Caucasus Business Week #169

BUSINESS WEEK

DISTRIBUTED FREE OF CHARGE

caucasus1

November 14, 2016 #169

November 14, 2016, Issue 169 - www.cbw.ge

Econo-mix Economic Growth Remains below Initial Plan Pg. 4

Insurance Dutch Insurance Company Invests GEL 7 Million in Georgia

Economy Electricity Price will not Rise Due to GEL Volatility Pg. 6

Pg. 11

Japanese Businessmen Interested in Poti Industrial Zone

How Ski Resorts Meet the Winter Season

Last week, the delegation of Japan External Trade Organization (JETRO) was visiting Georgia with the invitation from the Georgian National Investment Agency. The Japanese delegation members met with Georgian government officials and private sector representatives. Additionally, JETRO representatives were received

by Georgian vice Prime Minister and Minister of Economy and Sustainable Development, Dimitri Kumsishvili. The Minister updated the guests on Georgia’s investment environment and transmitted detailed information on economic reforms. “Japanese businessmen are interested to launch and develop business in various economic fields of Georgia,” Ketevan Bochorishvili, the Deputy Minister of Economy, noted. “They are interested in fields of commerce and industry, machine-building, food industry.

Pg. 6

Georgia’s Mineral Wealth

Pg. 6 Photo/Marina Keiras

Pg. 7

An assertion that Georgia is supposedly short on mineral resources is not really entirely true. The country has one very important asset in this respect. It has plenty of hydromineral resources, i.e. subterranean sweet and mineralized waters, including, among others, drinking waters, healing waters, balneological and thermal waters, etc. To the best of my belief, Georgia’s mineral waters (both carbonated and noncarbonated ones) are the country’s most advantageous natural resource which is becoming, year after year, more and more soughtafter commodity in the global market. They boast unique competitive advantages, as follows: 1. Abundant precipitation in Georgia’s high mountain areas create practically unlimited and renewable water supplies.

2. Anthropogenic impact on the environment is either non-existent or minimal in these areas.

This auspicious circumstance is enhanced thanks to a multi-level natural filtration of water flows when they pass through rock formations on their way from mountain tops to subterranean groundwater bodies.

Pg. 11

2 GOVERNMENT

NEWSROOM Georgia and India deepen trade, culture, tourism ties Georgia and India are deepening bilateral ties in a range of field, including tourism and aviation, by signing a Memorandum of Cooperation (MoC) to facilitate easier travel between India and Georgia.

Partnership Fund Started funding the Winners of “Start-up Georgia” The Fund has signed agreement with 8 business projects from 36 winners of the first contest.

The projects were funded by 586 700 GEL.

ECONOMY

126 Factories were Financed in the Frame of “Produce in Georgia” in 2016 The project “Produce in Georgia” is becoming more popular and trusted every day. At the same time, some of the factories which did not even exist before started to function in the frame of the program.

Foreign debt of Georgia is reduced in October According to Ministry of Finance, Georgia’s external debt amounts to 4,456 billion USD

by November 1, at that 4.45 billion is government’s debt, 5, 77 million – National Bank of Georgia.

BANKING

Georgia’s Currency Reserves Shrank by 100 million USD in October In October 2016 Georgia’s currency reserves declined by 100 million USD and totaled 2.760 billion USD, down 30 million USD month on month and up 12.7% year on year.

The Most Profitable Banks in Georgia According to the third quarter data, TBC bank has the highest profit which amounts to 183 million. Then it is followed with Georgian Bank with 150 542 000 GEL. The profit of BASISBANK was 18 589 079 million GEL, Liberty Bank had 21 787 69 GEL profit.

BUSINESS

Georgian Wine Exports Rose by 37% Year on Year According to Agriculture Ministry statistics, in January-October 2016 Georgia exported 38 392 510 bottles to 50 countries, up 37% compared to the same period of 2015.

“Borjomi” is Going to Buy Mineral Water Company in Russia In the rbc.ru information of Russian agency, it’s noted that “Borjomi” company has 8 factories in Georgia, Russia and Ukraine. As for “chistaia voda”, it exists on Russian market since 1998.

COMPANY

Henkel Plans to Expand the Product Range in Georgia by the end of 2016 An agreement on the construction of the factory was concluded during the World Economic Forum.

Henkel is the global producer of laundry and home care, beauty care and adhesive technologies.

November 14, 2016 #169

German chemical company enters Georgia, opens regional office

G

eorgia’s economy is set to get a massive boost after welcoming a new multinational company into the local market.

BASF, one of the world’s largest chemical manufacturers, has taken advantage of the favourable investment environment and vast business development opportunities in Georgia and has opened up a regional office in the small Caucasian nation.

BASF originated in Germany but has grown tremendously and now had offices in almost all countries and employed over 112,000 people.

Top Georgian Government officials attended a special ceremony that celebrated BASF’s entrance in Georgia.

Prime Minister Giorgi Kvirikashvili thanked BASF management, especially senior vice president Laurent Tainturier, for establishing the company’s regional office in Georgia.

Kvirikashvili said this was a result of Georgia’s liberal economy and the progress the country had made due to effective Government reforms that encouraged more investors to invest here.

We are pleased that BASF has taken advantage of Georgia’s strategic location and one of the most attractive business climates in the whole Eurasian region and has established its representation in Georgia, a genuine hub for business, logistics and transportation,” said Georgia’s Prime Minister at the special

ceremony.

The Prime Minister remained hopeful that this new venture in the region would bring the company even greater success.

Georgia needs investors like you; companies which acknowledge our country’s strategic role as a gateway between Europe and Asia a bridge between east and west and a part of the modern Silk Road. Your presence here also provides a quality stamp to Georgia’s economic and regulatory environment,” Kvirikashvili added.

The Georgian high official promised the Government would continue its ambitious reform agenda and further advance the favourable business climate, coupling it with cutting-edge infrastructure and a streamlined tax system to make business even easier.

We have a sound strategy and a plan of action to encourage innovative solutions and the start-up industry in Georgia. I believe with the combination of BASF’s unrivaled experience and Georgia’s innovative and creative business climate, the cooperation potential is truly huge,” Kvirikashvili said.

The German chemical producing company announced it would open a regional office in Georgia in September when Georgia’s Deputy Foreign Minister Davit Jalaghania met BASF managing director in Eastern Europe Andreas Lier.

After the meeting Lier said the German-based company had closely

observed the developments in Georgia and was impressed with the recent progress of the country.

Lier spoke highly of the open and liberal business environment of Georgia, and of the country’s efforts to become more sustainable, as this was in line with BASF’s mission. He also applauded Georgia’s resilience in the face of regional economic challenges and experiencing economic growth in spite of global problems.

For these and other reasons, BASF management had decided to open an office in Georgia’s capital Tbilisi and use the capital city as a base for the company to expand its operations while using all the opportunities available through various trade deals.

Other German companies were already enjoying Georgia’s favourable business environment and had a history of operating here. This year German building materials company HeidelbergCement Caucasus (HC Caucasus) celebrated its 10 year anniversary of operations in Georgia and also launched works to upgrade its cement and concrete facilities in the country.

In September this year another major German investment was made in Georgia when Henkel, an international producer of some of the world’s most recognised brands and technologies, opened its first plant in the Caucasus in Georgia.

Georgia, a growing hub for information, communication technology

G

eorgia is working hard to establish itself as a growing hub for information and communication technology (ICT).

This week the country participated at a global ICT conference, where Irish and Central European-based technology companies learned about Georgia’s favourable business and investment environment.

This week the Embassy of Georgia to Ireland participated in the ‘Central European Technology Conference’ organised by the Irish Chamber of Commerce in Central Europe (i-Cham CE) together with Enterprise Ireland.

The event brought together Irish and Central European-based technology companies including Google and LinkedIn, with a view to develop new cross-border business

BUSINESS WEEK caucasus

The Editorial Board Follows Press Freedom Principles Publisher: LLC Caucasian Business Week - CBW Address: Aleksidze Street 3 Director: Levan Beglarishvili; Mob: +995 591 013936 Sales: Mob: +995 558 36 61 07 WWW.CBW.GE Email: caucasianbusiness@gmail.com

relationships and partnerships.

At the conference Georgia’s charge d’affaires to Ireland Giorgi Zurabashvili made a speech that highlighted the latest developments in Georgia’s business and investment climate.

He talked about the reforms the Government of Georgia had made in the country’s information and communication sector, which had created greater benefits for companies willing to operate in Georgia’s IT sector.

Zurabashvili also talked about the State Program on Broadband Infrastructure Development in Georgia that would create a fiber-optic internet network in more than 2,000 cities and villages in Georgia.

