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Journal number 1 ∘ Eter Kharaishvili
The Atypical Crisis Impact on the Fruit Market: Structural Changes and Challenges

The article substantiates the importance of the fruit industry development for the balanced nutrition of the population and studies the factors that determine the further growth and steady development of the industry. There are several factors that lead to an increasing trend in fruit production and consumption, including the increase in the share of the middle class in the total population, the increase in the disposable income of the population, the rapid process of urbanization, the change in the lifestyle of consumers due to healthy food products, raising awareness about the characteristics of fruits, etc. It is substantiated that in the nearest period the current trends in the fruit market will be influenced by the further increase in the raw fruit production, the development of branding, technological progress and the development of online grocery chains. Based on the study of the changes caused by the atypical crisis, the negative and positive impacts on the fruit industry are identified.
The article analyzes the development trends of the fruit industry at the global and country level, assesses the problems caused by the atypical crisis in the field of trade and economic relations between countries, studies consequences of the impact of this crisis on the raw fruit market, and discusses opportunities for market diversification.
Development of trade and economic relations with countries, export potential raising tools, potential of diversification of export markets, ensuring optimal export-import balance are considered as the significant challenges out of the various problems in the agro-food sector of Georgia. Accordingly, trends and production indicators of raw fruit production in the agro-food sector are analyzed.
Main indicators of export-import of Georgian raw fruits are studied in the paper. Positive and negative aspects of export and import are identified through analysis, the main export markets of raw fruits are analyzed, the changes in export-import of fruit in these markets are evaluated, the modern challenges of the fruit industry are identified. Export growth is discussed, on the one hand, as an opportunity to increase local production, and on the other hand, to increase productivity and diversify of the market.
Current trends in fruit consumption are identified based on the grouping of materials regarding fruit industry development and market diversification. Some of them are worth noting:
● The growth of population leads to an increase in demand for food, including raw fruits;
● An increase in income leads to an increase in the demand for raw fruits;
● Consumer preferences change, leading to changes in demand for fruit;
● Consumption of fruits mainly increases in middle and high income countries;
● The increase in income in some countries increases the demand for food products with relatively high elasticity (fruits, meat);
● Modern storage systems ensure access to raw and non-seasonal fruits throughout the year;
● Market promotion and raising consumer awareness about the importance of raw fruit increases demand on it, etc.
The conditions for the entry of Georgian fruits to the international markets and the possibilities of market diversification are evaluated by the business analysis model, namely M. Porter's five factors of competition: the level of competition in the fruit market, the potential of new market entrants, consumer power, supplier power, market entry barriers.
The analysis of the model showed that the level of competition in the raw fruit export market is relatively high among the main exporters. Access to international markets is crucial for Georgia for the development of the fruit industry and the increase in the income of the producers. By improving the efficiency of natural and resource potential and using the comparative advantage of the country, it is possible, on the one hand, to increase the farming area in Georgia and, on the other hand, to develop intensive production. The demand for fruit is especially growing in the European market. Therefore, the growth of fruit export should be based on the following factors: development of fruit brands, improvement of quantitative and qualitative characteristics of the product, increasing the awareness through corresponding information systems, product and market diversification, etc.
The study of the potential of new market entrants and the emergence of product substitutes revealed that threats will occur if new entrants can compete with lower costs and products from other countries are exported to the market in the same period as from Georgia, or companies manage to offer new sales and service tools.
Consumer power is important for the reduction of price on fruit. This is determined by the number of consumers, as well as the opportunity cost of switching from one consumer to another, etc.
Supplier power obviously determines the price of products and services. It will be impacted by the number of fruit suppliers, product characteristics, opportunity cost of switching from one supplier to another, etc.
It should be noted that investments are important barriers, among others, to entering the fruit market. The fruit industry requires a large amount of investments. The requirements defined by the law, such as permits, licenses, quotas are especially important entry barriers for Georgian fruits; while the existing requirements from the consumers, as well as another standard can be considered as the indirect barriers.
Conclusions on problems and challenges in the raw fruit industry in Georgia are made and the appropriate recommendations on market diversification are developed.

Keywords: Atypical crisis, fruit market, structural changes, competition factors, market diversification.
JEL Codes: L11, L16, L22, L25

 

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