across the world.
The first thing that comes to mind in terms of allegory is putting colorful wrapped packages under the Christmas tree and then telling a child, “do NOT touch”. This prohibition generates simply an irresistible desire to unwrap them to immediately see what is hidden inside. Among other practical purposes of the packaging, producers aim to encourage precisely this behavior in potential customers. The simplest definition of packaging is “enclosing or protecting products for distribution, storage, sale, and use”. According to the Food and Agriculture Organization of the United Nations, frequently referred to as FAO in short, the main aims of packaging are to keep the food in good condition until it is sold and consumed, and to encourage customers to purchase the product.
According to Market Access Linkage Advisor at USAID Zrda Activity in Georgia, Mr. Giorgi Akhalaia, correct packaging is essential to achieve both these objectives: “if adequately packaged, the shelf-life of local surpluses of food may be extended, and this allows the food to be distributed to other areas”, he explained to Experto. Mr. Akhalaia further elaborated that in doing so, consumers are given more choice in terms of food available, food resources can be more equitably distributed, and rural producers may be able to generate income from surplus produce. After all, correct packaging prevents any wastage such as leakage or deterioration which may occur during transportation and distribution: “Good packaging and presentation encourages consumers to buy products. Foods with a longer expected shelf-life require sophisticated packaging to protect them against air, light, moisture, and bacteria”, concluded the USAID Zrda representative.
Solutions to packaging problems differ from region to region in Georgia and these variations are the result of factors such as economics, the availability or access to packaging materials, infrastructure, distribution systems, climatic conditions and consumer habits. It is a widely-spread belief that because of the economies of scale most packaging is either done in the neighboring country - Turkey (and elsewhere), or generally ready-made packaging materials are imported into Georgia. A closer examination showed that there are several packaging companies on the market that many stakeholders are not aware of. For instance, Georgian Cardboard, founded with local investment in 2009, owns a plant that is equipped with modern machines and high quality raw materials. The organization is staffed with local and foreign experts and they produce corrugated cardboard, boxes and sheets of any configuration. The Company can also imprint information on the packaging, such as logo, address, name of product, etc. Georgian Cardboard’s clients include but are not limited to: Barambo, Poultry Georgia, Dila Products, Kumisi XXI, Georgian Beer Company, Aversi Pharma, PSP, Marneuli Food Factory, ioli, and Sante.
Another packaging company that has been operating on the Georgian market for over ten years now is the LEGI Group. The Group has its own facilities in Gori and Tbilisi that are also equipped with modern machinery. They employ more than 100 qualified specialists. LEGI Group produces corrugated cardboards, wooden boxes, “move pack” boxes, archive boxes, auxiliary packaging materials and paper. They also have an impressive list of clients that include but are not limited to: SELA, Algeti, Sarajishvili, Goodwill, Ecostar, Bazi, Koda, Oceanida, Schuchmann, Batfarma, and Barambo.
The country has got even more sophisticated packaging companies as well. For instance, the Director of Tiki Wine Bags, Mr. Viktor Razumov told Experto that “Tiki Wine Bags is the only supplier of secure wine bags in Georgia, allowing to transport wine bottles safely”. They have launched the company only recently but already signed contracts with Kindzmarauli, Museum Hotel and its famous restaurant Sirajkhana and several other shops and wineries: “we are also negotiating with many other wineries, shops and hotels across Georgia”. Tiki Wine Bags plans to sell 50 thousand units this year and 90 thousand in year 2018: “Currently, all our clients are from Georgia, however, we are considering expanding to Armenia shortly. Several wholesale companies there have already expressed interest in collaborating with us”, explained the Director. He voiced concern that wine packaging market is almost nonexistent in the cradle-of-wine Georgia, “unless you consider general bubble wrap or low quality sacks as real packaging. Neither of these provide any acceptable level of safety”. Mr. Razumov further went on that “Eco-friendly packaging should be a priority, but mostly it turns out to be more expensive compared to PVC packaging. The Georgian government tries to improve the situation by banning the PVC product bags, but there should also be a demand on ‘green’ products first”. And it takes a big cultural shift to support this initiative, according to Victor.