He added the Georgian Government wanted to provide the entire country with high-speed internet,

and had launched the ‘High Speed Internet for Everyone’ project in January 2015. In his words, the Government of Georgia was aiming to build an innovation-based economy in Georgia.

www.cbw.ge <<

126 Factories were Financed in the Frame of “Produce in Georgia” in 2016

<<

The Spatial – Territorial Planning Document of Georgia will be Prepared with Support of GIZ

<<

Georgia is Ranked in the Top-10 of the Best Countries to Start Business

Editor: Nutsa Galumashvili. Mobile phone: 595 380382 Reporters: Medea Samkharadze; Mariam Kopaliani; Merab Janiashvili; Maria Bakh.

Designer illustrator: Ilia Chrelashvili. Technical Assistant: Giorgi Kheladze

Source: www.commersant.ge, www.bpi.ge, www.gbc.ge, www.agenda.ge, www.civil.ge

November 14, 2016 #169

PUBLICITY

3

4

ECONO-MIX

Economic Growth Remains below Initial Plan

Hila Peled CEO of Topishare

Merab Janiashvili Economic Analyst

As to annual inflation, in this case deflation was registered for the first time in 2016.

However, if we examine annual inflation trend due to months, we will see that starting January 2016 annual inflation was declining month to month

I

n September 2016 real GDP growth pace (according to preliminary estimations) made up 1.5%. The figure marked 2.2% in the third quarter of 2016, while January to September growth made up 2.6%. This figure slightly exceeds the IMF forecast, under which Georgia’s economic growth in 2016 was fixed at 2.5%.

At the same time, the World Bank prognosis totaled 3%.

It should be also noted that GDP quarter growth dynamics for several years shows declination trends. Economic growth in the 4th quarter of 2013 made up 7.6% compared to the same period of 2012. Over the past 6 quarters, this indicator made up only 2.6% and this is very low figure for developing countries like Georgia.

Crediting volume also shows that economic activity is declining. In 2016 commercial banks have shrunk crediting volume. In 2015 averaged annual growth in loans in national economy made up 31.9%, while in January-July 2016 the growth pace marked only 9.3%.

It is worth noting that crediting volume was quickly rising in development sector (31.2%) and hotels and restaurants sector (18.5%), while crediting volume sharply dropped in commerce and transport and communication sectors, by 8.5% and 11.4% on average, respectively. Consumer loans growth pace also extremely decreased – the averaged figure was 21.3% in 2015 and in the reporting period the indicator recorded only 1.6%.

Crediting volume also significantly declined in healthcare and social services, but the contraction in absolute indicators was insignificant, because their ratio in loans of this category is very low. It is worth noting similar contraction tendency continues throughout the year (excluding the development sector, which recorded 22-25% upturn at the beginning of the year and 41-45% growth in July-August).

As reported, this year government of Georgia forecasts 3% upturn. This prognosis seems questionable, but National Bank of Georgia makes optimistic forecasts anyway. According to the November monetary

‘‘

We all hear how you need to drive people to your website to boost sales.

But then what? People visit your website ones, maybe twice, and perhaps they buy your product or service. And then they leave again.

The main question should not be how you can drive people to your site, but how you can retain them. How you can get your customers to stay on your site and come back. And in this day and age, simply a good product or service isn’t going to get you there. Sure, email lists work. But it’s basically just a reminder to your customer that you exist, that’s all.

What you want, is that your customer starts building a bond with you, that it trusts you, and that it feels part of the community around your product and service.

And that’s the magical word: community. Building a community isn’t easy. Because how do you get the trust, the bond? How do you get people to come back to your site? And how will they stay? This is one of the reasons we’ve created topishare. It’s a unique and different platform where you can create your own customized platform with the click of a button and embed this social network to your own site. It’s like building relationships with your customer on your site instantly, without your email getting lost in their spam folder. You have all the tools you need to start building trust and let topishare build a community around your products/services/business.

A place where people feel connected, a place where they want to come back to talk to their newly made friends who feel the same about your products.

And this community will be a loyal community that will buy your products, return to your site, and do the most valuable advertising of all: word of mouth. topishare may be just a start-up, but we’re growing insanely fast – just over the past 3 months we’ve seen an increase of 1700%.

That’s no little peanuts. And the beauty of topishare is that everyone gains from this growth. As your social network can be found and accessed through the topishare platform as well. One of our most important parts of our approach is that we work closely with all of our partners that embed their own social network on their site, and that we collaborate closely to help you create exactly what it is you need.

GDP Growth in September Marked only 1.5%

‘‘

How Topishare Helps your Business Through Collaborative Growth and a Social Network on your Site

November 14, 2016 #169

policy report, economic growth will mark 3.5% in 2016. Despite risks exposed in the third quarter, the upturn may be lower than the announced indicator.

According to the forecast, economic growth is planned at 4.5% for 2017 thanks to higher investment inflows and increased consumption amid normalization of monetary policy and fiscal stimulus.

According to weak joint demand among trade partners, it is expected that in 2017 net exports have a little negative contribution as a result of slight growth in goods exports and increased demand for imports.

The mentioned forecast implies that, along with improved economic conditions among trade partners, in 2017 money inflows and revenues from tourism sector will increase.

The NBG optimistic forecasts are encouraging our society, but it is doubtful whether these forecasts will be fulfilled in reality.

Even the planned monetary policy could not be maintained within planned indicators.

As reported, the NBG expected 5% surge in inflation, while we have deflation, according to October indicators. According to the NBG forecast, low inflation indicators will be maintained in fourth quarter of 2016.

However, the figure will increase stage by stage starting 2017 and will remain within target indicator in midterm period.

Starting 2018 the NBG target indicator will be 3% instead of current 5%.

The 2016 budget policy is the result of low economic growth. The budget spending priorities show that no special economic breakthrough is expected. For example, according to January to June final report, social allowances constituted a major part of state budget expenditures – 37.4%, while expenditures on wages made up 17.7%, and on goods and services – 12.6%. To put simply, more than 67% of budget funds were spent on directions that give no economic return. State budget is 10 billion GEL and 6.7 billion was spent without economic return. Naturally, GDP growth would be low.

Finally, neither economic growth nor priority of budget spending nor economy crediting indicators give ground to talk about significant economic progress in 2016.

“It is difficult to make a comment on short-term fluctuations during the floating exchange rate. It should be noted, that various deals and expectations have impact on currency rate. Devaluations, as well as strengthening, should be made envisaging those factors. However, GEL will have a strengthening trend for mid-term and long-term period.

NBG makes interventions when fundamental factors do not have impact on the exchanged rate and there are definite expectations, which coincides to the bank’s strategy”.

Koba Gvenetadze President of National Bank of Georgia

November 14, 2016 #169

PUBLICITY

5

6

INVESTMENT

November 14, 2016 #169

Japanese Businessmen Interested in Poti Industrial Zone

“

Electricity Price will not Rise Due to GEL Volatility Georgian National Energy and Water Supply Regulatory Commission (GNERC) has launched public administrative procedures for defining electricity distribution, transit and consumption tariff for JSC TELASI. Amid the depreciation of the GEL exchange rate, electricity tariffs are expected to rise. The market exchange rate has already dropped to 2.45 points. Energy sector specialists assert that electricity and gas tariffs are expected to correct when the exchange rate reaches 2.5 points.

Moreover, it should be noted that current tariffs will run through December 31. At the end of 2016, the GNERC will revise the tariffs. There are predictions that certain distribution companies will suggest that the tariff revision is a problem.

At this stage, GNERC does not confirm tariff growth plans. The GNERC chairperson, Irina Milorava, said that, per the GNERC methodology, the companies should apply to the commission with a new tariff statement at the end of the year. That is the reason behind TELASI submitting its application.

«When talking about the exchange rate volatility, we should remember how much this fluctuation was, when tariffs were corrected. We do not have similar fluctuations currently. Therefore, it would not be correct to make accents on this issue. Also, it should be noted that the commission supervises tariffs in all sectors on an annual basis. According to our methodology, tariff applications must be submitted to the Commission at the end of a year. The commission must discuss these applications and pass corresponding decisions. This signifies that a tariff application does not equal a statement for tariff growth. Currently, the exchange rate tendencies do not create preconditions for embarrassment.

Recent trends prove that import dependency shrinks after domestic output growth. However, the currency exchange rate makes certain contribution to this. Even steam power plants buy natural gas in dollars. However, in part of our steam power plants, last tariffs were calculated with a 2.4 exchange rate. This point is maintained at this stage», Irina Milorava noted. Gia Arabidze, Dean of the Georgian Technical University energy and telecommunications faculty, noted that if the GEL exchange rate drops to 2.50 points, energy distributors will not demand for tariffs growth.

«Currently the rate ranges from 2.3 to 2.4 points.

In previous years, electricity tariffs rose because of currency exchange rates. However, during that period, the change was very important and there were no alternatives», Arabidze noted.

In February 2017, when Enguri HPP will be put into a rehabilitation regime, problems are expected to arise.

The government must invest great efforts to find adequate reserves. Electricity generated from Enguri HPP is cheap. Changes may occur after Enguri HPP suspends the operation, but the system is to prevent consumer tariffs growth», Arabidze noted.

