ISET

On the back of a sharp y/y decline in the price of Imeretian cheese (down by about 10 and 18% in July and August 2016, respectively), the Khachapuri Index took a big hit in August 2016. Having reached the seasonal bottom in May, the Index increased in June due to regular seasonal factors (tourism-related increase in demand and a gradual slowdown in domestic milk production). Yet, its behavior in July and August represents a major departure from the multi-year pattern we have been observing since 2008. In July, instead of going up, the Index dropped 3 tetri (to 3.01 GEL). The modest monthly increase of 14 tetri in August left the Index well below its last year value: 3.15 compared to 3.49 GEL in August 2015, representing annual Kh-Index deflation of 9.6%.

What may be behind such a major shift in cheese price dynamics? The answer must be sought on the supply side. If anything, this summer must have seen a sharp increase in the demand for Georgia’s traditional foods, including cheese and khachapuri, as a result of continued expansion in international and internal tourism (the latter was triggered by a series of concerts held in Batumi and Kutaisi as part of the “Check-In Georgia” program).

One reason for the increased supply of Imeretian cheese is favorable weather conditions (precipitation causing greater production of green grass and, consequently, milk supply). Additionally, Georgian cheese producers may be learning to substitute (cheaper) milk powder for fresh milk, making them less dependent on weather and domestic milk production cycles. A quick analysis of imports data suggest that this may be indeed the case. In the first 7 months of 2016, Georgia imported some 140 tons more of milk powder (a 40% increase) compared to the same 7 months of 2015.

 

More Khachapuri Index Articles

  • June 19, 2017 Kh-Index | Why do cheese prices fluctuate more in Kutaisi?

    In May 2017, the average cost of cooking one standard Imeretian khachapuri declined to 3.14 GEL – a 5.4% decrease month-on-month (compared to April 2017). In annual terms (compared to May 2016), however, the Index gained 8.5%. Deflation of the index was caused by the sharp seasonal decline in price of Imeretian cheese, which went down last month by 10.1%. The Khachapuri Index reached its lowest value (2.86 GEL) in Kutaisi. The magnitude of the Read More
  • June 5, 2017 Kh-Index | Continuing High Cheese Prices This Year

    In May 2017, the price of cooking one standard Imeretian khachapuri continued its normal seasonal decreasing trend and reached 3.14 GEL, which is 5.4% lower month-on-month (compared to April 2017), but 8.5% higher year-on-year (compared to May 2016). The main contributor to the price change was a seasonal decrease in the price of cheese, which fell by -10.1%, compared to the previous month (April 2017). As shown on the graph, from July to December 2016, Read More
  • Off-Season in Batumi and Kutaisi?

    In April 2017, the average cost of cooking one standard Imeretian khachapuri decreased to 3.32 GEL, which is 2.5% lower month-on-month (m/m, that is, compared to March 2017), but 4.9% higher year-on-year (y/y, compared to April 2016). The monthly decline in the price of khachapuri is driven by the seasonal adjustment in the price of milk and cheese. The price of cheese (6.93 GEL) has declined by -5.2% compared to the previous month (March). The Read More
  • Any Export Potential for Georgian Milk Products?

    ISET’s Khachapuri Index kept declining in April, which is in line with seasonal trends. The average cost of cooking one standard Imeretian khachapuri currently stands at 3.32 GEL, which is 2.5% lower month-on-month (compared to March 2017), and 4.9% above year-on-year (compared to April 2016). The current underdeveloped structure of Georgian dairy sector makes milk prices high and noncompetitive. According to FAO-EBRD data, the farm gate prices of milk differ between commercial farms and smallholders, Read More
  • Great Lent Pushed Prices Down

    In March 2017, the national average price of cooking Imeretian khachapuri declined to 3.41 GEL, which is 6.9% lower compared to the previous month (February 2017), and 4.1% above its value a year ago (March 2016). Such a noticeable monthly decline in the price of khachapuri is driven by the seasonal adjustment in the price of cheese, which stood at 7.31 GEL in March 2017, and is 12.2% below last month’s value (February 2017). As Read More
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