Essential oils

Project profile:

The global essential oils market was valued USD 5.5 billion in 2014. It grows by approximately 5% per year. The Soviet Union was the # 1 exporter of coriander essential oils and during the Soviet period Georgia had a rich history of essential oil production: primarily rose, coriander and eucalyptus. Georgian Pharmaceutical Company, which currently produces 160 unique medicines, plans to produce its own line of essential oils and cosmetics, including soap and shampoo – in a factory located in the Mtskheta region of Eastern Georgia. The plant will have capacity to produce 700 tonnes using new technology that will produce more than 50% of the oil from the plant. Plants are obtained from the local crops. Pilot production has already begun to extract 15 species of vegetable oils that use critical CO2 extraction, using cold press and hot distillation. The total investment of this project is 265,000 USD, 5 year IRR – 15%.

The Global Essential Oils Market:

Market size (2014): 5,5 billion USD;

Annual growth rate: 5%;

USA – considered to be the largest market for essential oils in the world ($ 900 million)

India – The largest exporter in the world – $ 600 million;

Bulgaria – The main exporter of essential oils in the region. 17th Exporter of the largest amount of essential oils – 50 million USD (2014)

Turkey: The 23rd largest exporter of essential oils in the world – 30 million USD (2014).

Advantages of Georgia:

  • Tax-free export to the EU, the US, the CIS and other regions with a total population of 2 billion;
  • Existing infrastructure and communication;
  • The low-cost resources (water, electricity, labor force);
  • The favorable geographic location: easily accessible European and Asian markets through Poti and Batumi Black Sea ports;
  • Local climate;

Project Description:

The plant location: Mtskheta district, Eastern Georgia;

Business activity: CO2 oils extract (Lavender, Rosemary, Chamomile, Iris) cold-pressed oils (Orange, Lemon, Tangerine), distilled oils (Geranium, Melissa Officinalis, Basil, Mint, Eucalyptus, Laurel, Valerian);

Production – All plants will be grown locally;

Production volume – 700 tons;

Staff – 10;

Financial indicators:

Total investment: 265,000 USD;

Expected income for one year: 160,000 USD;

EBITDA: 40,000 USD;

5 year IRR:  15%;

Government resources:

The Government of Georgia provides the following financial incentives:

  • The nominal price of the land;
  • Loan / Lease subsidy at the initiative “Enterprise Georgia” (ge);
  • Capital co-financing through Partnership Fund (ge);
  • Technical assistance through Georgian Industrial Development Group;