Andria Gvidiani, analyst for Association of Young Financiers and Businessmen (AYFB), noted that currently the tariff revision issue is irrelevant.

‘Electricity tariffs consist of several components.

The key components are: electricity generation, transmission-dispatching and distribution. In the Telasi case, the issue concerns the revision of distribution tariff. This segment is divided into five components: normative losses, capital expenditures, operating expenditures, electricity purchase and TELASI forecast investments.

Regarding the probability of the revision of electricity tariffs due to the volatility of the GEL exchange rate, I believe a similar scenario is ruled out at this stage. Today the GEL exchange rate exceeded 2.4 point. However, in 2015 the tariff was calculated for 2.30 points. Since then, the exchange rate remains permanently volatile. Therefore, I believe that the regulator will not revise the tariff because of TELASI’s application», Andria Gvidiani said.

There is no joint opinion on profitability of free industrial zones among economists.

There are more than 3000 similar zones worldwide and only a fifth of them should be considered successful.

When talking about expediency of free industrial zones, the discussions should be based on the development level of a country. In developed economies, the key method of creating similar zones is by replacing regional policies. For example, to develop island jurisdictions, Great Britain confers additional privileges to similar zones. This is because these regions cannot handle the regional policy frameworks developed by the Center.

“

When talking about the exchange rate volatility, we should remember how much this fluctuation was, when tariffs were corrected.

We do not have similar fluctuations currently.

Therefore, it would not be correct to make accents on this issue.

Last week, the delegation of Japan External Trade Organization (JETRO) was visiting Georgia with the invitation from the Georgian National Investment Agency. The Japanese delegation members met with Georgian government officials and private sector representatives.

Additionally, JETRO representatives were received by Georgian vice Prime Minister and Minister of Economy and Sustainable Development, Dimitri Kumsishvili. The Minister updated the guests on Georgia’s investment environment and transmitted detailed information on economic reforms.

“Japanese businessmen are interested to launch and develop business in various economic fields of Georgia,” Ketevan Bochorishvili, the Deputy Minister of Economy, noted.

“They are interested in fields of commerce and industry, machine-building, food industry.

We welcome their interest in Georgia. The Japanese delegation will remain in Tbilisi for two days to hold meetings with the Georgian government and business sector representatives,” Bochorishvili said.

JETRO is a Japanese external trade organization with close partnership relations with the government of Japan. The organization actively works on enlarging Japan’s global foreign trade relations. The key mission of the organization is to attract foreign investments and promote export potential in small and medium business sectors of the global markets.

Japanese Perspectives in the Industrial Zone “The Georgian National Investment Agency has been cooperating with the Japan External Trade Organization for many years. Namely, JETRO owns a regional office in Istanbul, Turkey. This office unites Japanese companies that operate on Turkish markets and consequently, are well-informed about Georgia’s investment potential,” Tamuna Liluashvili, deputy director of national investment agency, said.

“Japanese businessmen show a lot of interest in the Poti free-industrial zone and they are expected to make investments in Poti FIZ,” Liluashvili said.

“The visiting delegation includes several companies interested in production. FIZ is the most appropriate and profitable environment for production. JETRO delegates will visit Poti to receive information locally. Besides Poti Seaport, the delegation will also visit the Batumi seaport. This is the first visit and additionally, they plan on more business and informative meetings. As to your question, I cannot say with confidence that it is the objective of JETRO to buy Poti FIZ, but I do not rule out similar scenarios”, Tamuna Liluashvili said.

Failed Industrial Zone History of Poti FIZ started in 2008. On April 15, 2008 Poti FIZ was officially inaugurated. Then, President Mikheil Saakashvili stated that in the upcoming 50 months, at least 200 million USD investments would be made in Poti FIZ. Additionally, more than 400 enterprises would be created and tens of thousands of people would be employed. Saakashvili promised to transform Poti into a city with one-hundred-floor skyscrapers with modern infrastructure, airports and seaports.

The import and export operations are free of VAT. The profit tax on Poti FIZ territory and the lowest leasing fee runs in the Black Sea seashore (6-12 USD for a square meter). It is free to deliver raw materials from any point in the world. Poti FIZ has resources to receive electricity and water from one source. Despite all these promises, today no economic miracle has happened in Poti FIZ. A major part of

population remains unemployed waiting for improvement of elementary living conditions.

Also, it should be noted that Arab RAKIA Georgia was the operator of Poti FIZ, but the company has recently withdrawn from the FIZ. In 2013 Guga Tsanava, one of the directors of the company, told the Banks&Finances that Poti FIZ had not justified their expectations.

“We are not content with Poti Industrial Zone.

RAKIA has a huge experience in the operation of free industrial zones and it owns many similar zones worldwide. This type of zone should not operate with these results under our management. However, there are certain objective reasons. We are considering copying the RAKIA experience. Poti FIZ has a lot of potential but it only uses a minimum part of this potential. Investments will be put into Poti FIZ and the operation model will also be replaced,” RAKIA-Georgia director said during his interview in 2013.

Allure of Free Economic Zone There is no joint opinion on profitability of free industrial zones among economists. There are more than 3000 similar zones worldwide and only a fifth of them should be considered successful. When talking about expediency of free industrial zones, the discussions should be based on the development level of a country.

In developed economies, the key method of creating similar zones is by replacing regional policies. For example, to develop island jurisdictions, Great Britain confers additional privileges to similar zones. This is because these regions cannot handle the regional policy frameworks developed by the Center. The same motives were applied in Ireland, Italy, etc. Moreover, it should be noted that all developed countries of free economies, territories of similar zones and the population is too small to create a significant impact on the remaining part of the country’s economy. For example, Gibraltar or Isle of Man with a small population and underdeveloped economic sectors make evident profits and benefit from additional economic privileges. Simultaneously, their GDP per capita considerably exceed the analogical indicators of the country’s remaining sectors. The introduction of any additional privileges for a selected part of the liberal economy can solely bring marginal results for the economy. As a rule, similar measures serve regional development goals.

For example, we can compare GDP volume of developed countries per capita to analogical indicators in the free zones. Regarding developing countries, in this case, the size and factual peculiarities of the recipient country in addition to the quality of economic legislation and other aspects considered. The operation of free zones is justified in big countries with restriction on economic freedom that are capable of quick mobilization of cheap workforce, own capacitive domestic market. For example, in the Chinese economic zones, the pace of economic growth were 4-5 times higher compared to economic growth in the remaining part of the country during the early 90s. But what would happen during the equal and gradual liberalization of the whole economy? The results are clear. We would receive a higher economic growth pace all over the country.

Moreover, the creation of preferential regimes in certain regions of the country generates social inequality in the entire country. Undoubtedly, this factor will frustrate economic growth in the long-term as the government is forced into more expenditures in the educational and healthcare sectors, social programs and infrastructure.

November 14, 2016 #169

TOURISM

7

How Ski Resorts Meet the Winter Season “Several new hotels will launch in Gudauri. A 100-suite hotel is being constructed on Goderdzi resort.

Additionally, there are serious construction works are underway in Bakuriani. Many guesthouses are being built in Mestia. There are diverse activities in all resorts”.

Georgian ski resorts opening on December 10-17 are preparing for winter. What are the innovations for the 2016-217 season? How ready are the local municipalities and private sectors for handling the winter season?

This winter, Georgia has good potential as it snows in Tetnuldi, Goderdzi, Gudauri, and Bakuriani.

“Ski resorts will officially open in mid-December,” Sandro Onoprishvili, head of Ski Resorts Development company noted.

«Several new hotels will launch in Gudauri. A 100-suite hotel is being constructed on Goderdzi resort.

Additionally, there are serious construction works are underway in Bakuriani. Many guesthouses are being built in Mestia. There are diverse activities in all resorts. Moreover, there are luxury hotels including a new upcoming Radisson hotel construction in Gudauri. It is important to note that intensified construction works proceed at resorts. Ropeway infrastructure building works are in their final stages. Skiing tracks will be completed soon and will open in December 10-17» Onoprishvili said.

“Regarding artificial snow, the process

and supply will start in November 2022. The country expects international tourists from eastern Europe and neighboring countries,” Onoprishvili noted.

the price of the same suite will rise to 140 USD. The price will further increase to 170 USD during December 31-January 4.

Prices at Ski Resorts Hotel managers expect a busy season seeing as many hotel suites have been booked. The Caucasus Business Week has examined the cost of spending winter holidays at Georgian ski resorts.

Gudauri Marco Polo is one of the expensive hotels in Gudauri where a standard two-bed suite costs 169 USD. Hotel services include a breakfast, sauna, swimming pool, internet and spa center services. Places will be limited during New Year. Moreover, summer tariffs will extend to December 25 while winter tariffs will be slightly higher. According to the hotel administration, the price of the same 2-bed standard suite will rise to 180 USD. “In the duration of New Year, the price of a two-bed standard suite will rise to 252 USD,” the hotel management said.

