FMCG sector revenues increased substantially to GEL 8.8bn in 2018, up by 13.4% y-o-y and are expected to reach to GEL 9.4bn in 2019, +7% y-o-y.
“FMCG sector growth surpassed our previous estimates by 0.6bn in 2019. Higher inflation and increased tourism spending contributed to increased market revenue, +7% compared to our previous estimate expected at GEL 8.8bn in 2019”, TBC Research notes.
Domestic FMCG expenditures growth is driven mainly by higher purchasing power and increased inflation, for 2017-2019 years with population broadly unchanged over that period.
Domestic FMCG expenditures were up by 9.2% to GEL 7.6 bn in 2018. It is further expected to grow by 7.6% y-o-y and reach GEL 8.1bn in 2019. Tourist spending on FMCG likely stagnant in 2019, following the general expectation of a low-single digit decline in tourism inflows to the country y-o-y.
According to TBC Research, tourists spent GEL 728mln on FMCG in 2018, accounting for 8% of total sector revenue. Revenues in this segment displayed substantial growth (+82% y-o-y) in the same period. The per-capita daily tourist spending in restaurants in 2018 was GEL 51, 2x higher than the food and drinks spend outside restaurants (GEL 24).
Restaurants’ share in FMCG spending is stable at 6% of total sector revenue, with spending increasing to GEL 520mln in 2018 (+16% y-o-y) and GEL 590mln5 (+13% y-o-y) in 2019. Restaurants support the FMCG trade by purchasing food products from FMCG sellers. Total restaurant turnover was GEL 1.2bn in 2018. Revenue from restaurants in FMCG sector varies depending on restaurants’ gross margins, which we estimate at 45% (the direct cost of food products purchased from FMCG retailers) on average.
