The FINANCIAL — The forecast period of the packaged food market in Georgia is expected to see a return to pre-economic crisis levels of consumption, according to Euromonitor International.
Volume sales are expected to have the strongest growth while constant value sales will grow much more slowly. This will happen because the rate of inflation will outpace the growth of prices, the report said. The growing competition between market players will try to keep prices as low as possible to attract more consumers to their brands.
2012 saw significant activity by several large local players in different categories of packaged food. These included the Georgian manufacturer of chocolate and sugar confectionery, Barambo Ltd; world-famous company Wimm-Bill-Dann which launched its own manufacturing facility in Georgia; and Nikora JSC, Georgian-Eco Ltd and Sante GMT Ltd.
“Due to the big potential of the Georgian dairy market, both local and foreign producers are very active,” said Erekle Gamkrelidze, Deputy General Director at Sante GMT Products LLC.
“The number of Nikora’s customers increased by 37 percent this year compared to 2012,” said Nona Dzneladze, Head of the Marketing Department at Nikora. “Sales figures are increasing at the same time. We have 26 percent growth in sales in 2013 compared to the same period of 2012. This means that Nikora knows how to satisfy its customers’ needs,” said Dzneladze.
The competition in packaged food was also strong between distribution channels. A reduction in packaged food sales via other grocery retailers (mainly open markets) in favour of more convenient and modern independent small grocers, supermarkets/hypermarkets and convenience stores was the trend in the review period. By 2012 the share of sales in supermarkets and hypermarkets had the most rapid growth. The main reason is the growing number of modern outlets in the capital of Georgia as well as in its regions. High quality standards, wide choice of products and a high level of service attracted consumers, according to Euromonitor International.
“The review period was a difficult time for Georgia. The country was at war with Russia in 2008 and political-economic problems connected with this ensued at the end of the conflict. The deep economic crisis peaked in 2009-2010. Most people tended to save money rather than time and prepared food themselves at home or turned to purchasing cheaper unpackaged/artisanal products. These factors affected Georgian packaged food growth in the review period. The first signs of recovery were noticed in 2011-2012. The increase in consumer purchasing power led to stable growth of the majority of packaged food in both volume and value in 2012,” the report suggests.
Price stabilisation was the main trend in 2012, according to Euromonitor International. The end of commodity price increases and manufacturers’ decreased prices to promote sales resulted in price stabilisation in packaged food in 2012. Inflation in Georgia reached just 5 percent in the same year. In 2008-2010, the influence of the growth of commodity prices resulted in double-digit price growth. Increased competition between local manufacturers was another factor that resulted in reduced prices, according to the summary.
With the end of the economic crisis the sales of packaged food started to increase. This development was already visible in 2011 and intensified in 2012.
“The Packaged Food Market in Georgia is still in its developing stage. If we compare it to the western market, we will see a big difference. But the good thing is that the market is developing. It is very important to see a new manufacturer in Georgia, which will offer constant innovations to customers,” said Gamkrelidze.
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