The difference between Georgian and European prices is quite large. If we compare prices between chain markets of the same international brand in Georgia and France, in Georgia, sunflower oil of a specific brand is 34% more expensive, pasta by 97%, rice by 180%, butter by 30%, cheese by 42%, and chocolate by 47%, - Georgian Prime Minister Irakli Kobakhidze notes in a video message on consumer prices.
According to the head of government, the difference between prices is due to the high markup of distribution companies and markets, which averages 86% from the Georgian border to the counter.
"The public often expresses concern that the prices of food products in Georgian supermarkets significantly exceed European prices. To assess the issue, we selected several key food products, compared the prices of these products in Georgia and specific European countries, and analyzed the markup structure, including the trading practices of chain markets. The difference between Georgian and European prices is indeed quite large. If we compare prices between chain markets of the same international brand in Georgia and France, sunflower oil of a specific brand in Georgia is 34% more expensive, pasta by 97%, rice by 180%, butter by 30%, cheese by 42%, and chocolate by 47%. The difference in prices is due to the high markup of distribution companies and markets, which averages 86% from the Georgian border to the counter," says Irakli Kobakhidze.
According to him, the net profit margin of specific retail chains in Georgia is 7, 8 and even 14%, while in Europe their net profit margin is an average of 2%.
According to the head of government, the markup on the product and the financial burden imposed on the supplier are so big that it is often more profitable for Georgian manufacturers to sell their products not in Georgian markets, but to export them abroad.
“The study shows that the financial profit of chain markets in Georgia is much higher than in Europe. In particular, the net profit margin of specific retail chains in Georgia is 7, 8 and even 14 percent, while in Europe their net profit margin is on average 2 percent. It is also important to consider that the operating costs of markets in Europe - space rental, labor remuneration, utility costs, etc. - are much higher. The net profit margin of distribution companies is also very high, which in Georgia, as a rule, ranges from 6 to 13.5 percent. The markup on the product and the financial burden imposed on the supplier are so great that it is often more profitable for Georgian manufacturers to sell their products not in Georgian markets, but to export them abroad. That is why you often see foreign products in Georgian markets that Georgian companies export abroad. This is a serious problem, because the state’s interest is, on the contrary, to encourage Georgian production and minimize imports," the Prime Minister notes.