Mestia “The price of a standard two-bed suite is 95 USD at Tetnuldi hotel. The tariff includes two meals a day. Winter prices have not been determined yet, although it is being specified and calculated. The New Year’s program and the corresponding prices will be announced in several days,” the hotel management told CBW. At this stage, the tourist inflow to the ski resort is insignificant. However, the hotel management expects the inflow to skyrocket during the winter season.

In comparison to the previous years, local municipalities also expect the tourist inflow to increase. Mestia governor, Kakha Zhorzholiani, noted that a new skiing track will open in Tetnuldi in mid-December. Additionally, the local population is ready to host tourists.

Bakuriani According to the Crystal hotel management, currently, Crystal hotel operates with summer tariffs with the price of a two-bed standard suite being 100 USD. After December 30,

“Several families have already arranged new hotels as part of the Produce in Georgia state program and organized due infrastructure too,” the Mestia governor said.

“This year Svaneti is prepared for the ski resort season. This year, three new ropeways have been added to Tetnuldi. In addition to cafe-bars and restaurants, a new administrative building will be launched. Soon, more specified schedules and plans will be published. Prices do not rise at this stage”, Zhorzholiani noted.

Bakuriani Governor, Dimitri Kipiani, noted that this year’s new season will open in mid-December. A new ropeway will open in Mitarbi.

“Also, the New Year’s events will be arranged in Borjomi and Bakuriani,” Kipiani said. “The Bakuriani ski resort will host plenty of foreign and local guests,” he added.

“For many years, our resorts were criticized due to the absence of entertainment centers. However, this year, several new entertainment facilities will launch operation in the Bakuriani resort. Local self-government provides full support to private sectors to develop in this direction so the region acquires valuable infrastructure, the Bakuriani governor noted.

8

PR

November 14, 2016 #169

“Moreover, the personal nature of a PR manager is very important. A PR manager must be very balanced, calm and able to receive criticism.

A good PR manager can either revive or frustrate a company”

Nobody Taught Me PR Management. This is Inherent Interview with Khatia Shamugia, head of PR and Marketing Department of the ICI-Paris perfumery network.

MARIAM KOPALIANI

- What is your profession?

- I am specialist of Georgian language and literature. I graduated from Ivane Javakhishvili Tbilisi State University. I hold BA and MA degrees. Also, I graduated from the marketing and management faculty of University of Georgia.

-What was your first job place?

-I started my career at Voice of Georgia radio station (FM 107.9) as a host of musical programs. Later, I continued my career in Tbilisi no. 6 secondary school as a probationer teacher.

- What is your current job and position?

- Head of PR and Marketing Department of Ici-Paris perfumery network.

- What was your first success?

-Enrollment into Higher School was my first success.

- What is your business project that you are still proud of today?

- There are many similar projects in which I have succeeded. This includes the festival at State Philharmonic where, for the first time, I stood on a stage of Big Concert Hall. There, Fortuna radio station presenters were leading the evening. We handed over awards to a composer of the century, song and so on. I met with a musical elite for the first time. This concert was very successful. Consequently, I consider that event as one of the formulas for my success. This concert was staged by Marina Beridze. After

this concert Marina Beridze offered me to lead various concerts at various stages. That is how my career of a stage presenter started.

-Besides your concert career, you also lead the PR and marketing department of Ici-Paris network in Georgia. You have, successfully and actively, been leading this business for many years.

What makes a person successful in your field? Besides knowledge, what special characteristics are required?

-Only knowledge does not work in this field. Firstly, a PR manager represents a company in which he/she works.

In practice, this signifies that a PR manager is the image of the company.

Therefore, you should be able to tune the society positively. If the society likes you, they will like your company too. Therefore, fluent speech and capability of persuading people are the most important features and details for PR managers. Moreover, you should be very positive, love communicating with people and act as a diplomat and a balanced person.

- Is it possible today, in Georgia, to study PR valuably? Or is international knowledge and experience is required anyway?

- In general, experience is required in all fields. Synthesis of theory and practice is the best combination for

becoming the best professional.

- Is PR management perceived and understood in Georgia in its classical form?

- I have not worked as a PR manager in developed countries and I do not know details of their activities. However, a PR manager does not solely signify a famous person. A PR manager should love the company that he/she works for. Motivation is also necessary, but practical experience brings everything. Nobody has taught me PR management. I suppose this is inherent potential. I love my work so much and that’s why I have grown into a good PR manager. Moreover, the personal nature of a PR manager is very important. A PR manager must be very balanced, calm and able to receive criticism. A good PR manager can either revive or frustrate a company.

- Where would you work if not in the PR management field?

- I have worked for Fortuna radio station for 10 years as one of the best presenters. Still today, FM 106.9 is the radio market leader. Anyway, I would work as a PR manager for Fortuna radio station. When I was working there, PR direction was different from the contemporary model. However, we were working as presenters and we used to perform PR management functions too. I am associated with Fortuna radio even today and this makes me happy. If not a radio station and concert presenter, I would be a philologist and prepare children. To put it simply, I would be a teacher. I love children very much, as well as communicating with people. I believe we can learn a lot from children.

I grew up in a family of teachers.

My mother and grandmother were teachers. Even my aunt was a teacher.

Therefore, I think I have inherited this aspect genetically.

- Where do you see yourself after 20-30 years?

- I will turn 69 after 30 years and, therefore, I doubt I will be working as PR manager. Anyway, I think I will

have a consulting company.

- Field where you would never work.

- I would answer this question with a joke. I think I would never work in banking sector. Not because a commercial bank is a bad. As I have clarified, a commercial bank has its protocol and according to this protocol, bank employees cannot have wear red manicure and red lipstick.

However, red manicure and lipstick are my signature trends. Therefore, I would not work in a commercial bank.

- What benefits do you receive from the company where you work? What makes your company interesting?

- The ICI-Paris company has given a lot to me. This is a huge experience with many interesting people. I have met world leader in perfumery. Moreover, I have traveled all over the world. It is the merit of this company. I am a famous perfumery expert in Georgia.

- What are your strong and weak sides, as a businesswoman?

- I would not name strong aspects as it is difficult to talk about myself. Nevertheless, I would say that I have many strong sides, including the fact that I am independent and I am the only bread winner in my family. I care for financial aspects of my family. As to my weak sides, I did not pay attention to them, but now I do. I am not good at cooking and I have no idea what happens in the kitchen. This is my minus since girls busier than me can cook supper and invite friends. They are proud of this. But me, I invite my friends to supper prepared by my mother. I cannot prepare any dishes.

This is my quality I dislike the most.

I have not worked as a PR manager in developed countries and I do not know details of their activities.

However, a PR manager does not solely signify a famous person. A PR manager should love the company that he/she works for. Motivation is also necessary, but practical experience brings everything.

9

NGO

November 14, 2016 #169

The program CiDA offers to the ecomigrants consists of three components: 1.

Supporting women eco-migrants for small business startups 2. Rehabilitation of infrastructure 3.

Advocacy.

CiDA Funds EcoMigrant Women to Haul Samtatskaro Out of Despair In 1986, disaster struck Adjara- the Southwest region of Georgia lying on the coast of the Black Sea. Savage landslides and floods devoured the homes and livelihoods of Adjarians, forcing thousands to abandon the region and disperse to various parts of Georgia. These regions included the villages of Samtatskaro and Heretiskari

NINO KUPARASHVILI

The Civil Development Agency (CiDA) organized an adventurous, two-day media tour to give journalists the opportunity to meet the eco-migrants who built new homes for themselves while combatting a large share of hardships.

However, building new lives from scratch would, nearly, be impossible without the generous support from the CiDA. This organization aims to implement programs to aid in the improvement of economic conditions of suffering eco-migrants.

The project we studied was the “Raising the Economical and Infrastructural Capabilities of Eco-Migrants in Managing the Migration Process”. The European Union funds the project. Along with CiDA, the project is administered by the Regional Development Center (RDC) and the Georgian Association for Educational Initiatives (SIQA).

CiDA cooperated with the Dedoplistskaro municipality in aiding the people of Samtatskaro. The allocated budget was GEL 33,800. According to Nicoloz Janiashvili, the governor of Dedoplistskaro municipal board, the meeting with CiDA was held in Spring. This led to the agreement for the municipality to coinvest into CiDA’s projects. Additionally, Janiashvili claims that the municipality is experienced in working with NGOs. Moreover, it has collaborated with USAID to provide solar panels in the village of Shiraki, in South-East Georgia.

This incentive generated electricity into households lacking this basic requirement for over 25 years. The program CiDA offers to the eco-migrants consists of three components: 1. Supporting women eco-migrants for small business start-ups 2. Rehabilitation of infrastructure 3. Advocacy. Therefore, in our trip, we studied the various business established by women of Samtatskaro.

