The FINANCIAL — Georgian tea producers are exporting around 90% of produced tea to different countries, including Azerbaijan, from where popular tea brands are then imported back to Georgia.
The country which was the main supplier of tea for the Soviet Union, can’t even meet the demands of its own market today. However, the tea producers say that the position of Georgian tea is now improving.
“Before the government change in Georgia, Azerbaijani companies were monopolists in sugar production and distribution in Georgia. They refused to supply local shops if they didn’t also agree to sell their tea. In this way Azerbaijani companies managed to also monopolize the tea market in Georgia,” Temur Jashi, Director at Agrofirma Kobuleti, told The FINANCIAL.
The Georgian tea market today is saturated with products imported from Turkey, Iran and Azerbaijan. This is despite the fact that tea-growing in Georgia first started in the 1830s and the country went on to become the primary tea supplier for the former Soviet Union.
“Tea brands Lipton, Maryam, Ahmad and a small share of products packaged in England are dominating the Georgian market. These companies occupy 90-95% of the Georgian market according to the results of last year,” said Jashi.
According to the German Business Association Georgia (DWVG), West Georgia’s humid sub-tropical climate and mineral rich soils contribute to the original taste and high quality of Georgian tea; this is where tea plantations are mainly located. Georgian tea can easily compete with that of India or Sri-Lanka due to savings on transportation when targeting western markets. It is believed to have unique taste, subtle flavours and special aroma and is especially good for blending with different types of tea leaves. Georgian green tea is especially notable for its very interesting, strong taste.
The main consumers of Georgian tea are former republics of the Soviet Union: Uzbekistan, Tajikistan and Ukraine. Exports to Germany, Poland, Holland and the USA are increasing.
The rich tradition of tea production, high quality raw materials, reasonable price/quality correlation and 0% entry tariff for Georgian tea in more than 50 countries – are named as the main competitive advantages of Georgian tea by DWVG.
“When referring to Georgian tea on the domestic market, segmentation is an important issue. We have Bolnisi, Marneuli and Gardabani regions settled by Azerbaijanis. They have a special attitude and culture of tea drinking, due to their lifestyle and traditions,” says Mikheil Chkuaseli, General Director of Geoplant.
“If average tea consumption for the total Georgian population is 600 grams per person, in these regions consumption is almost three times bigger – at 1 kilo and 600-800 grams. The whole market of these regions is occupied by brewed tea,” he added.
In Chkuaseli’s words, in 2009 Georgian tea companies occupied only 2%. The situation significantly changed in 2010 when the companies Samaia and notably Geoplant, producer of Gurieli, Rcheuli, Georgian Baikhi #36 and Ali Sultan brands, were opened. Georgian companies doubled their market share which then reached more than 4%. “In 2011 our company held market share of 12%. Tea consumption in Marneuli, Gardabani and Bolnisi is 40-45% of the whole market. Excluding these specific regions we occupy over 22-23%. From our company’s example I can say that consumption of local tea is increasing in Georgia. We are successfully competing with imported products,” Chkuaseli declared.
He said that in 2010-11 only Lipton tea was dominating the Georgian market. “It remains a major competitor. Paradoxically, I find competition among tea companies beneficial. Tea is a healthy product, useful for people of every age. While not being against coffee in general, the development of instant coffee is a big competition for tea, so by promoting each of our products, we are promoting the healthy lifestyle as well.”
In its commercial market research report, Euromonitor International stated that “although Georgian players made considerable efforts to revitalize local tea consumption and manufacturing in 2010 and 2011, they will find it difficult to compete with popular imported brands as they have neither a price nor quality advantage.”
According to Chkuaseli, the market share of local tea companies has been increasing significantly. Official statistical data provided by Geostat, shows that the amount of imported tea increased in Georgia in 2012, in comparison with the previous year. The total amount of tea imported in 2011 came to 859.6 tons, and in 2012 came to 1,931.8 tons. Kazakhstan, Mongolia, Germany and Ukraine are the main target markets for local tea producers. Tea export recorded a small decrease in 2012 compared to 2011. The amount of tea exported in 2011 was 2,325.1 tons, and the following year – 2,297.2 tons.
Discussion about this post