Moving back to corrugated cardboard packaging, Fabrica 1900 is the largest producer of corrugated cardboard packaging in Georgia and one of the main producers in the Caucasus Region, according to its Managing Partner Mr. Zurab Alavidze. With the latest production equipment on the Georgian market, Fabrica 1900 produces tailor-made 100% recyclable and biodegradable packaging. The Managing Partner of Fabrica 1900 revealed to Experto that the Company is currently constructing a new production facility in Mtskheta: “our new 8,000 square meter corrugated cardboard packaging production facility shall employ 200 local persons. Our aim is to eventually substitute the imports”. The enterprise right now operates in the test mode, as explained Mr. Alavidze. The Company imports input materials, such as paper, adhesive and paint from Azerbaijan, Turkey, Russia, France, and Ukraine as they are simply not found in high quality in Georgia.
Mr. Nick Bitskinashvili, Financial Manager of Poliedro mentioned to Experto that “the Company, founded in 2013, focused on packaging materials, widely used in factories bottling water and wine. In 2015 we have expanded the product range and began to produce disposable packages, aluminum foil, PVC Stretch-film, and tracing paper (baking paper)”. Mr. Bitskinashvili further elaborated that “within the frameworks of the Produce in Georgia program, we have leased high quality German production equipment. We have also obtained a paper bobbin making machine that complements our main production line”. In spring 2016 Poliedro exported their products to Turkey and Azerbaijan and at the end of that year, they sent a test shipment to France: “we are currently finalizing the negotiations for a long-term agreement with our partner in France”. The Company mainly imports raw materials from Turkey and Iran: “we are also negotiating with potential suppliers in the US, Belorussia and Kyrgyzstan”, concluded the representative of Poliedro.
Experto cannot forego mentioning the Şişecam Glass Packaging Group that currently has a total production capacity of 2.3 million tons per year, making it the biggest glass packaging producer in Turkey, and the fourth biggest in Europe and the world. The Group owns the MINA Ksani Glass Container Factory Anadolu Cam Sanayii A.Ş. The business continues its production in a total of ten plants, three of which are in Turkey, five in Russia, one in Ukraine and one in Georgia. The Group offers production of designed glass packaging of different colors and sizes for the food, beverage, spirits, pharmaceutical and cosmetics sectors. In Georgia, they produce bottles and jars of different sizes. The Company’s clients include but are not limited to: Badagoni, Coca-Cola, Healthy Water, PepsiCo, and IDS Borjomi.
Ms. Katy Chumburidze, the Deputy Chief of Party for the newly launched USAID Zrda Activity in Georgia (USD 14.7 million) mentioned earlier, is responsible for the overall vision and leadership of the project. She unveiled to Experto that “the small producers are simply not aware of the packaging options available in Georgia” and that is why “Zrda’s activities, among other initiatives, shall promote new and improved linkages between these actors”.
Last week, Experto attended the CFIA Rennes 2017 exhibition. The Carrefour des Fournisseurs de l’Industrie Agroalimentaire, referred to as CFIA in short, is the place where food processing is reinvented. According to Mr. Sébastien Gillet, Director of CFIA Trade Shows, “one of the largest showcases of French know-how aimed at manufacturers in the sector is divided into three unique categories: ingredients and intermediate food products; equipment and processes; and packing and conditioning”. With 1,450 exhibitors and 20,000 visitors, this exhibition is one of the most important events in Europe dedicated to the food-processing sector. Experto has put Georgia on the radar at the event.
More about that in the coming feature articles, but the bottom line is, good packaging sells a product. Once sold, that product will certainly be evaluated for its value, and that in turn shall have an impact on future repurchasing patterns, but to attract the customers for that first initiating attempt packaging is indispensably crucial. While sustainability and simplicity shall most likely continue to be the major packaging trends in the years to come, we should not forget about the importance of visibility and interaction with the customers as customization and personalization may give a producer a significant competitive edge.