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. Last Updated: 07/27/2016

Bootlegging Prompts Halt To Borzhomi Investment

TBILISI, Georgia -- Georgian-Dutch joint venture Georgian Glass & Mineral Water Co.N.V, or GG&MW, said Thursday that it had decided to suspend investment in the production of Georgia's well-known brand of Borzhomi mineral water.

"We have decided to interrupt our investment for the time being until the Georgian government adopts a single strategy for Borzhomi production," GG&MW managing director Jacques Fleury said.

He said the main reason for the company's decision was the inability of the Georgian government to stop bootleg output.

"There is no real control over resources -- a lot of people can bottle fake Borzhomi water," Fleury said.

Georgian President Eduard Shevardnadze said Wednesday that he needed more power to fight growing government corruption, which he described as "out of control" and as posing a danger to national stability.

Shevardnadze said graft was threatening Georgia's relations with global financial organizations and foreign investors.

"Unfortunately, the present system of governing in Georgia has not been able to overcome the bureaucratic apparatus, which shelters the shadow economy and corruption that is out of control," he said at a news conference in the Tbilisi, the Georgian capital.

"This is hurting the investment climate in the country and is complicating our work with international financial organizations and foreign investors," said Shevardnadze.

Fleury said bootleg Borzhomi operators in Georgia had significant support from the Georgian officials.

"There are a lot of private interests among people in the government. We feel that they help and pay more attention to them than to us," he said.

Fleury said that for every real bottle of Borzhomi sold in the former Soviet Union there are nine fakes -- brews of dirty tap water with added bicarbonates.

Fleury said there were hundreds of illicit Borzhomi makers, adding that there were over 500 outfits in Georgia alone.

The market for mineral water in the former Soviet Union peaked before the 1991 breakup of the superpower at 480 million bottles per year, worth about $200 million. Borzhomi held the lion's share of this.

Fleury said a single Borzhomi producer in Georgia could restore the mineral water to its former dominant position.

"In Soviet times, Georgia produced about 400 million bottles of Borzhomi per year. Now it produces only 50 million bottles," he said.

GG&MW produced 28 million bottles of Borzhomi last year and planned to raise the volume to between 50 million and 55 million this year.

Fleury said the company intended to invest $10 million in the reconstruction of glass bottle factories this year. The company has already invested $1.5 million in rehabilitating a glass bottle factory in Georgia.