Georgian tea producers request fair competition
28 October, 2010
Georgian tea producers request fair competition

Georgian tea producers aim to conquer Georgian market by ecologically pure product and oust the suspicious quality import off the country. To hit this goal they need just fair competition and ask Georgian government to establish fair game rules to both local tea-producers and importers alike.
Georgian tea has strengthened its positions lately at local market enhancing its market share from 5% to 11% this year alone. Georgian government plans to enhance the local tea-share to 30% in coming two years

and increase the figure gradually as much as possible. This year seems like a breakthrough in the rap sheet of notorious fame of Georgian tea stagnated for tens of years thanks to soviet time planned economy been focused on quantity of the product instead of quality that badly affected quality of almost all products including tea.
But profit for local production across the secured market of great Soviet Union with no actual competitors was guaranteed.

The bitter results of notorious practice were yielded when manufacturers remained tete-a-tete with the demanding consumer after the collapse of Soviet regime. The import [of low quality meantime] ousted locally produced trash-tea. The market was lost to Georgian tea-growers as a result and once accurately trimmed tea plantations grew into jungles. Some persistent tea-growers managed to survive however and with the focus on tea-quality entered international market by exporting raw tea of the best quality. Georgia faced a strange quiz: 90% of Georgian-produced high quality tea is exported abroad while Georgian local market is by 90% saturated  of suspicious-quality import.
Meantime Georgian tea is acknowledged as one of the best worldwide if produced honestly in full compliance with the tea growing and manufacturing standards. The mild Caucasus climate auspicious for growing ecologically pure, pesticide-free tea makes Georgian tea unique and of better quality compared to the traditional hot tea grower countries of China and India or any other one. Georgian raw tea is exported to traditional tea-producer and consumer countries including India, Kenya, Egypt, and Indonesia [starting 1996], while local supermarkets snub to put the packed tea in sale. 
According to data of 2007, Georgia exported a USD 1.2 million worth product while the import value exceeded USD 4.2 million. Obviously domestic market looks more profitable and Georgian tea-growers aim to domain at the market gradually.

Georgia consumes about 2 thousand tons of tea per year and Georgian tea growers can completely meet this demand and implement export at the same time.
Georgian tea manufacturer managed to restore about 15 thousand hectare of plantation with 15 thousand tons of productive capacity [of high quality tea].  But they produced only about 1500 tons annually due to lack of demand.
The situation has radically changed lately however. Georgian tea-growers entered Georgian market by four new brands Gurieli, Samaia, Aisi and Martvili in this past August alone expanding the local production market share by 5-6% approximately while the share of Georgian tea-producers accounted less than 5% for about 15 years after collapse the soviet regime.
Georgian tea-producers assure they are focused on quality of the product alone and can provide Georgian population by ecologically pure product. They hope to get back the lost consumer trust by raising their awareness and domain at local market ultimately. The single request they have toward the state is to establish fair market game rules and act as an impartial referee. The problem is that Georgia still lacks the food control legislation and government implements tea quality control once in a blue moon and the bad quality import infests the market. According to Tengiz Svanidze, President of Association of Georgian Tea-Producers, 80% of the import is of bad quality and even risky to health.
“The single thing we ask the state is no money support but fair competition,” Mikheil Tsintsadze, Founder of Georgian Aroma brand producing tea in Guria region, told Georgian Journal during the tea-festival held on October 23, 2010 in Tbilisi. “Let the state put us the local tea-producers and importers in equal conditions. Let it control the quality of the imported tea as well as the locally produced tea, when the state control of tea quality will be strong the consumer trust will be regained and we’ll get through all difficulties.”

The key challenge is that tea-distributors shun Georgian tea as supermarkets refuse to accept them. The reason is absence of consumer trust toward the product, tea-growers explain. However underdeveloped management skills also affect sales.
“Supermarkets refuse Georgian tea frequently because Georgian tea-companies fail sometimes to provide with promised quantity of the product and provide with the fake product in this case,” Bakur Kvezereli, Minister of Agriculture of Georgia, explained to Georgian Journal adding that this problem must be tackled between companies and supermarkets themselves. He eluded commenting on adoption of stronger quality control however, assuring that the state implements the product monitoring based on selective method. Kvezereli hopes that the share of local product will enhance to 25% next year going higher in a long-term prospect.
“We plan to take all segments including the high-priced premium sector and cheaper sorts of tea alike, and it will be possible to compete with all sorts of all brands imported in Georgia,” He said.   
Georgian tea-producers having reequipped their plants by state-of-the-art technologies assure this is quite possible if the fair competition rules are adopted that will filter the import and pave the way to honest Georgian tea-growers with due management skills.
Part of the problem is that Georgian tea-brands have been sold at prestigious supermarkets including Goodwill, G-Mart, Populi etc calculated on high-purchase-power consumers. While the economy-class consumer that goes to smaller supermarkets and trade outlets remained out of the game. Newly fledged tea-brands plan to develop larger distribution network to make their product available to entire Georgian population.
To this end they entered the market with about 7 sorts of tea ranged from the lower quality cheap tea-bags to expensive segment of premium tea. Prices are quite competitive varying from GEL 0.7 to GEL 6 per 100 gram of tea. The famous foreign brands including Lipton, Green-field and Ahmad tea also offer similar prices and even higher. The quality of Georgian product equals and sometimes wins over the similar sort of imported tea, Svanidze assures.
Geoplant, one of the leading Georgian tea-producing companies that entered the local market by Gurieli brand in this past August, managed to sell 10 tons of tea during two months already that translated into GEL 380 thousand on financial language. It has been exporting 100% of its product till this year, 50% of which goes to US, and the remainder part was redistributed on Europe and Ukraine.  Geoplant has already secured about 70-80% of Tbilisi network including prestigious supermarkets as well as smaller trade outlets and distributes the Gurilei-branded product in Kutaisi and Batumi as well.
Samaia created a special distribution company Samaia Trading focused on sales of Samaia-branded product alone and plans to enter all possible trade outlets throughout the country so as to make its product available to everyone here.

Georgian companies also plan to hit overseas markets by packed tea after conquering the local market. Geoplant is already getting through negotiations with Germany and plans to export packed tea to Berlin by the end of this year. Martvili Company plans to enter Ukrainian market and Ternali-branded tea will be exported to Poland soon. However Geo-agro-product, that produces Aisi-branded tea, sells packed tea in Great Britain starting 2004 and takes the premium segment. Georgian company exports its raw tea to Great Britain, its contracted dealer packs the tea and sell throughout the country via on-line network, Tamaz Mikadze, Director of Geo-agro-product, explains the mechanism.
“I take only premium segment in Georgia and Great Britain alike,” he said. However sales in Georgia go at a lower speed as of yet due to lack of awareness while in Great Britain the product is in great demand.

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