The FINANCIAL — The post war and recession period in 2009 was terrible for most business sectors however we managed to find one company that continued to flourish, not just in Georgia but in foreign markets too.
Batoil, which started refining sunflower-seed oil and producing Georgian oil in 2006, currently occupies Turkish, Armenian and Iraqi markets. The company has already started processes to enter the new markets of Israel, Syria and other Eastern countries.
Annual turnover of the company in 2009 was 60 million GEL, 13 million GEL was occupied by just oil. Presently Batoil occupies 30% of the local market. In the future the company plans to increase this figure to 45-50%.
The successful example of company Batoil encouraged President Saakashvili to make the optimistic statement that in two years Georgia could become “an exporter country, instead of an importer”.
Lukhum Kapanadze, Director of the company Batoil, told The FINANCIAL that at present the existing imported products that occupy leading shares of our market limit the development of local products. “I think the Government should implement some measures that will encourage local producers to gain competitiveness,” Kapanadze said.
One of the most popular types of oil – Mziuri, produced by Batoil, was named a favourite product by Georgians and was awarded with a Golden Brand nomination.
“The number one priority of our company is the quality of the produce. One of its main advantages is its nationality. We are a totally Georgian company and the national issue plays a key role in the customer’s decision to choose our products. We realize and respect our customers’ loyalty and will do our best in order to over- exceed their expectations,” Kapanadze revealed.
Q. How important a year was 2009 for your company?
A. 2009 was a year of development on the Georgian market for our company. Oil product Mziuri was not only introduced to Georgian customers but immediately gained huge popularity.
“We bought a new line of 1 litre oil pouring that will allow us to double oil production. We are working seriously on gaining an ISO 9001 quality standard system. We increased the assortment of our products, received the Georgian quality mark and most importantly, won a Golden Brand award.
Q. How have the recent economical challenges changed your marketing and strategic plans for further development?
A. The global economical downturn of course affected our business as well as many others. An increase of interest rates and the deficit of credit resources affected our turnover resources, but fortunately that did not influence realization of our products. The main obstacle for the company is the dampening of prices by importers.
Q. The Golden Brand award determines the popularity and creative decisions of the company. In your view, what is the main advantage of your company that attracts customers?
A. The number one priority of our company is the quality of the produce. One of its main advantages is its nationality. We are a fully Georgian company and the national issue plays a key role in the customer’s decision to choose our products. We realize and respect our customers’ loyalty and will do our best in order to over- exceed their expectations.
Q. How would you evaluate the perspective of the development of agricultural business in Georgia?
A. Agriculture should become the main point of our economy. For its development it is very important to accept support from the Government. Currently many imported products occupy leading shares of our market which is limiting the development of local products. I think it is crucial that the Government implements some measures that will encourage local producers to gain competitiveness.
Q. How have changes in the economy influenced competition in your particular field of business?
A. I would not say that the recession has caused any real difference in the competition. The fact is that in accordance with their quality and price, our products do not have any real competitors.
Q. What are the main factors that can support further development of your company?
A. The most important thing is a change of price policy on our market. At present our production has become more costly.
Q. What will the main challenges for your company be in 2010?
A. We plan to launch a new pouring line, also implement the manufacturing of mayonnaise. We aim to realize these plans so long as we do not encounter any financial difficulties.
Q. In 2009 company Batoil started cooperation with Armenians in order to start exporting oil (1000 tonnes) to our neighbour country. Did you manage to successfully negotiate with the Armenians and start the import of products there?
A. We have already started exporting oil to Armenia. This is not to the same amounts that we originally planned, but if we agree on prices then we will increase the volume of exported products.
Q. Batoil is already exporting products to Turkey. Tell us what the main difficulties were that you faced when entering the foreign market? What would you advise to other entrepreneurs that plan to export products abroad?
A. Our main partners were companies that participated in the construction processes of our factory. Accordingly it was not difficult for us to enter foreign markets. To Turkey we are exporting kopton which includes 30% oil. In Turkey it is used as a raw material for producing oil.
Q. What is the total volume of products that Batoil exported in 2009? Please also name the countries exported to.
A. We exported 70,000 litres of refined oil to the Republic of Iraq. We exported 550 tonnes of sunflower seeds to Armenia and 65,000 tonnes of kopton to Turkey.
Q. In 2009 Batoil realized 6 million tonnes of oil. What are your expectations for 2010 in regards to product realization?
A. According to our advance predictions, we think that the volume of sales of oil will reach 9 million tonnes in 2010.
Q. What is the total market share of your company at present and by how many percents do you plan to increase it?
A. Presently we are occupying 30% of the market but in the future we plan to increase these figures to 45-50%.
Q. Which new products did you start producing in 2009?
A. We started realization of refined oil under the name Premium. It is closer to the products of European quality and costs more than others. Another new product was the oil Sasalate that is not refined. It is characterized with a special aroma and mostly attracts customers with spicy tastes.
Q. Which new foreign markets do you plan to enter in 2010?
A. Huge interest in our products was expressed from Israel, Syria and other countries of the East.
Q. Could Batoil totally replace imported products in the future?
A. After launching our new pouring line the volume of our production will reach 2,500,000 litres per month. This is practically 80-90% of the total amount of oil used by our citizens monthly.
Q. Which company do you consider your main competitor?
A. Unfortunately at present all producers offering products at cheap prices regardless of their quality or country of origin, are our competitors.
Q. According to the optimistic estimations of President Saakashvili, in two years Georgia should become an exporter country. What is your estimation of the Georgian industrial market? What are the main factors that could realize the President’s hopes?
A. Georgian products are really competitive on the world market despite being less advertised. The main goal is introduction of our products to foreign markets and the role of the Government is playing a key factor in that.
Q. Batoil’s factory is located in Batumi. Please estimate the potential of development of this region.
A. We did not choose Batumi for the location of our factory by accident. The most important thing for us is that it is right next to Batumi port. The main advantage of Batumi has always been its industrial importance. Numerous factories were working in this city in the past. The building of our factory was aimed at encouraging other entrepreneurs to start building different manufactories. In this respect the Adjaran Government has been really very active.
Q. What share of agricultural products are occupied by imported products on the Georgian market?
A. I do not have exact statistical data but this figure should range around 70% or more.
Q. In Georgia the majority of raw-materials of sunflowers are imported from Ukraine. Why can we not manage to supply the demanded raw-materials with locally produced products?
A. The first reason for this fact is that Ukrainian raw materials are greasier compared with locally produced products grown in Kakheti. Another reason is the more expensive price of the local product that would increase the self cost and complicate its realization. The third reason is an insufficient amount of local products. As we already mentioned we are exporting kopton to Turkey and local produce would not be able to supply all our demands.
Q. What is the current number of your employees and do you plan to increase staff numbers in 2010?
A. Presently we are employing 220 workers. If we add new production branches we will add more workers.