The decision of the Eurasian Economic Commission on the phased introduction of labeling for bottled water, adopted in October 2021, made the Kyrgyz manufacturing companies of this type of product seriously worried about the prospects of their business.

Expensive, but necessary

After analyzing the situation, it became clear that entrepreneurs are not ready for the introduction of labeling today. To find a way out of this situation, the International Business Council (IBC) of the Kyrgyz Republic initiated a round table dedicated to the problems and prospects for the development of the food industry in Kyrgyzstan.

In the course of the dialogue between business and government officials, numerous problems have emerged that need to be addressed immediately. However, the former does not have the means to do this, and the latter has no leverage.

“Marking requires the introduction of additional operations in the production chain,” explained the head of the IBC, Askar Sydykov. - As our research shows, producers of bottled water are not ready to introduce labeling due to the lack of appropriate equipment, the cost of which ranges from 75 to 200 thousand euros. To this must be added the cost of depreciation and logistics. As a result, the costs will be included in the cost of the product, which will make it uncompetitive in the domestic market, not to mention supplies abroad. It is possible that, as a result, the share of counterfeit products will increase. In addition, questions of an infrastructural nature arise. For example, for uninterrupted accounting and tracking of products, constant high-speed Internet is needed throughout the country, but this is not available everywhere.

According to the IBC, the producers of bottled water agree with the experts, before starting the introduction of the labeling of these products in Kyrgyzstan, it would be nice to first study the experience of other countries in this area.

Russian industrialists willingly shared their experience. According to the head of the Union of Producers of Juices, Water and Drinks of the Russian Federation, Maxim Novikov, without special equipment that recognizes digital information about a product, it will not be possible to achieve a full effect from the labeling.

“All points of sale must be equipped with devices that read the QR code of the products,” he said. “Not only is such equipment expensive, it also needs to be modern from a technical point of view. As practice has shown, the installation of such devices in small retail outlets is not economically feasible at all.

And this is another problem. Indeed, in Kyrgyzstan, such reading devices are available only in large retail chains, of which there are only three. Even the assumption that sellers in the markets where most of the Kyrgyz people shop will buy them is still unrealistic.

From the international practice of labeling goods, during the round table they cited the example of Brazil and Turkey, where the state fully covered the costs. In Georgia, this process has not yet been fully regulated, therefore, manufacturers have difficulties with exporting products.

At the same time, despite the difficulties, food industry workers agreed that there are pluses in the labeling. First of all, this is the possibility of unhindered entry into foreign markets and the preservation of positions already existing there, guarantees of the legality of the origin of goods, their safety, as well as the fight against counterfeit goods and accounting for tax revenues.

However, the question of how to make the process of introducing labeling painless for Kyrgyz business remains unanswered.

Market Access

In addition to discussing foreign experience in product labeling, the round table suggested conducting a thorough analysis of pricing after equipping goods with a digital code, as well as the possibility of providing the state with special financial conditions for business. Which ones, the government should decide.

We also touched upon the export of Kyrgyz water. She is interesting to China and the Arab countries. But, alas, everything again depends on the marking.

Kyrgyz manufacturers announced their desire to sell their products abroad back in 2011. And some managed to get into international markets. However, the percentage of “lucky ones” remains negligible. Without a doubt, it will increase after the introduction of labeling, but only if enterprises can find the means to start this process in their enterprises.

In the opinion of the majority of entrepreneurs engaged in this business, the state support of domestic producers could save the situation. It remains to be seen what the Cabinet of Ministers of the Kyrgyz Republic will say about this, which is supposed to consider this issue at the end of January 2022.“Kyrgyz producers compete not only with each other, but also with their counterparts from Kazakhstan and Russia,” said Edil Mamytbekov, head of the Association of Bottled Water Producers of the Republic. - The rivalry is tough, and only those who have either additional means of production or the possibility of serious financial investments will stay afloat. The costs of equipping marking lines will not be pulled by few, and those who fail will be forced to leave the market. It's a shame if this niche is occupied by importers.

Open your face

In Kyrgyzstan, the Regulation on labeling goods with identification means was approved in 2019. According to the document, the passage of this procedure is required by goods produced in the republic or imported into the Kyrgyz Republic, as well as exported to the EAEU member states. However, it was not possible to seriously address the requirements of the regulation. The pandemic and the restrictions imposed in connection with it prevented.

In 2020, a pilot project on voluntary labeling of goods was launched in the country. In July 2021, labeling of alcoholic beverages and cigarettes began without fail, and since January 2022, a ban on the circulation of unmarked alcohol and tobacco products has been in effect in Kyrgyzstan.

“So far, it is difficult to talk about any significant replenishment of the country's budget thanks to labeling,” said Candidate of Economic Sciences Eldar Naumov. - The fact remains: the prices of these goods have increased significantly. However, the problem is different. Today, both large and small supermarkets are literally inundated with unmarked alcoholic drinks and cigarettes. What will happen to them? Who will be held liable for non-compliance with the requirements of the law?

As it turned out during the round table, in Kyrgyzstan, not a single domestic enterprise has an automated line for marking goods. Even in companies producing alcohol, which in the republic are considered large producers of food products, labeling is done by hand.

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