The FINANCIAL -- According to the Khachapuri Index, year-on-year we have observed a sharp increase (up by 9.1% compared to October 2015) in the price of butter.
Typically, the price of butter should follow the price of milk, since the latter is the major ingredient of butter. Interestingly, however, the data collected for Khachapuri Index does not support this trend. Our data showed a 1.1% year-on-year decrease in price of milk. The explanation could be that most milk (and also milk products) that we are monitoring are made of milk powder.
Several surveys have been conducted in Georgia to check the quality of butter (sold in local markets). These surveys showed that the composition of butter in many cases included very low or even 0% milk fat; instead, they contained vegetable fat and trans fats. Under new food regulations implemented in August 2015, it is prohibited to label a product as “butter” if it does not contain 80%-90% milk fat. Despite this, it is still unclear how protected consumers are from purchasing poor quality and sometimes even dangerous food products.
Domestic Production and Consumption of Milk and Milk Products (Ths. Tons)
The production and consumption of dairy products in Georgia has been increasing in recent years, as reported by Geostat. It is perhaps not surprising that as Georgia becomes more developed, and people earn higher incomes, they tend to diversify their diets and switch to foods with higher nutritional value. Increased consumption of dairy products could therefore help explain the increased importation of butter, which since 2009 has gone up by 123% (compared to 2016 nine month only).