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Home / Business / Crisis in Wissol Group – Smart Supermarkets Close, Wendy’s Cutting Salaries
Philippe Peguilhan, Country Manager of Carrefour in Georgia and Soso Pkhakadze, President of Wissol Group have signed successful partnership agreement month ago

Crisis in Wissol Group – Smart Supermarkets Close, Wendy’s Cutting Salaries

Wissol Group is one of the old business companies on Georgian market.

The business group owned by brother businessmen Soso and Levan Phkhakadzes currently unites the following subsidiaries: Wissol Petroleum Georgia, Air Wissol, Wissol Gas, Vianor Georgia, Wissol Gas Distribution Company, Smart network of supermarkets, Wendy’s network of fast food restaurants, Villaggio development company and Alma advertising company.

Initially, Wissol Group owners took efforts on oil products market. In 2002-2006, the company was shaped under the Canargo Standard Oil brand and starting 2006  the brand of Wissol maintains its own place on oil products market. Wissol Group started active operation on oil products business in heavy times under the ruling of United National Movement. In that period SOCAR appraised as the business of two presidents, GULF ascribed to Kezerashvili and Saakashvili and several other companies used to operate on the market and do high-income business on oil products market.  This was impossible without cooperation with the ruling Authorities.

In that period all companies used to follow an agreed scheme and high tariffs were maintained artificially to raise huge revenues. By the way, all these facts were proved after the regime changed, when the competition agency accused five key oil products companies such as SOCAR, Wissol, Lukoil, Gulf and Rompetrol of cartel collusion and imposed a 55 million GEL fine on them. And 10.4 million GEL fine was imposed on Wissol.

In those years Wissol Group and its owners used to receive huge revenues. After the power change, when business was exempted from pressure, the business group owners decided to invade new markets. As noted above, Wissol Group owns several subsidiaries, but the Group  decided to particularly develop Smart network of supermarkets and Wendy’s network of fast food restaurants. All opening ceremonies of supermarkets or restaurants were held in bustling atmosphere.

As a result, the Group has opened 16 supermarkets of SMART and 10 fast food restaurants of Wendy’s. According to the statement by the management and owners, SMART was to become one of the most successful network of supermarkets, while Wendy’s was to provide real competition with McDonald’s that remains the most favorite network in Georgia. However, developments went in different way – Smart supermarkets are being closed one after another, while Wendy’s has started cutting salaries.

At this stage, Smart has closed Vazisubani, Gldani and Vake branches and these facilities were sold to the competitor network of Carrefour. Wissol Group seems to have failed competition and taken decision to transmit facilities to competitors. Smart is expected to close supermarkets at Saburtalo and Rustaveli Avenue too, because in Saburtalo  District Carrefour opened a new facility in front of Smart and this fact is expected to lead the Smart supermarket to bankruptcy.

As to Wendy’s, this network manages to continue operation, however, the network staff asserts that the company has considerably cut salaries. At the same time, employees cannot explain reasons for reduction of salaries. Wendy’s also seems to be failing competition on the market and it is not ruled out the management start closing facilities, following reduction in salaries.

It seems Wissol Group owners have failed to get established on new markets and remain successful in real competitive environment. One can succeed on oil products market as a result of cartel collusions and maintain high profits margin, but it is an absolutely different situation when you have to act in real competitive environment.

As to oil products market and Wissol Petroleum Georgia, the management seemingly plans to carry out certain changes. Supposedly, all or a certain part of Wissol refueling stations will be transformed into ECO refueling stations. For example, the station on Vazha-Pshavela Avenue has already started re-branding process and it is colored in red and white colors instead of green color.

Wissol Group has not made an official statement about this fact, however, the refueling station’s representatives noted that Wissol refueling stations will be transformed into ECO stations.

We remind you that ECO’s fuel was one of the favorite products in Georgia because of its high quality standards, however under the ruling of United National Movement, this brand was expelled from the country in practice and in 2014 Wissol obtained fuel supply exclusive rights from ECO, as well as the right for use of ECO trademark in Georgia. Seemingly, now the company plans to use this right. The time will show whether all refueling stations will be rebranded or only several ones will be transformed. Nobody talks about reasons that have preconditioned  these changes,whether Wissol has lost a great number of clients and has decided to rebrand the network or has just decided to return ECO brand to the market.

The fact is Wissol Group is demonstrating crisis signs. Wissol Group, which was a successful business group under the ruling of United National Movement, failed to maintain advanced positions on the market in new realities. All other details will be outlined in the course of time and the Caucasus Business Week (CBW) will comprehensively cover this issue for our audience.