TRACTORS At our arrival in the village of Samtatskaro, with open arms, we were invited into the yard of a family’s house harboring

their precious tractors. As we spoke with the locals, they revealed their hardships of working in the fields and the relief the four CiDA-funded tractors has blessed them with. In addition to the motor block tractors, CiDA has provided the rejoicing villagers with complementary tractor attachments.

However, the tractors are solely capable of maneuvering on soft and moist soil.

This proves suitable for fields near the Alazani river- the main source of irrigation water of the Samtatskaro village. The villagers access the water through pumps supplied, once again, by CiDA. These fields are where farmers operate the tractors in addition to small pieces of farmland located by the river banks. However, other fields located further from the river are the most problematic. This is because of the non-existent irrigation system to carry the water further away from the river banks and into the remaining fields.

The seeding on the fields commences in March. During the month, the farmers utilize the fertile soils to grow vegetables, such as tomatoes, cucumbers, cabbages, onions, garlic, and potatoes. Proudly, the farmers admitted to the new tractors increasing their yield and the opportunity to harvest up to twice a year. Moreover, the new machinery reduces and alleviates their working hours.

“Before, our working day began at 7 am and ended at 7 pm. All day, in the hot sun, we worked the fields by hand,” said Darejan Jaini, an Adjarian eco-migrant.

Jaini admitted that the arid climate of the village challenged the eco-migrant families in adapting to their new environment.

“I would like to thank CiDA and everyone who has helped organize this great help. We can, now, provide our families and children,” she added, tearfully.

The harvested products are transported and sold in Georgia’s capital city, Tbilisi.

This becomes the farmers’ chief source of income and nourishment. Additionally, the owners rent the tractors to neighbors in need of a helping hand- or, more accurately, a helping plow. There are no fixed prices set on the rent as it all depends on the amicable relation-

ships and negotiating skills between the leaser and the lessee.

Previously, the farmers relied on Mechanisatory LLC- a company providing them with necessary farming tools and vehicles. However, according to the farmers, the organization constantly delayed the arrival of the vehicles and the company’s services grew into enervating waiting games. Although four tractors are insufficient to serve the 420 villagers residing in Samtatskaro, “at least we don’t need to wait so long for LLC tractors,” says Alexander Jaini, an Adjarian eco-migrant living in Samtatskaro since 1986.

As our first visit neared the end, the operators began packing their cumbersome equipment and we began scurrying back into the comfort of our luxurious minivan. However, not before the family forcefully, but lovingly, dragged us back into the house for a generously set table of delicious Georgian food.

WATER TANKS After the feast, we resumed our journey.

Our next stop were the water tanks. At our arrival, we were shown two large water tanks supplying clean drinking water to 300 families of Samtatskaro. CiDA’s investment of GEL 12,560 and the GEL 53,577 investment of the Municipality of Dedoplistskaro of the Kakheti region, supplied approximately 300 families with drinking water. However, the arid climate of the village creates a problematic water debt. This means that there is a deficit in the water supply to the system, leaving families without water and fields with insufficient irrigation water. Consequently, the inconvenience has driven many youngsters out of the village.

SEWING SHOP Following the visit to the water tanks, we piled back into the minivan and drove to visit the tailor shop. Natia Mikeladze, the owner of the tailor shop, welcomed us into her home. Mikeladze led us into her newly renovated basement where she has stationed her workshop. As we entered, my eyes darted to the table laid with fizzy drinks, colorful fruits, and irresistible confectionery.

However, attempting to stay professional, I sorrowfully ripped my gaze away and onto the three sewing machines further down the basement. Two women working the machines curiously eyed the bustling operators setting up their cameras and the journalists crowding around Mikeladze.

“To be frank, I had no hope in winning this grant. But, luckily, it happened and we have successfully established this business,” Mikeladze said. Previously, sewing was solely a hobby and friendly deliveries to neighbors. However, CiDA’s grant offer urged her into applying to receive financing. Following her victory in receiving the funds, she transformed her basement into her

workshop. Mikeladze revealed that two of the employees were her relatives who, along with her, produce bed linen and female clothing. Her husband manages the delivery of the raw materials and the supply of the finished products.

The merchandise is sold on the Tbilisi markets and, even, to the suppliers themselves.

MEN’S SALON Our final stop was at the house maintaining the newly established men’s hair salon. And although we could not get free haircuts, the owner’s adorable puppies were the perfect substitution.

This specific grant was admitted to Nino Mikeladze who had arrived at Samtatskaro in 1990 from Adjara. This led her to establish the only men’s hair salon in the entire village. Therefore, it is safe to say that the entire village is her one big customer- or, rather, her husband’s as he is the only employee.

Mikeladze has no knowledge of hairdressing. Thus, she delegated the art to her husband and, instead, adopted the managerial position. CiDA supplied the couple with all the necessary equipment involving a shampoo bowl, a barber chair, a hair dryer, a sterilizer and cutting tools. The family contributed by purchasing the mirror.

As her services stretch specifically to men, Mikeladze said, “Regarding the enlargement of the business, in the future, I’m planning to grow into providing haircuts to women.”

With that, we wished them luck and crowded out of the small doorway and into the minivan. We drove back onto the dirt paths and out of Samtatskaro leaving the rejoicing people with their treasured possessions. As we left the village, we entered the dangerously narrow mountain roads unprotected by guardrails. However, before I knew it I was peacefully, yet very uncomfortably, asleep. How? Because I knew a Georgian driver is the most skillful. This does not stem from a place of patriotism but from the first-hand experience of the Georgian drivers unapologetically breaching every traffic rule in the roads of Tbilisi.

And yet, somehow, they survive.

This organization aims to implement programs to aid in the improvement of economic conditions of suffering ecomigrants. The project we studied was the “Raising the Economical and Infrastructural Capabilities of Eco-Migrants in Managing the Migration Process”.

The European Union funds the project.

10

BUSINESS

November 14, 2016 #169

McDonald’s Introduced an Innovative Booth for Orders in Georgia McDonald’s introduced an innovative booth for orders in Georgia jointly with company VISA and Bank of Georgia, which official presentation has been held on November 11, in Digomi Restaurant.

McDonald’s Georgia is named as the company with the best service in Georgia for several times. However the company offers more simple, fast and comfortable service to the customers by introduction of an innovative booth for orders.

Innovative booth for orders is adapted to the needs of disabled entities. Customers can apply the booths in 4 restaurants of McDonald’s: near Embassy of the USA, Tsereteli Ave; Megobroba Ave. in Rustavi and East Point.

BRAND

WINE

“Shatrovani”- the Idea which was Turned into Business an idea during family dinner and it took us long time to fulfil our idea, but we created real perspectives for it and finally managed to fulfill it.

How did you choose the name and design for the brand?

The name “Shatrovani “ is an old Georgian word and means decorated with gold embroidery.We wanted to underline the ancient history of Georgian wine culture with it. Minimalistic design is popular on Georgian market and makes the product interesting for the customers.

What were difficulties you had to deal with when you started the business and how did you overcome those obstacles?

It was hard to start from nothing because there is a lot of competition in this field at the market. You need to prepare product very well and calculate everythin, but you can

“Shatrovani” is a new Georgian brand for wine, which appeared on the market few months ago. The family business is led by father and son. It is their goal to make the wine part of customer’s life. However one of the founders of the brand , Giorgi Tsutskiridze says that, it is not easy job to do. He talks about how they came up with an idea to start a business and what are their plans for the future.

Tell us about “Shatrovani”, what kind of wine do you offer and when did

it appear on the market?

Alcohol drinks company “Shatrovani” appeared on the market on 1st of June, 2016. It offers red semi dry and sweet Saferavi, red dry Saferavi and white dry Chinese wine made from Georgian grapes to the customers. We are planning to offer new brand like French “ Merlo” and Georgian Rkatsiteli.

How did you come up with an idea to start a business and who are the founders?

Our company is a family business. We came up with

NEWS

JEWELRY

Dry Shampoo- a Product Two Friends Discovered in Europe

Jewelry Brand Revitalizing Petre Otskheli Works

Young programists, Iulia Tvalabeishvili and Tamta Kirtadze found out about dry shampoo in Europe and they discovered that it does not exist on Georgia market. That’s why they decided to introduce it to Georgian customers and created their own start up.

Ketevan Saqareli is an author jewelry brand and runs under trademark of KS for about one year. The brand unites several collections, including works created by inspiration of Georgian modernist painter Petre Otskheli. In her interview with the Marketer Ketevan Saqareli, the trademark founder, talks about the brand details, manufacturing technologies and inspiration sources.

How did the business idea arise and what products do you offer to customers?

We create works modern, successful, interesting persons, who strive for self-expression and individualism. Jewelry works are created of only precious or semi-precious metals and materials (gold, silver, diamond and so on).

We also use various jewelry techniques and modern technologies with main accents on enamel technique. We create our modern design ornaments based on ancient enamel technology. Popularization of this technology and my 10-year experience in jewelry field have inspired me to develop this brand.

