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| Home > News & events > 2006 feature stories > Georgian frozen food business grows | |||||||||
Georgian frozen food business grows |
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EBRD loan strengthens the country's first ever producer of frozen food Seven years ago, Givi Gachechiladze gave up a well-paid banking job in London to return to his native Georgia where he used his experience and savings from the big city to set up a frozen food business with a university friend, Akaki Paitchadze. Their business, Delidor, has become the country’s first-ever producer of frozen food, a natural in this country blessed with a splendid warm climate and fertile soil. Georgia was one of the primary suppliers of agricultural products in the former Soviet Union and Delidor is helping to bring back the glory days. By 2002, frozen tomatoes, aubergines, onions and cauliflower from Georgia were all on their way to Russia, Germany, Belgium and Netherlands. Since then, the company has increased the number of vegetable and fruit varieties it exports to 23 and, in 2003, the two Georgians sold a minority share in Delidor to a foreign business partner. Unfortunately, this did not resolve their working capital problem. Explains Mr Gachechiladze: “We observed an increase in demand for frozen foods as industrialisation and urbanisation progressed in our neighbouring countries. But this business is highly seasonal and we needed more working capital. The deus ex machina would have been a bank that could invest big money in our business for a long period. This was more of a dream as no local bank would take the risk.” The solution came through the EBRD. In 2005, Delidor received a loan and equity injection from the Bank totalling $1.5 million (EBRD owns 27 per cent of Delidor). This helped them to purchase a new compressor, freezer, packaging equipment and several tonnes of the best Georgian vegetables and fruits. Save energy and cut prices Givi Gachechiladze is confident about the future of Delidor. A new factory is now being built that will see a tenfold improvement in the company’s energy efficiency. “Too much energy was being wasted in the old factory built in the Soviet era. The cold storage will now be closer to the packaging area and we will use the same amount of electricity to store 3000 tonnes instead of just 300 tonnes in the old factory. By consuming less energy, we will be able to cut prices,” he adds. Delidor’s 230 employees will be very busy this year. And they are perfectly qualified to do their jobs. “All our key people are trained. For example, the EBRD TurnAround Management (TAM) Programme trained our quality assurance technicians and will train the company’s management this year,” says Mr Gachechiladze. TAM, which in Georgia is financed by donor grants provided via the Early Transition Countries fund, is also advising the company in developing a business plan and in its application for the Hazard Analysis and Critical Control Points, an international quality standard that will help Delidor market its food abroad. Explains Mr Gachechiladze: “The certificate is not obligatory in Georgia but once we receive it, buyers in international markets will have the guarantee that there is no problem with the frozen food we process.” Delidor has big ambitions for the Russian market, confident that both countries would benefit, particularly with demand for frozen food increasing in Russia and with imports from Georgia entering duty-free. But the country that would have offered Delidor a great opportunity for expansion has since imposed a ban on key farm products from Georgia. Apart from the Russian setback, Mr Gachechiladze is confident. “This business is exciting,” he adds. “Georgia has big potential in agriculture.” Delidor buys all its vegetables and fruit from Georgian farmers and the EBRD loan helped to keep those relationships going. Mirian Chkhitonidze is one of the 400 farmers in 80 villages around Georgia who supply Delidor. How to become a rich farmer “All the land you can see here belongs to me,” says Mr Chkhitonidze proudly, pointing towards his 120 hectares of land. “Am I a rich farmer? Perhaps richer than other farmers in the village who don’t work with Delidor,” he adds. A builder by profession, Mirian Chkhitonidze felt the call of the land and became a farmer instead. In 2000, he started to sell one quarter of his production to Delidor and saw his income increase. He then bought 50 hectares, two tractors, built a new storage space and increased production. Later, he renovated his two-storey house in the village of Marneuli, southern Georgia, and bought a house in the capital, Tbilisi. “A few years ago, a loan was all I was looking for to expand my business. After working with Delidor, I have now built up enough capital to invest on my own,” says Mr Chkhitonidze. “I am glad that Delidor received an EBRD loan and created more business for farmers like me.” He, in turn, has created jobs for 60 smaller farmers and other locals.
By Marjola Xhunga, EBRD communications adviser
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