Olive oil is branching out

Taste as well as health benefits continue to draw consumers into the olive oil category.

Over the last two months The New York Times and The Wall Street Journal featured stories on the health benefits of the Mediterranean diet. Known specifically for its heart-health qualities, the diet emphasizes foods such as fruits, vegetables, nuts, whole grains, beans, fish, seafood and, possibly the star of the diet, olive oil.

The heart-healthy perks of olive oil are not news; cooking shows and nutritional experts have been extolling these virtues for years. Of course, for consumers nutritional benefits matter little if the product does not taste good, say industry observers.olive-oil-branch

Fortunately for olive oil manufacturers and retailers, more and more consumers are discovering the robust flavors that olive oil can deliver, and its versatility in the kitchen across various meals.

“Consumers are finally seeing beyond the health benefits and they are starting to expand into taste,” says Lisa Kartzman, director of public relations and strategic projects for New York-based American Roland Food Corp. “It always comes back to the American palette. We are still a relatively young country and the American palette continues to become more sophisticated, similar to the European palette.”

Manufacturers say there is a wealth of opportunity to grow the category. Not only are new users adding olive oil to their carts; existing users are finding additional ways to incorporate it into their regular regime.

There is still plenty of room to grow. According to observers, 2012 average annual consumption for olive oil was 0.9 liters or 0.24 gallons in the U.S. Comparatively; Portugal’s average annual consumption was 8 liters (2.11 gallons) while Spain was twice that at 16 liters (4.22 gallons).

“There is so much more olive oil being consumed in the Mediterranean,” says Rich Fryling, vice president of marketing for Baltimore-based Pompeian. “Even if we were able to add just one more liter per year, we would double the business. That shouldn’t be too hard to accomplish.”

Manufacturers agree that the best way to increase consumption is through education. As it stands now, manufacturers say the category can be very difficult for consumers to navigate; even basic olive oil terminology often confuses a lot of potential users.
Some of the questions observers receive are, “What is extra virgin olive oil? What is the difference between pure and refined?” Ultimately there are still basic misconceptions and education gaps. Yet users are thirsting for information.

“When consumers are hungry for information, often they will latch onto any message they get, and there are a lot of bad messages out there,” says Fryling. “What is happening is those bad messages are receiving attention. Our job is to help set them straight.”

Pompeian is working closely with retail staffers to help educate at the store level. Fryling says that more and more grocers are employing Registered Dieticians (RDs) to help their shoppers eat better. “We are working with these RDs to better educate them, so they can in turn pass on that education to consumers.” Part of that education includes providing literature with the best ways to speak with the end shopper about olive oil.

This spring Pompeian is opening a 4,000-square-foot visitor center at its Baltimore headquarters dedicated to educating consumers. There, visitors can learn about the history of olive oil, taste different oils and better understand the methodology used in bottling olive oil. “We are pretty much going to raise the curtain,” says Fryling. “We have more than one million gallons stored in this factory, so it is a way for us to open up and allow consumers to see everything that goes into producing olive oil.”

One lesson observers say is important for both consumers and retailers to understand is that not all olive oils are created equal. The olive oil used for cooking is not the same olive oil used for drizzling over a salad which is not the same olive oil used for dipping bread. Kartzman says there is a good amount of the population that understands this and they are becoming olive oil connoisseurs.

“This consumer wants the different types of flavor profiles they get from unique olive oils,” she says. “We are seeing much more of that in the market place. It is not just about buying extra virgin olive oil anymore.”

Price sensitive?
One factor that often scares away would-be purchasers is price. Over the past few years supply has been high, thus keeping prices relatively in line. Some say that attractive pricing has played more than a small role in improving sales.

That is about to change.

A poor 4th-quarter crop in Spain, the world’s largest olive oil producer, is about to force an increase in olive oil pricing. The pending increase has some observers concerned that sales may slow.

“With the price increase you may see consumers buying less,” says Mark Coleman, vice president of retail for Ayer, Mass.-based Catania-Spagna Corp. “If they were buying a 3-liter can, maybe they will switch to a 51-ounce bottle. If they were buying a 51-ounce bottle, they may drop to a 25.5-ounce.”

