The FINANCIAL — Georgian products, with the exception of a few famous brands of mineral water and wine, have always had an identity problem, especially on export markets.
Suffice to say Georgian fruits, i.e. mandarins, being exported to Russian and Ukrainian markets in bare wooden boxes with no logo or other identifying marks, do not inform consumers in those countries that they are from Georgia.
The reality for a long time has been that the majority of fruits were sold in traditional open-air marketplaces (so-called “Bazroba” in Georgian) where no one really cares about branding. The only differentiation that customers could make therefore was by the superior taste of Georgian fruits, which remain highly appreciated by most. But in the end unless buyers specifically ask the sellers where a product is from, it is highly unlikely that they would ever concentrate on its origins.
Another problem with the export of fruits and other types of goods is their distribution to stores and their warehouses. The owners of such sales points (especially big ones) often refused Georgian products entrance to their stores due to the lack of branding, packaging and handling of the wooden boxes, the latter being a big headache for them.
In recent years Georgian producers have become more active about resolving such issues. Whereas earlier only wine, mineral waters and some other goods were packaged, now Georgian herbs (“mtsvanili”), kiwis, apples, plums, citruses and other fruits are being packaged in cardboard with the sign “Made in Georgia” clearly visible on the outside and exported to European and former Soviet Union countries mostly, Ukraine being first in the list.
There are currently eight major packaging companies in Georgia that have several years of experience working with Georgian companies. As they claim, farmers in Georgia need to raise awareness of new packaging techniques in order to boost sales at higher prices and establish images of their brands.
Four companies out those eight have been selected by the USAID EPI project (Economic Prosperity Initiative) to help increase, innovate and thereby support agro sector development in the whole value chain in Georgia.
As the Manager of one of those companies, Legi Group’s George Gorgisheli, told The FINANCIAL, “If corrugated cardboard were widely used by farmers it would diminish the costs of carrying cargo, for example whereas in terms of a 22 ton container wooden boxes weigh 3 tons, an identical container made of cardboard would weigh half that, namely 1.5 tons. In addition the cost per box is 15-20% cheaper than the usual wooden boxes. So for example if it costs 3 GEL for one wooden box to keep 15 kilos of apples in, a corrugated box costs 2 GEL,” he said.
“With ten years of experience serving dozens of Georgian companies we currently have two offices with our production lines of various packaging materials in Tbilisi and Gori. We also plan to expand to Batumi from where we will mainly focus on the packaging of mandarins,” said Gorgisheli.
“Anti-damp corrugated cardboard containers have already been tested in our factory and we will move into serial production of them at the end of this month. By doing so, strawberries, peaches and other types of fruit will be able to be efficiently handled and exported. In the process of building a production line we invested 50,000 USD on new machinery capable of introducing specific (anti-damp) lubricants to corrugated cardboard. Our company is able to produce 70-80,000 boxes a day; sometimes we are able to sell the whole amount, sometimes not. But our overall annual growth is minimum 20-30%,” Gorgisheli told The FINANCIAL.
“In export markets there has always been a problem of utilization of wooden boxes as large supermarkets did not accept them whereas in terms of corrugated packaging they recycle it and earn additional income. The latter can be recycled eight times. As for the local Georgian market, we think that in the event of the launch of this product being successful with exporters, then local small farmers will begin to follow suit,” believes Gorgisheli.
As EPI’s packaging value chain consultant David Charkviani told The FINANCIAL, “By supporting packaging companies and informing farmers about such opportunities, the latter will have the opportunity to increase their profit margins. Georgian products have a great taste and we all know that but the problem has always been making consumers in those export markets take notice of the Georgian fruits/vegetables exported to there. In Ukraine whereas a Turkish packaged mandarin is sold at 1.20 USD Georgian unpackaged mandarins cost 0.80 USD, there is certainly a gap and this gap can be filled with relevant packaging and branding of those products. For this purpose we are bringing well-known experts from all over the world to help Georgian farmers and packaging companies to increase their competitiveness and turn already established commodities into actual brands.”
“We have supported “Legi Group” for instance in introducing a new type of corrugated cardboard which can withstand damp and is very useful for the packaging of any type of fruit, especially mandarins. We will soon be holding meetings with local farmers to introduce such packaging techniques that are less costly, namely 0.60-0.80 GEL per box,” noted Charkviani.