How has inspired Petre Otskheli’s art your works?

Petre Otskheli is my most favorite painter and I learned his art at Theatrical University. I believe he has created unique works from the future world. Regretfully, his art has not been appreciated respectively in Georgia and abroad. “I have developed his collection with much caution and love. We have found unique culture niche for the art of Otskheli. We do not resort to copying his art. We may be a little ambitious, but I feel this and I believe our collaboration will contribute to popularizing the art of Petre Otskheli.

How can we buy your works?

Currently, a part of collections is ready and is sold in several stores (DOTS Tbilisi, O,MODA MODA). Collection of Otskheli is a small one and we made works in this collection by pre-orders. In the future our consumers will buy our works in our online stores.

What makes you special from your competitors?

We follow special concept in combination with old and new tendencies, original design, various expression of enamel technology and quality of products that will withstand the time.

Serial production of enamel technology jointly with modern design also create effect of unexpectedness.

Mashpro Ltd Plans to Produce New Species of Mushroom Mashpro Ltd plans to produce a new species of mushroom next year. According to the company representative Nino Santadze, the project is under development for the time being.

At this stage Mashpro produces champignons that are sold on the local market. The company was founded in 2012 and owns 26 000 square meters of land in Kaspi municipality.

In Santadze’s words, Georgian mushrooms are in great demand on the local market, the company has sold 48 000 tons of mushrooms in the current month.

overcome the barriers with the knowledge and enthusiasm.

How does “Shatrovani”stand out among other brands?

We don’t try to make prices artificially high and offer quite affordable prices to the customers. At the same time, we maintain the quality. Our wine has a distinctive aroma and taste. It is not a drink we should serve only during big feasts but wine which we can drink daily at dinner.

What are your future plans?

We have big plans for the future. We want to establish ourselves on Georgian market not only with wine but also offer other products to customers. We are currently working on introducing new products.

We prepare to send our products to international exhibitions in the west Europe. Soon, we will have a website where you can purchase the wine online and have special offers.

H&M Signed for the First Store Openings in Georgia During 2017 First shop of H&M to appear during 2017 year in Georgia, company’s Global Press Officer, Elnaz Barari confirmed the information to commersant. Official websit of H&M released Press Release.

HM Hennes & Mauritz AB, H&M, the international fashion brand known for offering fashion and quality at the best price in a sustainable way, has signed for the first store openings in Georgia during 2017. More information will follow in due course. In 2017, H&M will also open in Colombia, Iceland and Kazakhstan.

Co-Investment Fund makes 100% investment in the project and its total investment volume equals $77 million USD. Famous Israel-based company Moshe Tzur Architects is the designer of the project. Total area of the shopping mall “Gallery Tbilisi” will amount to 22,000 square m. Out of this 5 floors will be allocated for retail segment and the food zone, with restaurants and cafes integrated in a single space.

OPINION

November 14, 2016 #169

Georgia’s Mineral Wealth An assertion that Georgia is supposedly short on mineral resources is not really entirely true. The country has one very important asset in this respect. It has plenty of hydro-mineral resources, i.e. subterranean sweet and mineralized waters, including, among others, drinking waters, healing waters, balneological and thermal waters, etc.

Dr. Andrei Maximov Maximov&Partners LLC am@maximov.com www.maximov.ge

T

o the best of my belief, Georgia’s mineral waters (both carbonated and non-carbonated ones) are the country’s most advantageous natural resource which is becoming, year after year, more and more sought-after commodity in the global market. They boast unique competitive advantages, as follows: 1. Abundant precipitation in Georgia’s high mountain areas create practically unlimited and renewable water supplies.

2. Anthropogenic impact on the environment is either non-existent or minimal in these areas. This auspicious circumstance is enhanced thanks to a multi-level natural filtration of water flows when they pass through rock formations on their way from mountain tops to subterranean groundwater bodies. This guarantees the ideal natural purity of Georgian waters.

3. The diversity of natural climactic conditions, topographic features plus geological material (including that of volcanic origin) and mountain soils result in the fact that Georgian mineral waters have varied and invariably rich and saturated elemental and microelemental composition.

4. The composition of the waters is stable and constant because of the depth from which the water is drawn out of subterranean storage bodies.

They are separated from the surface with impermeable strata which guarantees the composition of water in deep belowground reservoirs will not be destabilized despite any changes in seasons, weather conditions, fluctuations in precipitation or occurring cataclysms.

5. Mineral combination of Georgian waters differs depending on their point of origin and thus almost all of its brands can be considered as both healing and potable waters. This means that they can be consumed on a daily basis plus used for preparing food.

6. Due to optimal salinity levels (quantities of minerals dissolved in water) and to the varied microelemental composition (combination of calcium for the growth and consolidation of osseous tissue, magnesium for immunity improvement, as well as sodium, chloride, bicarbonates and sulfates for health, well-being and a great skin condition) each brand has a special niche of its own, with regard to its useful preventive and curative properties.

This provides a ground for marketing different brands of mineral waters for various target audiences among the consumers (beneficial for children, sportsmen, elderly, advocates of healthy and active living, etc).

7. Automated high-tech equipment was installed at all main Georgian mineral water deposits over the last

decade and constant laboratory testing is conducted in order to ensure the level of quality and stability of water composition with regard to the highest international standards.

Mineral water is, in my opinion, the only item among Georgian exports that has practically no risk of human failure during its production.

8. All existing brands of Georgian mineral waters are related to ancient stories and beautiful legends: miracle-working springs were mentioned since very early on and commercial production of Georgia’s waters was started in Tsarist Russia, in the 19th century. If approached from a correct angle, this makes marketing and promotion easier abroad: consumers always like better brands with a historical background.

9. Last, but not least, Georgia’s mineral waters are its only export item having an unlimited potential for growth. Especially when we consider not only existing brands, but also new and promising water deposits that can be developed in the future.

22 deposit sites of mineral waters are registered in Georgia today, boasting a total debit of 40 billion liters per year. They are renewable resources, and there is no doubt that Georgia’s hydro-mineral resources are not restricted by this figure.

During the Soviet period Georgia produced annually over half a billion bottles of 18 types of mineral waters, thus securing all of the Soviet market with its very popular brands. This branch of Georgian industry was completely ruined during the 1990s, yet it is experiencing a comeback in the 21st century due to the active recovery process. Old brands, like Borjomi, Likani, Nabeglavi, and Sairme, were reintroduced, and new brands were developed and are actively promoted, especially in the niche of non-carbonated mineral waters: SNO (produced by AquaGeo), Borjomi Springs, Mitarbi, Sairme Springs, Bakuriani, Bakhmaro and others. At present, various brands of Georgian fresh groundwaters andmineral waters are exported to 24 countries around the world.

Nevertheless, the export of Georgia’s mineral waters is not as dynamic as they deserve due to their unique competitive advantages. The total share of mineral waters in Georgia’s export does not exceed 4-5%. There are certain reasons for that.

As always with the Georgian export, there is no effective marketing of mineral waters abroad, especially at the new, developing markets. Such Soviet-era brands as Borjomi and Sairme are still popular around the post-Soviet realm; these plus other, new brands are always welcome with Georgian expats living in European countries. Yet in the new and most promising markets, such as China, Iran, India, Arabic and African countries, Georgian brands are still little known even though some promotional activities are already under way. It is mostly so due to the fact that major Georgian producers (IDS Borjomi International, JV Healthy Waters, Sairme Mineral Waters Ltd., Aqua Geo Ltd.) have been competing with each other on foreign markets.

This is quite logical, of course, since

they operate in the same product niche, yet the resources allocated for marketing are miniscule as compared to the scope of the task. A strategic decision should be made by launching a national brand of Georgia’s mineral waters on the global market. It should be done with the state’s assistance, yet with active support of all major players.

The state has been actively working in this direction, so it should not be criticized all the time. For example, it was through the government’s initiative and many years of effort that Georgian mineral waters got their PDO (Protected Designation of Origin) registration, which is a protection mark for product origination area. It guarantees that a producer will have legal protection against counterfeiting. Unfortunately, none of Georgian producers have been using this designation yet; at least, I

For Georgian export this is a an issue of special and serious importance.

Over the last several months, the delivery of authentic Georgian waters and lemonades to the traditional Russian market were severely limited because of counterfeited goods. I know this subject out of personal experience:

have not seen any of that even on a single label.

For Georgian export this is a an issue of special and serious importance.

Over the last several months, the delivery of authentic Georgian waters and lemonades to the traditional Russian market were severely limited because of counterfeited goods.

I know this subject out of personal experience: my logistics company serves Russian dealers that distribute these products, and they have drastically curtailed their purchases of Georgian waters as compared to September and October of the previous year. This is what they say: “The reason is simple: Moscow and other cities are swamped with cheap waters and lemonades of uncertain origin”. This is a dangerous situation since under the conditions of the extended crisis Russian consumers consider lower prices as more attractive. If we let things slide and leave this situation unattended, we can lose our market share. What should be done? The same as can be done with creating the national brand for Georgia’s mineral waters: acting in a lawful manner, with an all-round state support, we must come out in a united front actively fighting against criminal counterfeiting activities.

