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Overview of Business Sector in 2016

Georgia ranked 16th  among 190 countries in the 2016 Doing Business rating. The country has advanced by 7 places.

However, success of companies depends on the existing economic situation in the country. There is no evident answers on how successful the year of 2016 was for companies in various segments. All companies equally suffer from GEL depreciation affects. Many companies are expected to correct prime costs and increase product prices in 2017.

Businessman Temur Chkonia thinks that it is not interesting to talk about his own business. “Nobody cares, we have more problems”, he said and appraised the current situation in the country instead of overviewing his own business.

“Any year is interesting in ordinary life, but in economy every year is very difficult. After the 2012 elections we have only heavy years. We remain in political competition regime. The winner party competes with the defeated party over the past 6 years. The winner party should have entirely different mission and show more responsibility. Serious economic changes are taking place in the world and if Georgia wants to be integrated into the global economy, then we should remember that visa liberalization does not imply only travel, it implies integration into the global and European systems. The current economic developments in Georgia are interconnected with external factors. For example, Turkey faces economic problems and this factor affects Georgia too. What does the economic might mean? When many reasonable people create export products, but, regretfully, we lack for similar people. We are people infected by Communist set of mind and we only ask Government to rescue us. The 25th year has passed and Georgian business cannot realize we should not wait for government mercy.

Our economy is heading to the bottom and in this situation Government should cut expenditures. We do not need so many Ministries. Our economy cannot put up with such expenditures in government structures. When business takes costs, we try to optimize expenditures. Sometimes we have to even dismiss workers, regretfully. Economy implies fight, war and regretfully, not everybody can win and be happy in this war.

We need radical changes and these radical changes need radical officials…

GEL exchange rate is  a painful issue for our country. It is erroneous statement that the GEL exchange rate cannot affect prices. The New Year is coming and we do not grow prices, because we respect our clients, but nobody can work without profits. We will have to make our services more expensive. However, the main thing is that higher prices cannot work without solvency of our population. Higher prices work when salaries also grow.

In 2016 the state budget received 85 million GEL from my business and I have made 120-150 million GEL investments since I started doing business in Georgia”.

Avto Svimonishvili, founder of Margebeli Holding (that unites Nabeghlavi, Marneuli, Emgadi brands) says that the year of 2016 was a transient period for the company, because the company built a new factory in Nabeghlavi, and entirely renewed infrastructure. Thus, the company will be able to manufacture various sorts of strong drinks.

We have taken a loan from EBRD and made investments of 32 million EUR jointly with our partners. We will test the enterprise in January 2017 and we will start full production in spring 2017.

We manufacture our products jointly with famous company Rauch that produces RedBull. Our clients will receive high-quality products thanks to experience of Rauch and our raw materials. Thanks to such mighty enterprise, our products will be supplied to both domestic market and exports markets. We want to further develop our production and use concentrates of Marneuli enterprise in Nabeghlavi enterprise and develop a basis of raw materials.

We use our own raw materials in processing fruits and vegetables. We hold our own land plot, where we grow cucumber and tomato. We also own fruits gardens in Gardabani. As to sales of our products, we mainly sell our products on domestic market, but we have also sent a small consignment of tinned fruits and vegetables to the USA and several other markets. The raw materials basis does not suffice for exports, while there is much demand for Georgian products.

Nabeghlavi is exported to about 25 countries. We plan to further expand the basis in Asia, for example, in Iran, United Arab Emirates, Japan, Korea… In whole the holding grew by about 15%, but in 2017 our portfolio will be broadened and we expect high growth».

Georgian Wool company founder Zaur Kuliev is content with the year of 2016. The last 3 months recorded a growing demand for Georgian Wool. Exports to India, Britain and Ukraine was successful.

“We have exported 100 tons of wool for the last 3 months and we have still orders to fulfill. Our wool is rude and it is mixed with other sorts of wool. Our prices are affordable and they range from 55 to 70 Cent. In 2017 we will arrange wool washing facility and number of employees will increase to 45 ones from 15. At the same time, we will build a storehouse in Lilo and invest 100 000 USD”.

Businessman Vano Ioseliani has moved from mushroom business to rabbit breeding business. The brand of My Rancho will appear on the market in the near future:

“We will introduce rabbit meat at the end of spring. This is a high-technology industrial farm and we have invested about 1 million USD in creating it. We will offer unique sort of rabbit meat to our consumers. Rabbit breeding was a strong direction in Soviet Georgia, while it was annihilated in 1990s and we want to revive it. The market demand is huge. We conduct preliminary negotiations with restaurants. Initially, we will keep 10 000 rabbits and later their number will increase to 25 000 ones. First of all, we plan to replenish the domestic market and later we will also penetrate exports markets.

Giorgi Korghanashvili, commercial director of Zarapxana, is discontent with the year of 2016, because the existing economic difficulties have affected the company plans too.

“Price of gold dropped in the second half of 2016, but the exchange rate changes could not balance it. The year of 2016 was not better than 2015. We still manage to maintain gold prices despite the exchange rate depreciation thanks to certain reserves, but if the current tendencies continue, we will have to revise prices. In 2016 we had to close our store in Baku and relocate it to trade facilities because of existing economic difficulties in Azerbaijan, where the demand has extremely dropped. In 2017 we plan to develop a new collection and open at least one store in Tbilisi, supposedly, at the new shopping mall. We also plan to offer online sales services. Currently, the major demand is registered for diamond jewelery. We have various collections and serial works in natural and precious stones. Collections of Vani and Tamar are very successful projects, but there is growing demand for diamond jewelery with multiple petty stones”…

Herbia director general Zurab Janelidze noted that in 2016 the company implemented re-branding project as part of USAID program and arranged a packing enterprise equipped with modern technologies. The Global Gap standard was also renewed.

«Our production comprises a full cycle starting from packing to sales and our consumers receive high-quality products, according to European standards. Sales were improved. Bulgaria is our main exports market and we supply our products to this country in continuous regime. Bulgaria is a certain barometer for us to determine the existing situation on European market, how competitive our products are. We have also visited Polish and Baltic countries for search of new markets and we plan to expand our primary production, sales and number of employees in 2017.

Initially, Herbia was oriented on exports markets, but since there was no opportunity for manufacturing high-quality homogeneous products in large volumes for European market, we decided to take efforts on Georgian market and it turned out that our consumer is tasteful and buys high-quality products and our decision has justified.

Georgian product is in much demand, but we do not have large volumes of product. Therefore, we plan to develop corporate direction. This step will enable us to help small entrepreneurs in overcoming difficulties. Moreover, we will be able to enlarge production of homogeneous  products for exports markets. We also plan to arrange training centers to promote activities of farmers.