VZCZCXRO8290
RR RUEHLMC
DE RUEHSI #2938/01 3070431
ZNR UUUUU ZZH
R 030431Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 4554
INFO RUEHAK/AMEMBASSY ANKARA 3967
RUEHKB/AMEMBASSY BAKU 1729
RUEHRL/AMEMBASSY BERLIN 0969
RUEHLO/AMEMBASSY LONDON 0687
RUEHMO/AMEMBASSY MOSCOW 7922
RUEHFR/AMEMBASSY PARIS 0275
RUEHYE/AMEMBASSY YEREVAN 1935
RUEHVEN/USMISSION USOSCE 2093
RUEHNO/USMISSION USNATO 3881
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION
RUEHRC/USDA WASHDC

UNCLAS SECTION 01 OF 02 TBILISI 002938 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/CARC AND EB/TPP/ABT 
 
E.O. 12958: N/A 
TAGS: EINV ECON ETRD PGOV KFIN GG
SUBJECT: GORKONI FRUIT PROCESSING COMPANY: AFTER STALIN, 
ANOTHER PRIDE OF GORI 
 
 
¶1. Summary.  The city of Gori in the Shida Kartli region of 
central Georgia prides itself on many things: the birthplace 
of Josef Stalin, the home town of current Georgian Defense 
Minister Irakli Okruashvili, and host to the country's top 
fruit processing factory.  Econoff visited the Gorkoni fruit 
processing plant on October 3 at the invitation of a Ministry 
of Agriculture official.  The plant has yet to realize its 
high potential, but with little domestic competition, the 
company is in no hurry.  It relies on government purchases 
for a quarter of its revenues, and has developed export 
markets in Ukraine, Israel and Germany.  End Summary. 
 
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Georgia's Orchard - Unrealized Potential 
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¶2. The Shida Kartli region of Georgia is traditionally known 
as "Georgia's Orchard" and supplied fresh produce to the 
Russian market during Soviet times.  Recently imposed Russian 
sanctions and disruption of traditional trade links dictates 
reorientation to alternative markets and value-added 
production.  The high potential for produce processing in the 
region remains unrealized, although Tornike Mgaloblishvili, a 
Ministry of Agriculture official, told us that a few 
factories are under construction and will open soon. 
 
¶3. For now, Gorkoni, located in Gori, is the only food 
processing facility in the entire Shida Kartli region.  It 
produces fruit and vegetable preserves, juices, jams, and 
sauces for domestic consumption and export.  The company's 
bestseller is a Georgian plum sauce "Tkemali," produced in 12 
varieties.  Gorkoni's operations are seasonal and in the 
high season it has 200 employees.  It purchases its inputs of 
produce from local farmers.  As an employer in Gori, Gorkoni 
is unrivaled in size except perhaps by a new military 
hospital, which opened on the day of our visit. 
 
¶4. The factory was privatized in 1994 and is 20 percent 
Russian-owned.  Twenty-five percent of Gorkoni's output is 
for domestic consumption -- almost entirely in the form of 
government contracts to supply kindergartens and the 
military.  The other 75 percent of production is exported to 
Israel, Ukraine, and Germany.  Gorkoni has established 
contacts with Japanese and UK partners for future export 
expansion.  Despite its partly Russian ownership, Gorkoni has 
not targeted the Russian market, and has not felt any major 
ill effects because of Russia's ban on agriculture products. 
 
¶5. Gorkoni's final product is tasty and visually appealing, 
but the factory and equipment is very outdated.  The only new 
addition is a sterilization device, donated by the Ministry 
of Agriculture.  The factory needs upgrading, especially to 
reach its potential, but it has an established brand name in 
Georgia and contacts abroad.  Its management needs to work 
hard to attract investors and partners to renovate the 
factory and expand its market.  Such value-added agricultural 
processing is one of the more promising sectors of the 
Georgian economy for foreign investors. 
 
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A Good Judge Makes a Good Businesswoman? 
---------------------------------------- 
 
¶6. The company's director is a former judge who recently 
abandoned her judicial career at the request of government 
authorities to direct Gorkoni.  (Note: It is likely that some 
of Gorkoni's shareholders are government officials who have a 
vested interest in its success.)  Despite her dedication, the 
director lacks management education and experience.  The 
company takes its government contracts for granted, and has 
done little to market its natural and organic products in 
domestic stores. 
 
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Gori's Golden Boy Okruashvili 
----------------------------- 
 
¶7. Gori still respects Stalin's cult of personality, and it 
 
TBILISI 00002938  002 OF 002 
 
 
supports the idea of a strong leader.  Not surprisingly, Gori 
and the Shida Kartli region is a stronghold of Defense 
Minister Irakli Okruashvili, who is from the region. 
Okruashvili's name in Georgian translates to "Golden Boy." 
When we asked Gorkoni's director her opinion about 
Okruashvili's promise to be in Tskhinvali for New Year's, her 
eyes sparkled and she confidently responded, "We believe in 
him!  He will be there!" 
 
¶8.  Comment:  Gori is one city in Georgia that can be assured 
a steady trickle of tourists because of the Stalin Museum and 
birthplace.  Gorkoni's fruit processing factory is an example 
of the kind of business whose potential could be realized 
with the help of foreign investment in Georgia. 
TEFFT