11

Dutch Insurance Company Invests GEL 7 Million in Georgia On November 8, 2016, the “International Insurance Consortium”, a Dutch insurance company, signed an agreement to invest GEL 7 million into the Georgian “IC Group Insurance Company”.

The investment agreement was signed by the General Director of “IC Group”, Tengiz Mezurnishvili and the Founder and Director of “International Insurance Consortium” (Netherlands), Jacob Westerlaken.

The investment will be aimed at the growth and development of the company. This will increase the job opportunities. Moreover, soon, the IC group will operate on the Georgian market in the renovated form.

The “IC Group” was founded on November 10, 2005. Since the beginning, the company successfully operated in the insurance market and in the existing competitive environment. After acquiring “People’s Insurance” in May 2009, the “IC Group” became one of the leaders in health insurance.

The International Insurance Consortium (IIC) has valuable knowledge and expertise in all areas related to insurance and social security. IIC is currently involved in projects across 8 countries. It is represented in 4 countries by IIC Netherlands, IIC Slovenia, IIC Ukraine and IIC Georgia. Its core activities include consulting and providing investments to support local companies and organizations in their strategic approaches and risk management decisions.

The Consortium focuses on the partnership with insurance companies operating in South-East and East Europe and the Black Sea region. The Consortium provides long-term investments, thus creating the basis for the stable development of the companies and benefiting from the existing networks and potential, as well from the investor’s knowledge and expertise.

What do you think will be the benefits of the investment?

I think what is important, here in Georgia, is that people understand that insurance is not something that is invented for nothing. The awareness is not there. I always hear that when a disaster happens, afterward, people always say “oh I wish I had insurance”.

But nobody wants to know about it before. It’s always after.

So, this is where I think that we can do something to benefit Georgia. We know how to make it easier and bring the products to people.

The second part where I feel that the market can benefit is on the social security level. Not only on personal savings but also on health insurance. We work in a lot of countries for health insurance. And there’s always the same question: how much will the state pay and how much will the individual pay? If you don’t know, as an individual what you pay and what the state pays, then you have an issue. Because you don’t know what to insure.

This discussion needs to be held because people need to know their opportunities. And this is what we do and provide.

What do you think about the Georgian insurance market?

Is there anything that must be improved or changed?

The first thing that must be improved is the awareness of the customers. I think that the insurance companies here have not developed a system to explain why they are there.

Also, I think that there aren’t enough options for the customers to choose where they want to buy the insurance. If I go to other countries, I can choose. I can have an agent; I can go via the internet and I can go via a broker. I have a choice. You must be able to buy a policy whenever and wherever you want. Here, why not receive an SMS at the airport asking if you have travel insurance.

No? Push this button. Yes? Push that button. Then you’ll have what you need without any hassle. This is where, I believe, we can bring in new methodologies.

How do you see the IC groups future?

We are ambitious. We don’t come here to become number 10 in the market. We believe that our approach gives us a good market position. We will not work for maintaining the current state.

In the beginning of next year, we will bring out the strategies and goals that we will have.

How aware are you of Georgia’s insurance markets that made you want to invest GEL 7 million?

Of course, you get a general picture from the people you know.

First, I get information from the insurance companies themselves, the people you talk to and the regulators. But I, also, always talk to the customers. So, if I’m going on the streets, I always ask where did you buy your policy? Why did you buy it there? That way, you get all the information. In my opinion, the awareness is not there yet. If I talk to people, they do not know what insurance is. Overall, the Georgian market is very attractive to us and we believe in its potential.

12

PUBLICITY

November 14, 2016 #169

November 14, 2016 #169

13

WORLD NEWS Quotes

“ Those who “While global markets focus on the U.S. presidential elections, Turkish markets have unfortunately negatively differentiated from others due to its own dynamics”

expect to reap the blessing of freedom must undertake to support it

”

“Securing energy security and competitiveness is a major premise for construction of an international pipeline”

Thomas Paine

Turkish Lira hits fresh all- Erdogan: BTK Japan Lawmakers Moot Railway to Re- $6.7 Billion Russia Gas time low amid political vive Historical Pipe to Greet Putin risks, economic worries The Turkish Lira hit another all-time record low against the U.S. dollar at 3.185 early on Nov. 8, as concerns about pressure on opposition circles rise, despite an optimistic mood in global markets ahead of the U.S. presidential election.

The Turkish economy is also a cause of concern due to its heavy reliance on external financing.

The dollar-lira parity, which tested 3.18 in illiquid markets late on 3.18, started the day at 3.17 but it then saw 3.185 after the announcement of lower-than-expected industrial production data.

Turkish industrial production declined annually in September after an increase in the previous month, data from the Turkish Statistics Institute (TÜİK) showed. Industrial production dropped a calendaradjusted 3.1 percent year-on-year following a 2.2 percent increase in August.

The parity later rebounded

slightly to 3.182.

The arrest of 10 MPs from the Peoples’ Democratic Party (HDP) overnight on Nov. 4 and of nine journalists, staff members and executives from opposition daily newspaper Cumhuriyet on terrorism-related charges had already put huge pressure on the currency.

While these arrests drew strong international condemnation of a widening crackdown on dissent, President Recep Tayyip Erdoğan declared that Turkey is “no longer subject to orders.”

“While global markets focus on the U.S. presidential elections, Turkish markets have unfortunately negatively differentiated from others due to its own dynamics,” said Fatih Keresteci from DNG Consultancy, as quoted by Reuters.

“The maintenance of confidence is urgently needed to normalize this process,” he added.

British taxpayers’ money given to the WHO used for lavish conference in Delhi THE Government is facing new demands to review the “grotesque misuse” of British taxpayers’ money after it emerged that £15 million has helped fund a “junket for the great and the good” in Delhi.

Shipley Tory MP Philip Davies, who has campaigned against the UK wasting money on international aid, has hit out at a fund given to the World Health Organisation (WHO) to help it campaign against tobacco in “low and middle income countries” which would not normally receive British aid cash.

The UK Government has committed to £3 million a year for five years until 2021 for the WHO’s Framework Convention on Tobacco Control (FCTC) and some of that money has been spent on a lavish conference in Delhi this week due to end Friday.

The event sees delegates - including the Department for Health

mandarin Andrew Black - put up in luxury hotels with rooms and taken on a trip to the Taj Mahal, entitled “Romance of Taj”.

The conference also saw the WHO impose secrecy and throw out journalists with delegations afraid that their activities will be reported.

It follows a similar “junket” in Moscow two years ago while the FCTC Secretariat has cost £14 million in the last year alone.

Already there has been controversy over the campaigns run by the FCTC which has seen the WHO demand that war-torn Syria introduces plain packaging and praised North Korea and Turkmenistan’s appalling dictatorships for banning smoking.

The alleged misuse of British taxpayers’ money on the “nanny state” project has already been attacked in a report last week by the TaxPayers’ Alliance.

Silk Road

The Baku-Tbilisi-Kars (BTK) railway will revive the historical Silk Road, President of Turkey Recep Tayyip Erdogan said, TRT Haber TV channel reported Nov. 9.

Erdogan noted that Turkey will be connected by a continuous railway with China with the help of the BTK. Earlier, Turkish Minister of Transport, Shipping and Communications Ahmet Arslan told Trend that the BTK railway, along with other railway projects under construction, will bring annual revenue of billions of US dollars to Turkey’s logistics sector.

The BTK railway is being constructed on the basis of the Georgian-Azerbaijani-Turkish intergovernmental agreement.

The peak capacity of the railway will be 17 million tons of cargo per year. At the initial stage, this figure will be one million passengers and 6.5 million tons of cargo.

Friendship Bridge to Be Built between Georgia and Armenia The construction of the bridge, expected to be completed in under two years to feature a four-lane highway in the territory of the SadakhloBagratasheni border checkpoint on the Georgia-Armenia border, will be supported by the Governments of Georgia and Armenia and financed by the European Bank for Reconstruction and Development.

Georgia has already commenced tender competition procedures pertaining to feasibility study and detailed design for the RustaviSadakhlo highway. The Agreement on the Construction of the Friendship Bridge was signed on December 24, 2014 by Giorgi Kvirikashvili (the then Deputy Prime Minister and Minister of Economy and Sustainable Development of Georgia) and Gagik Beglaryan(the Minister of Transport and Communications of Armenia), during the former’s visit to Yerevan.

Today the Prime Minister of Georgia and the President of Armenia visited the new Bagratasheni checkpoint on the Georgia-Armenia border and attended its opening ceremony.

J

apanese lawmakers are revisiting a plan to build a $6.7 billion natural gas pipeline from Russia ahead of a visit

by President Vladimir Putin to the Asian country next month.

