Home / Business / Why do Leading Companies Ignore Genuine Milk?!
Milk market

Why do Leading Companies Ignore Genuine Milk?!

In the last period the dairy products market competition has intensified. There is no official information on how the market ratio are distributed between companies.

Sante and MilkoFood are named as unofficial leaders of the market that control about 50-60% market ratio. The remaining part is shared by small companies.

It should be noted over the past years many small milk processing companies appeared in Georgia. The Caucasus Business Week (CBW) has tried to identify reasons for this progress – whether this progress is the merit of  business environment in the country, the field promotion by various forms or there is a niche on the domestic market that still remains unemployed.

We contacted representatives of small dairy products companies and they noted that the state policy has incentivized appearance of new dairy companies on the market.

Green Ranch Company

After Telavi Wine Cellar winemaking company,  Zurab Ramazashvili, head of Green Ranch milk processing company, has taken efforts in the dairy business too. The company supplies processed milk to Soplis Nobati company.

The company owns a farm in Akhmeta and has 61  cattle (Swiss and Dutch cows) and produces about 1000 liters of milk a day.

In the last period the Authorities have been demonstrating huge attention to the agriculture sector. The preferential agro credit program has been introduced. Produce in Georgia program also runs and these efforts provide much stimulus for small business companies, Ramazashvili said.

He also talked about the current problems in the sector and noted that the field lacks for professional staff. Therefore, the company cannot expand output without training employees.

“Today our country lacks for professionals in this field. There are people who have lived the whole life in village and they are expected to know how to care for cattle, but it turns out they do not know many details and this knowledge is necessary. Today I employ several persons that know the field and they will train new employees too”, Ramazashvili said.

The field development is taken to a science level in foreign countries, while in Georgia this field remains in the germ form. Therefore, in Georgia similar enterprises require huge investments, Ramazashvili said.

“You may own excellent cattle and equipment, but management skills are required. At this stage, exploration and improvement process is underway in the company to make the production more effective”, Ramazashvili noted.

LLC Green Ranch is located in the Akhmeta District, the Kakheti Region. In 2015 the company took part in the agro credits program and obtained 500 000 GEL financial support component.

Company Glekhuri

The company has been operating on the market for several years, produces several varieties of dairy products, including cheese and butter, Anzor Khinikadze, head of Glekhuri dairy products company based in Tsalka, the Kvemo Kartli Region, noted. We produce 4 sorts of cheese (Sulguni, Imeruli, Datsnuli (plaited), Plaited Smoked, Smoked Sulguni), natural butter and custard and sour-cream. All these products are made of genuine milk and our products are sold in Tbilisi. Imeruli Cheese occupies a major portion in production and distribution.

In the last period the number of milk processing companies multiplied thanks to joint efforts of the government and the nongovernmental sector. Almost all new enterprises have been recently established thanks to grants or preferential loans. For example, in Tsalka there are 4 milk processing companies, including 3 ones were founded by grants and 1 was established as part of the preferential agro credit program», Khinikadze said.

This is the big stimulus. There was no similar support and promotion in previous years, he said.

Previously, the demand for natural products was huge than now, because milk powder cheapens the production.

“In the last period milk powder is widely used and the demand for natural products has slightly changed. Milk substitutes have replaced natural products to such a degree  that I would not dare enter the market today if I were a beginner and new businessman, because it is difficult to find a niche on the market. Previously, the demand for genuine milk was huge on the market, when I started business, Now this demand has declined and we buy milk from farmers”, Khinikadze said.

Despite the mentioned difficulties, dairy production in Georgia remains a perspective field anyway, Khinikadze noted. The company makes advancements every year. In 2016 the company plans to satisfy all international standards. In the future Glekhuri will launch manufacturing of export products too.

Nebiera Dairy Products Enterprise

In the last period the quantity of new milk processing plants has genuinely increased and this is a very good tendency, Kakha Tskipurishvili, head of recently founded company of Nebiera, said.

Both the Authorities and the nongovernmental sector have made huge contribution to these positive changes and preferential loans also make much stimulus, as well as Produce in Georgia program and others. Today no small enterprise is founded by their own financial resources, he said. There are many small companies on the market, but the market lacks for milk anyway, Tskipurishvili noted.

«The existing farms are not sufficient.  Sante and MilkoFood are the market leader companies. MilkoFood works on milk powder by 100%, while genuine milk occupies only 10-15% in Sante production», Tskipurishvili said.

Major companies show less interest in genuine milk because of two reasons. First, genuine milk grows the prime cost and secondly, this is hazardous. Genuine milk may comprise some bacteria and consumers may be infected, while milk powder rules out similar threats, he said.

Almost all small milk processing companies make accent on cheese production, Tskipurishvili said.

Nebiera company was built by financial support of one of the UN programs  in 2009 and was handed over to the Gori State University in a year. In two years the company suspended operation. In January 2016 the Gori State University transmitted the enterprise to me for a 5 year leasing period, Tskipurishvili said.

To resume operation, the company invested 50 000 GEL in the production. At this stage we are establishing HACCP – Hazard Analysis and Critical Control Point and threats analysis system and the process will end in about 50 days, he said.

Currently, the company produces 3 varieties of cheese, including pasteurized Imeruli, pasteurized Georgian and Plaited Sulguni cheese. As to prices, the price of 1 kg of plaited cheese is 12 GEL, Imeruli – 9 GEL and Georgian – 10 GEL.