Powdered milk

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.