A group of about 80 lawmakers from ruling parties will ask the government by the end of this month to carry out a feasibility study on the project, Naokazu Takemoto, the secretary general of the group, said in an interview. The proposed pipeline linking Sakhalin island with Tokyo is estimated to be as long as 1,500 kilometers and cost about 700 billion yen, a study by the group shows.

Prime Minister Shinzo Abe is seeking to deepen economic ties with Russia in an effort to resolve a 70year-old row over four disputed islands off Hokkaido. Expanding energy cooperation can help Japan diversify supply sources as the country imports almost all its fuel needs, while Russia, struggling to climb out of a recession amid western sanctions and low oil prices, can gain a market share in Asia’s secondbiggest economy.

“As we want the return of all four islands of the Northern Territories, we should offer something that makes Russia happy,” Takemoto said on Nov. 4 in Tokyo. “To that end, the Japan-Russia natural gas pipeline plan is one of options. Russia’s economy has recovered a bit, but is still in great difficulty. They want to sell natural resources, particularly natural gas.”

The pipeline may transport about 25 billion cubic meters a year of gas to Japan and generate annual revenue of about 200 billion yen, according to the study. Japan, the world’s big-

gest buyer of liquefied natural gas, paid 5.5 trillion yen ($53 billion) to import 85 million tons of LNG last year, Ministry of Finance data show.

Russia accounted for about 8.9 percent of the total, the fourth-biggest supplier after Australia, Malaysia and Qatar.

An official of Jera Co., a joint venture between Tokyo Electric Power Co. Holdings Inc., Japan’s biggest power utility, and Chubu Electric Power Co., indicated interest in the project in a recent meeting with Takemoto, the lawmaker said, without identifying the official. Takemoto wants to hear from other utilities whether they are into pipeline gas, he said.

“Securing energy security and competitiveness is a major premise for construction of an international pipeline,” Jera spokesman Atsuo Sawaki said Nov. 7 in an e-mail response to questions from Bloomberg News.

“If those two points can be ensured, we would like to carefully consider the use” of the pipeline, Sawaki said.

Tokyo Gas Co., one of Japan’s major gas importers, sees Russia as a “potential source of pipeline gas to Japan,” Hiroyuki Sagawa, manager of the company’s gas resources department, said in September.

Russia’s Gazprom PJSC, the world’s biggest natural gas exporter, will revisit the possibility of building the pipeline, the Nikkei newspaper reported in September, citing Deputy Chief Executive Officer Alexander Medvedev. It received “strong, repeated requests” from Japanese business and political leaders to reconsider the project, according to the report. Gazprom’s press service declined to comment on the pipeline.

14

PUBLICITY

November 14, 2016 #169

Your house in Lisi Green Town is waiting for you

E

ven a modest saving is sufficient to purchase an apartment in Green Town.

With a mortgage loan from TBC Bank, it is possible to purchase an apartment at Lisi with just a 10% down payment.

Green Town is the only residential complex in Tbilisi where green space and infrastructure make up 80% of territory, with just 20% allocated for residential buildings. The residential buildings offer duplexes, townhouses and villas. Nearly every home includes a panoramic view on Tbilisi. „It is important for us to promote a new, healthy lifestyle in Georgia.

We offer not only comfort, the highest quality and service, but also piece of mind, green space and an eco-friendly environment. It is the best choice for families who prioritize a healthy lifestyle. “ – says Nodar Adeishvili, CEO of Lisi

Development.

A fully functional kindergarten and two private schools (G. Zaldastanishvili Georgian-American Academy and British-Georgian Academy) are already open in Lisi Green Town; Lisi Lake’s recreational zone, sulfur baths, a gym and a pool are also in

the vicinity. The project is spread across 400 ha of land; the first district is already finished and the second one is under construction.

Lisi Green Town has received awards in different categories at the International Property Award, the world’s most prestigious award in

the field of real estate, for the past several years. „Anyone who pays 10% of the apartment price as a down payment will receive the rest from us as a mortgage loan. Anyone can visit our mortgage center, purchase an apartment with conditions tailored to

their needs and get mortgage loan,”says Nino Khacheishvili, the head of TBC Bank’s retail loan department.

TBC Bank will review the income of the potential buyer using a simplified procedure; for non-residents loan term has been extended to 60 months.

November 14, 2016 #169

15

RESTAURANT NINO GUGUNISHVILI

Natakhtari Lemonade and Rugby Association Kick Off ‘Get into Rugby’ Project

TABLA CHANGES CONCEPT NOVELTIES FOR RESTAURANT CUSTOMERS NUTSA GALUMASHVILI

Tabla restaurant has changed its concept to offer different and diverse menus and services to customers. Tabla is one of the special Georgian restaurants in the center of Tbilisi, which is an ideal guide for Georgian culture and traditional hospitality.

A special supper was held at Tabla restaurant in relation to the mentioned changed. Invited guests tasted new menu and appraised renewed concept of the restaurant – three new spaces with three independent menus: Tabla Dukani, Tabla Saloon and Tabla Hall.

Tabla Dukani is located on the first floor and its menu comprises diverse dishes with soups, pastry, sausage goods and beer.

On the second floor the restaurant offers Georgian dishes with entirely new vision and cozy environment. Tabla Hall is the best place for ceremonies and events. There are three private spaces in classic part with traditional Georgian menus, where guests are able to plan small events, business dinners and family festivities.

Tabla guests will receive advises from Sommeliers for harmonizing chosen dishes and taste characteristics of wines. Besides menu changes, Tabla has also introduced many other novelties. Regarding this issue, the Caucasus Business Week has

taken interview from Maka Gvritishvili, ICR marketing department manager.

When and why did you decide to change the concept and what is the objective of these changes?

For the third year TABLA maintains the status of one of the best Georgian restaurants for both Georgian and foreign clients. We permanently examine opinion of our guests and offer our innovations to them. And this change is based on similar research. The new concept makes Tabla menu more diverse and our guests acquire richer experience at our restaurant.

Consequently, we hope to attract more guests with various taste preferences and wishes.

Many various dishes have been included in the menu.

Who are their authors and what is their history?

Our menu was developed by our caterer Mrs. Lika Kartozia.

The menu has been created of ingredients from various regions of Georgia and local dishes. Appellation of each dish expresses this factor very well.

TABLA has been operating on Georgian market for 3 years. What niche has you occupied and how has Georgian customers accepted your restaurant?

TABLA is famous as a top class

Georgian restaurant. High standards in terms of food, services make our restaurant the best place for families and friends, business meetings, foreign guests and various events and ceremonies.

For the third year TABLA maintains the status of one of the best Georgian restaurants.

Combination of Georgian cuisine and modern gastronomical standards in menu and services ensures popularity of TABLA among both Georgia and foreign clients.

’

For the third year TABLA maintains the status of one of the best Georgian restaurants for both Georgian and foreign clients.

The Georgian Rugby Association together with Georgian Rugby Union and Natakhtari Lemonade this week announced the start of the ‘Get into Rugby’” project, signing a memorandum of understanding.

Get into Rugby is designed to promote tag rugby and raise awareness of healthy living. Since it entails the participation of school children, the rules are safe and tailored to children’s needs. The 2017 Natakthari Lemonade Cup festival will be held within the project frames.

169 schools are expected to enrol in the project and almost 300 school teachers will be re-trained to be able to work with over 3500 pupils.

150 schools are already participating in the project with 85 teachers currently benefitting from the retraining program and over 20 instructors specialized to work with school teachers.

The project campaign is being realized under the Europe Rugby recommendations and standards.

“We want it to become an unprecendented social and sports event in Georgia,” said Nikoloz Khundzakishvili, Corporate Affairs Director of Natakhtari Company during the presentation.

“This project is the result of the success and hard work of our rugby players, the Rugby Union and our veteran sportsmen. “We are particularly delighted with the active involvement of the private sector in recent years. What’s most important with this initiative is that the younger generation will have the chance to utilize their talent to the maximum.

Future stars will be born!” said Tariel Khuchikashvili, Minsiter of Sports and Youth of Georgia.

According to Giorgi Kacharava, President of the Georgian Rugby Association, within the framework of the project, school teachers of Physical Education will be retrained with the help of certified instructors. “For the moment over 100 schools are enrolled and possibly every Tbilisi school will participate. The goal of the Get into Rugby campaign is to get children acquainted with rugby values. At the same time the project focuses on developing Rugby playing skills,” he said.

Gocha Svanidze, President of the Rugby Union of Georgia noted that the success of Rugby club largely ensured the growing interest in the ‘Get into Rugby’ project, both from children and their parents, who want their children to play rugby.

“This project will definitely give our youth a unique chance to develop their talents and skills in rugby and become successful sportsmen in this field. It will also help to establish a healthy lifestyle and promote rugby as a sport, bringing sustainability to its development. I believe these children will certainly bring glory to our country.”

16

PUBLICITY

November 14, 2016 #169