Project profile:
Samtskhe-Javakheti region is distinguished by traditional livestock, which in turn is the driving force of the local economy. Recently completed infrastructure projects in the region provide a strong foundation for a local dairy processing plant that can produce organic powdered milk, butter and cheese. The estimated investment of the processing plant is 12.5 million USD, IRR – 17%.
Local market:
Imported powdered milk (2015): 16 million USD;
Imported butter and milk fat (2015): – 6.3 million USD;
Milk production in Georgia (2013) – 604,7 million liter;
Milk production per capita (2013) – 135 million liter;
Advantages of Georgia:
Georgia has a favorable investment environment, as evidenced by:
- Tax-free export to the EU, the US, the CIS, and other regions (with a total population of 2 billion);
- Existing infrastructure and communication;
- Low-cost resource – for example, electricity, labor force and water;
- Favorable geographical location – easily accessible European and Asian markets (through the Black Sea ports of Poti and Batumi);
- Wide range of natural, decorative and constructive stones (231 registered ores, total 1.5 B m3);
Project description:
Company location: Tsalka, Southern Georgia;
Products: powdered milk, butter and three types of cheese (Sulguni, European cheese, dry cheese);
Business activity: Production of milk, dairy products, distribution in the local market;
Employment: 40 employee;
Unit price:
- Milk (1 kg) – 3.22 $
- Butter (1 kg) – 4.72 $
- Sulguni (1 kg) – 3.43 $
- European cheese (1 kg) – 6,44 $
- Dry cheese (1 kg) – 3.00 $
Production capacity:
- Milk (Tons) – 2.043
- Butter (Tons) – 1,022
- Sulguni (Tons) – 365
- European cheese (Tons) – 365
- Dry cheese (Tons) – 365
Financial indicators:
Total investment: 12.5 million USD;
III year income: 12.8 million USD;
III year EBITDA: 5 million USD;
IRR: 17%
Government resources:
The Government of Georgia offers the following financial incentives:
- The nominal price of the land;
- Disbursement of the loan/lease within the framework of the initiative – “Enterprise Georgia” (www.qartuli.ge);
- Co-financing of capital through Partnership Fund (www.fund.ge);
- Technical assistance through the Georgian Industrial Development Group;
The opening of a powdered milk processing plant can be considered a profitable and promising investment, as there is a constant, high demand for dairy products in Georgia and in Caucasus. In addition, powdered milk and food made from it are considered necessary all over the world.