Mediterranean magic

As consumers continue to embrace the flavor and health benefits of olive oil, experts predict sales will double over the next decade.

Craig Levitt

The Greek poet Homer referred to olive oil as liquid gold. Ancient Greek athletes used to partake in olive oil rubdowns because they believed it had medicinal and mystical powers. In modern America, it’s doubtful that the local gym or spa offers olive oil treatments, but increased use in the kitchen has certainly spurred olive oil sales.

According to Chicago-based Information Resources Inc. (IRI) total U.S. dollar sales at food, drug and mass outlets (excluding Wal-Mart) for the 52-week period ended Dec. 27, was just under $730 million, an increase just under 2%. Unit sales topped 100 million, with an increase just under 5%.

Retail sales figures provide only a glimpse into the growing popularity of olive oil, however. According to industry reports in the last ten years olive oil imports have increased from 163,000 tons to 268,000 tons, an increase of about 65%.

“We have seen an amazing increase in total imports of olive oil into the U.S.” says Bill Monroe, CEO of Baltimore-based Pompeian. “Though still a small part of the business, there has also been a doubling of the crop out of California. Basically, olive oil has become the oil of choice in the American marketplace.”

Industry observers say that olive oil’s reach goes beyond supermarkets, which they estimate accounts for about 35% of total olive oil distribution. Observers emphasize that olive oil is consumed in many areas that aren’t measured, such as restaurants and small gourmet shops.

Monroe is quick to point out that Amer­icans’ taking to olive oil is all the more impressive when factors like the economy and product cost are taken into account.

“The business is growing, not only in supermarkets but all ends of distribution,” says Monroe. “This is an amazing phenomenon since the price of olive oil is normally three to four times the price of regular seed oil. I think it’s the idea that olive oil is healthy, but it also tastes good. You can have a healthy product but if it doesn’t have a certain appeal, particularly when you are cooking—consumers want to add value to what they are cooking—olive oil accomplishes that. For retailers, the outlook in the next ten years is the category will probably double again, which is quite amazing.”

From Tuscany to Tunisia

With the growing popularity and distribution of olive oil, the number of importers and exporters has increased as well. The added players in the category can lead to a great deal of confusion for consumers and retailers. For example, many consumers associate olive oil strictly with either, Italy, Spain and, to a lesser extent, Greece. In fact countries all along the Mediterranean produce olive oil, even if they don’t send it to the U.S.

Tunisia, a small country in North Africa on the southern coast of the Mediterranean Sea, has been producing olive oil for more than 2,000 years. About 50 olive oil producers from the country, with the help of Johnson City, Tennessee-based Hamman Marketing Assoc­iates, recently launched a “100% Tunisian” campaign to promote Tunisian olive oil.

According to Al Hamman, of Hamman Marketing Associates, the program is a long-term project initiated by the Tunisian Ministry of Industry to promote the country’s premium bottled olive oils and build a network of representatives and distributors in the U.S. market.

“When thinking about olive oil, people don’t think of Tunisia right of the bat,” says Hamman. “Yet it is the fourth largest producer of olive oil in the world. Traditionally, the Tunisians have sold their olive oil in bulk to Spanish and Italian producers for blending. Now Tunisians are saying, ‘why don’t we sell our oil 100% pure, rather than blending it with other oils?’”

Hamman says the initial stage of the campaign is geared towards educating retailers on the availability of Tunisian olive oils. Once the distribution is widespread the campaign will be taken to consumers. Part of the program includes a website, www.100percenttunisian.com, which in­cludes a listing of producers, where to buy Tunisian olive oil as well as uses, recipes and health benefits.

While Hamman doesn’t expect all of the Tunisian brands to make an impact with U.S. retailers, he says there are “five or six strong competitors who I think will be ideal in the market.” He adds that there are a number of smaller boutique brands that are available as well. One of the brands Hamman is excited about is called Terra Delyssa, which is produced by a Tunisian company called CHO and has a distribution center in Houston.

One of the better-known olive oils on retailer shelves is also 100% Tunisian—yet few know it. “We have a bell cow out there, although it’s not marketed that way,” says Hamman. “Newman’s Own Organics is 100% Tunisian olive oil, so to put somebody in step quickly, you name drop and say, ‘here is one of the most revered brands in the organic field and they are 100% Tunisian,’ that always helps.” 

Private label opportunity

Perhaps due to the artisanal nature or relative “newness” of the category, olive oil doesn’t carry the same brand cache afforded other food and beverage products. In fact according to IRI sales data, private label olive oil accounts for the greatest amount of retail dollar sales at almost 22% for the 52 weeks ended Dec. 27. Observers estimate that, including private label, the top three or four brands account for about 75% of olive oil sales, yet there are thousands of brands in the U.S.

Producers of private label olive oil say that because there are so many brands it opens the door for retailers to establish their store brand in the burgeoning category, thus creating a new—and true—point of differentiation.

“A lot of the names of the smaller companies are not well known,” says Edward Salzano, executive vice president and COO of Fairport, N.Y.-based LiDestri Foods, makers of private label olive oil. “Take a Wegmans, a Harris Teeter, Safeway Select or look at what Kroger has done—some of the brands that they have created—the consumer identifies more with those brands than with some of these so called proprietary brands that really have no marketing behind them.”

As the entire category continues to grow and consumers become more familiar with olive oil, LiDestri specializes in flavored and infused oils. Salzano says that some of the retailers he works with will carry a couple of national brands for the traditional olive oils such as extra virgin, pure or lite, but when putting together specialty products they might develop their own program, carrying only their own brand, eliminating the need for redundancy.

LiDestri is also expanding beyond its specialty oil making capabilities and has created an innovation center that will allow them to create unique packaging options for its retailers. The innovation center includes packaging from Italy that emulates what many of the imports have.

“The innovation center gives us greater control,” says Salzano. “We bring the oil in, in bulk, and pack it domestically. This gives us greater control because we don’t have to worry about the long lead time and shipments. We can also do smaller runs, allowing us to be more responsive to the retailer.”

Also providing private label olive oil is the Catania-Spagna Corp. Mark Coleman, vice president of retail for the Ayer, Mass.-based company, which also sells the Marconi brand olive oil, says that the success of private label olive oil is also a byproduct of retailers putting greater effort into their entire line of private label products.

Coleman, along with most observers, attributes the success of the entire category to several factors, not the least of which is the fact that retailers advertise olive oil on an almost weekly basis. There are also plenty of secondary and tertiary placements as well, such as the bakery and produce departments.

Packaging changes

Another important element that observers say has contributed to greater acceptance is the ongoing switch to plastic packaging. Coleman likens the switch to what happened in the juice category years ago.

“It has taken olive oil a lot longer to make this transition,” says Coleman. “People once thought, and some still do, that olive oil had to be in a glass bottle or can to retain flavor, that’s simply not true.”

In addition to switching from glass to plastic packaging in its 34-ounce bottles, Goya Foods has also redesigned its label in order to keep the line current and fresh.

“The label doesn’t look completely different,” says Kenia Delgado, olive oil product manager for Secaucus, N.J.-based Goya. “We kept the same palette, but on the label we are promoting how our olive oil is made, what type of acidity it contains and where we import it from (Spain).”

Delgado says by refreshing the line Goya not only is able to continually serve its current users, but attract new users as well.  “Our ultimate goal is to expand beyond the typical Goya user,” says Delgado. “We are a traditional Latino company but we are trying to break into mainstream.”

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