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Tea, two, one: Countdown to Georgian chai revival?

By Alexander Ward
Friday, July 18
Sitting in a near-bare office on the fifth floor of a musty Soviet building in Vake, Gocha Dzneladze, the director general of one of Georgia’s main tea producers, is not happy.

“I told you not to do it,” he says sternly into his office phone. “Not without the government’s permission…it is criminal to make business in Abkhazia.”

An Indian company specializing in tea processing equipment is at the other end of the line and has been talking business with companies in Abkhazia.

“I don’t like things to get political,” apologizes Dzneladze when he hangs up, “but he will get his hand cut for doing business in Abkhazia…it’s criminal.”

Sitting amongst a few office essentials—a computer, printer, some unkempt paperwork and four cartons bearing foreign tea brand names—the enthusiasm with which Dzneladze talks his trade makes up for the drab setting.

If Dzneladze’s optimism is justified, the industry may re-taste some of the success of its Soviet past. Back in its heyday, the Georgian tea industry satisfied 95 percent of the Soviet Union’s demand and was the fourth or fifth biggest exporter in the world.

The industry took a sharp downturn when the Soviet Union collapsed. Internal conflict and political instability in Georgia combined with poor trade relations with Russia left many tea plantations unusable—the overgrown tea bushes a depressing metaphor for a once-blooming industry neglected and in need of attention.

The first significant pruning came in the mid-1990s when foreign investors, mainly from Germany, bought up a number of processing plants and injected some hope into the country’s tea production prospects.

It was on this wave of investment in 1996 that Dzneladze’s company Geoplant was established.

Teething problems

Months before he was ousted in 2003, former President Eduard Shevardnadze promised GEL 3 million to help revive tea production.

Swept to power in the Rose Revolution later that year President Mikheil Saakashvili’s administration picked up where Shevardnadze left off, providing a string of subsidies to Georgian tea producers throughout its first few years in power.

The success of funneling funds in this direction has been debatable. Dzneladze maintains that this financial assistance was crucial for getting some ten thousand hectares of disused plantations back to a working state.

But a representative of the Agriculture Ministry, Tornike Mgaloblishvili, acknowledges that the government’s past approach to revitalizing tea production has not yielded many significant results. Now, he says, the ministry is pursuing a more diversified strategy than simply handing out subsidies.

This involves helping tea producers find new markets through foreign exhibitions, something that has been of particular importance across the agricultural sector since Russia imposed a blanket embargo on Georgia in 2006.

Geoplant currently sells 45 percent of its produce to the global tea giant Lipton and 35 percent goes to Germany. The rest is divided between Ukraine, Turkey and much smaller importers including a number of Central Asian countries, Poland and even India.

Unlike Georgia’s wine and mineral water industries—both of which have fared poorly in finding replacements for the Russian market—Geoplant was quick to find alternative buyers.

The reason, Dzneladze explains, is that the company does not produce a finished retail product, but bulk dried tea that is often blended with other leaves before being packaged under a foreign brand name.

Consequently, an aggressive marketing campaign is not needed to find new buyers and penetrate new markets. “Lipton buys from us, but they are not using it as a Georgian mono-tea,” he says.

Teetering on revival

In fact, whereas most of Georgia’s agricultural sector aims to increase exports, Geoplant is hoping to crack the domestic market.

Some 98 percent of tea consumed in Georgia is imported—a situation that Dzneladze thinks presents a tremendous opportunity for homegrown producers.

Not only is Georgian tea grown without the use of pesticides and herbicides, he claims, but it is inevitably fresher than tea that has been shipped from thousands of miles away.

Recent investment in the company has funded projects to upgrade its three main processing plants in Guria, Imereti and Samegrelo that should drastically improve the efficiency of production.

The next step is to take advantage of the government’s cheap credit scheme, which offers long-term low-interest loans to stimulate agricultural projects, to kick start an all-Georgian tea brand.

“Many people are skeptical of the tea industry in Georgia,” Dzneladze laments. “But this is wrong—the Georgian tea industry has very big potential.”

“Georgian tea is ecologically pure, we are surrounded by countries that are big tea consumers…and we can easily compete with producers that are 5 000 kilometers away: transport costs are lower, and we can deliver fresher tea.”

Aside from logistical advantages, there is also a certain nostalgia in the former Soviet Union for Gruzinsky chai, the Geoplant director general reckons.

The company certainly has grand ambitions. If all goes according to schedule, market research will wrap up in the fall and Geoplant’s first fully Georgian tea brand—picked, processed and packaged—could be on its way to a teapot near you as early as December.

As for Abkhazia, Dzneladze says that the moment the breakaway region comes back to the fold everyone will get a sip of Georgia’s tea success.

“Of course we will help them [Abkhaz tea producers], and together we’ll improve the tea industry,” he says.