Value Chain Assessment to Enhance the Export Potential of Georgia’s Small and Medium-sized Enterprises

This assessment examines the export potential of Georgian small and medium-sized enterprises (SMEs) to enhance their access to European markets and seize emerging export opportunities.

The analysis focuses on four promising sectors: beverage manufacturing, packaging, apparel production, and IT services. 

Through value chain mapping, quantitative data analysis, and qualitative interviews with SMEs and industry experts, the study identifies both barriers to growth and pathways to success. It reveals that Georgian SMEs in these four sectors show strong export potential, particularly in high-value and niche markets. Realising this promise offers an opportunity to accelerate growth through modernised production, improved EU compliance, strengthened logistics and financing, and enhanced skills and international credibility. With coordinated support from the government, donors, and the private sector, Georgian businesses are well-positioned to thrive in European markets.

This research was conducted from September 2024 to March 2025 by the Policy and Management Consulting Group (PMCG) and the Policy Institute of the International School of Economics at Tbilisi State University (ISET-PI) under the Inclusive Access to Markets (IA2M) project, which was funded by the European Union and implemented by UNDP.

Key Findings by Sector

Beverage Manufacturing: SMEs account for 88% of businesses, with a robust 14% average annual turnover growth (2017–2023). Export opportunities are strong in niche and culturally distinctive products. Key challenges include the cost and complexity of EU certification, inconsistent quality of local raw material, outdated machinery, and skills gaps. Yet, unique flavour profiles and rising demand for authentic, small-batch products offer clear export potential.

Packaging: SMEs dominate the sector (99% of active companies), with turnover reaching GEL710 million in 2023 and exports growing by 26% annually since 2018. While reliance on imported raw materials and high transport costs limit price competitiveness, the sector benefits from a proven capacity to meet EU standards, active industry associations, and innovative practices such as the use of recycled materials and eco-friendly design. Building local certification services and leveraging eco-credentials could further boost export performance.

Apparel Production: Driven by rising global interest in Georgian fashion, the sector has achieved 19% annual growth in value-added (2017–2023). High-end, handmade apparel is the most promising, supported by relatively low labour costs, established international partnerships and active participation in trade fairs. To unlock further growth, SMEs need more information on international compliance requirements, solutions to high logistics costs, and improved labour skills in design and machinery operations.

IT Services: In 2023, one of Georgia’s most dynamic sectors, IT services, generated GEL4.2 billion (5.2% of the country’s total nominal GDP), marking a thirteenfold increase in turnover since 2017. Rapid growth, a business-friendly environment, and a large pool of English-speaking talent position Georgian IT firms to compete internationally. Continued collaboration with global partners, strengthening vocational training, and building visibility in European markets can further help to advance the exports. 

Background

Inclusive Access to Markets is a EUR 5,162,000 initiative funded by the European Union (EU) and implemented by UNDP in partnership with the Estonian International Development Centre (ESTDEV). It aims to empower small and medium-sized enterprises (SMEs) in Georgia and foster their capabilities to enhance value chains and secure access to the EU and European markets.

Disclaimer

This Value Chain Assessment was conducted by the Policy and Management Consulting Group (PMCG) and the Policy Institute of the International School of Economics at Tbilisi State University (ISET-PI) with the assistance of the European Union and UNDP. Its contents are the sole responsibility of the research team and do not necessarily reflect the views of the European Union and UNDP.