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Georgia's salty Borjomi water could return to Russia

Source: Thomson Reuters Foundation - Mon, 28 Jan 2013 16:42 GMT
Author: Reuters
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MOSCOW/TBILISI, Jan 28 (Reuters) - Georgia's salty tasting mineral water, Borjomi, expected to be bought by billionaire Mikhail Fridman's Alfa Group, could return to Russian tables soon amid increasing signs of an improvement in relations.

A deal to buy a controlling stake of IDS Borjomi has closed, Russian state news agency RIA Novosti reported on Monday. That followed a statement from Alfa in December that it had agreed to buy a stake in the firm from a fund controlled by the heirs of late Georgian businessman Badri Patarkatsishvili. Russia's Kommersant daily reported the deal was worth ${esc.dollar}300 million.

"If Russian businesses are saying we want to invest in Georgia, it potentially would reopen the Russian market for Georgian exports," said Charles Robertson, economist at Renaissance Capital.

"Georgian products were always desired in Russia, whether the wine, brandy or water."

A Georgian delegation is expected to visit Moscow in February to discuss restoring trade with Russia, once its largest export market.

Borjomi became a symbolic victim of tensions after Georgia's 'rose revolution' of 2003 led by pro-Western President Mikheil Saakashvili, which led to trade frictions and outright conflict when the two sides fought a five-day war in 2008.

Russia banned imports of Borjomi in 2006, citing health and safety reasons. Before the ban Borjomi's share of the Russian mineral water market was 13 percent.

Last October's election victory in Georgia by Prime Minister Bidzina Ivanishvili, a billionaire who made his fortune in Russia, has raised hopes of a thaw.

Ivanishvili, who built a Russian banking-to-retail empire worth ${esc.dollar}6.4 billion before entering politics in his native Georgia, is promising a more pro-business environment and to work effectively with Moscow.

The International Monetary Fund said this month it expects Georgia's economy could grow 6 percent this year, citing the possibility of increased trade with Russia.

The head of the Georgian Orthodox Church, Patriarch Ilia II, visited Moscow and met with Russian President Vladimir Putin last week, while Ivanishvili met Prime Minister Dmitry Medvedev on the fringes of the World Economic Forum in the Swiss ski resort of Davos.

All sides were tight-lipped over the Borjomi deal, indicating just how sensitive the diplomatic situation remains.

"To be super-friendly with Russia is still not a vote-winner in Georgia," Robertson said. (Reporting By Megan Davies and Margarita Antidze; editing by Douglas Busvine and Louise Heavens)

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