A price increase, some observers say, will not prevent the average consumer from looking to experience a higher quality extra virgin oil. “The couple of dollars that we are talking about is not going to change the effect that has already started to roll in this country,” says American Roland’s Kartzman.

True or not, most observers agree on one thing, the pending price increase will open the door for new product lines to shine. So far it seems as if they are.

Blending in 
“We are seeing a trend toward functional or transitional oils, its sort of in between a vegetable oil and olive oil—blended oils,” says Roberto Avila, director of marketing for Borges USA—Star Fine Foods, based in Fresno, Calif. “They offer some of the benefits of olive oil and the price is a little higher than vegetable oil, but not as high as olive oil.”

For years manufacturers have put efforts behind olive oil blends. Observers say blends are great to cook with and have caught on in the food service industry—but they have yet to resonate at retail. Manufacturers are hoping that that is about to change.

“In food service, blends are huge,” says Coleman. “A chef can cut down on cost significantly. Consumers that cook with blends can do the same.”

Under the La Spagnola brand, Catania-Spagna is introducing a sauté oil. The oil is a Mediterranean blend of olive oil, canola oil and grape seed oil. Coleman adds that the oil also contains an anti-splatter additive. The sauté oil will be “priced attractively” and is available this month in a 48-ounce bottle.

Pompeian also offers a blended line of extra virgin olive oil, canola oil and grape seed oil. “People are realizing when they taste a really nice oil they want to reserve that for drizzling and dipping,” says Pompeian’s Fryling. “You don’t need to use extra virgin olive oil for cooking, that’s where blends come in. They still have that wonderful fruitiness and aroma, but you are letting the canola oil do what it does best. Canola is a wonderful oil and when blended with extra virgin olive oil it adds stability.”

Fryling adds that grape seed oil has become incredibly popular, because of its light taste, antioxidant properties and cooking versatility.

Borges USA is introducing what they are calling “usage oils.” Extra virgin olive oils designated to be used for cooking specific dishes. “There are three SKUs, and they will say on them ‘extra virgin olive oil for vegetables, for fish and poultry or for beef and lamb,’” says Avila. “No one has taken this approach before where we are dictating what the oils are used for.” The line comes in a 500ml dark green glass and is available this month.

The oils are all single varietals, but Avila says the names of the olives are not being emphasized, “Because to the regular consumer, those names don’t mean anything. We are stressing what they can be used for and highlighting it on the label.”

Avila also says that in the long run the price increase may actually be beneficial toward growing the category, suggesting that many brands may start offering blended oils, growing that category, and when the price drops back down convert those users to extra virgin olive oil—thus growing that category as well.
Olive oil origination
Years ago the olive oil conversation began and ended in Italy. Today consumers are more aware that olive oil comes from around the globe.

“We are moving away from the ‘Italian oil being the only good one,’” says Tomas Almeida, marketing director for Sovena USA, based in Rome, N.Y. “Today there are different origins playing an increasingly important role such as Greece, Spain, Tunisia, Argentina and even here in the U.S.”

While country of origin is important, more and more, specific regions are drawing interest from consumers. Take Italy for example. The American Roland Corp. has begun importing products from specific regions of the country. “We have brought in products from Tuscany, Sicily and Puglia,” says Lisa Kartzman, director of public relations and strategic projects for the New York-based company. “Each region is very unique in its olive oil flavor.”

She says that is significant because olive oil will take on the nuances of the soil of where a tree is grown. “It always comes back to the soil—what is the make-up of the soil and how the soil is tended.”

Knowing where olive oil comes from continues to gain attention as traceability and authenticity becomes important for all categories. Heather Iafrate, brand manager for the Green Seed Group, based in Westport, Conn., says part of this trend has made some U.S.-based brands popular because of the ability to easily identify their origins.

“Imported product, however is more difficult to trace the origin, especially since one bottle of olive oil can come from multiple countries,” she says.

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