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Russia Targets Borjomi in Trade War with Georgia
/ 5 May.'06 / 17:51
Civil Georgia

Russia’s decision to ban the import of one of Georgia's most prominent export – Borjomi mineral water – five weeks after banning the import of Georgian wine, was not a big surprise amid Russia’s trade war with Georgia, officials in Tbilisi say.

The Russian consumer protection agency said it will revoke Borjomi’s safety certificates starting from May 7; meanwhile the agency instructed Russia’s customs service to prevent the import of Borjomi, citing the product’s failure to meet standards.

“The reason for this very difficult decision was the fact that an inspection carried out recently in the regions - especially in the Moscow region - showed that these waters, which are being advertised as 'Borjomi' water, do not, in reality, correspond to the specifications of this water,” Genady Onishchenko, the Russian chief sanitary inspector, told reporters.

“Out of the 69 samples of this mineral water [Borjomi] inspected in April in the Moscow region 68 failed to meet standards,” Onishchenko said in a letter to the Russian customs service on May 4.

Georgian Glass & Mineral Waters Company (GGMW), which produces Borjomi, has already denied these allegations as groundless.

Georgian Prime Minister Zurab Nogaideli said Russia’s recent ban is “a politically-motivated decision.”

“Although we are working towards re-entering the Russian market, we should work more actively towards entering new markets,” MP Nogaideli, who is currently visiting London for the business forum Invest in Georgia, told Imedi television on May 5.
 
“They are fighting against everything that is Georgian, which has nothing to do with fighting against falsification,” Mikheil Svimonishvili, the Georgian Agriculture Minister, said on May 5.

Parliamentary Chairperson Nino Burjanadze said Russia’s decision “was not a surprise.”

“This [ban of Borjomi] is yet another argument in favor of those people who demand Georgia’s withdrawal from the CIS [Commonwealth of Independent States],” Burjanadze told reporters on May 5.

President Saakashvili hinted on May 2 that Georgia may quit the CIS and instructed the government to estimate the possible economic consequences of withdrawal.

This ban of Borjomi on the Russian market is less painful for Georgia than the banning of wine, experts say.

The amount of mineral waters (all brands, including Borjomi and Nabeghlavi) exported to Russia is less than that of the export of Georgian wine – USD 23.6 million vs. USD 63 million in 2005, respectively.

On the other hand, the Georgian mineral waters’ foreign markets are more diversified than those of Georgian wine, which is mainly exported to Russia – up to 87% in 2005.

Last year the Georgian Glass & Mineral Waters Company (GGMW), which produces Borjomi, exported USD 22.1 million worth of Borjomi to Russia, according to the Georgian Department of Statistics (GDS). USD 7.7 million worth of Borjomi was exported to Russia during the first three months of 2006, according to the GDS.

GGMW claims that 50% of its entire production goes to the Russian markets, while 17% goes to Ukraine, 15% is consumed in Georgia and the remaining 15% goes to 25 other countries.

GGMW is one of the largest Georgian companies which turned into a multinational last year after it established a holding with the leading Ukrainian mineral water companies - IDS and Oscar Mineral Water Plant in Morshyn.

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