"I believe there are opportunities to cut prices, and to achieve this, we need to work diligently. Parliament will also assist us; a relevant commission will be established, the process will be transparent, and the public will observe the discussions with the sector representatives," Georgian Prime Minister Irakli Kobakhidze states.
According to the head of government, the total product markup is 86%, with distribution accounting for 44% and network markets for approximately 28%, summing up to 86%.
"The margin also varies between the supermarkets themselves, and between distributors. This is a specific characteristic. In total, it amounts to 86%, which signifies a large difference compared to European prices. For example, when we studied markup formation in Europe, the difference between wholesale and retail prices ranges from 20% to 30%. In our case, transportation is added to this, although the total of 86% is still much higher than in the case of German markets. Furthermore, rent in Germany is also more expensive, and salaries are higher, which naturally leads to higher costs for chain stores. Therefore, we believe there are opportunities to reduce markups and lower prices. Let me give an example, I'm not sure how to explain it, but let's take a specific product, a specific type of rice, which costs less than 4 GEL in a particular chain in one of the European countries, while the exact same product costs almost 11 GEL in the same chain in Georgia. The price difference is almost threefold. It's a bit difficult for me to explain this, but we will study and determine how logical all of this is. Another interesting detail is the frequent mutual claims made between the industry representatives, such as retailers towards distributors, distributors towards retailers, manufacturers towards retailers, distributors, and so on. This also offers us a better insight into the heart of the problem.
In the PM’s words, the process is expected to be completed by the end of April.
"This process should be completed by the end of April, but this does not mean that we’ll wait for price cuts until the end of April. We expect to make progress and achieve results in this endeavor ," the Prime Minister stresses.
