`Mark Kailis Has an Appetite For Organic Olive Oil - Olive Oil Times
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Mark Kailis Has an Appetite For Organic Olive Oil

By Denise Johnson
Jun. 17, 2010 13:25 UTC

Mark Kailis, man­ag­ing direc­tor of Kailis Organic Olive Groves in Western Australia is rais­ing AU$30 mil­lion (about US$26 mil­lion) to buy the olive grove and pro­duc­tion assets of the failed Australian agribusi­ness Great Southern in a bid to become an organic olive oil pro­ducer on a global scale. The pur­chase would add nearly 1800 hectares, or about 4500 acres, to the exist­ing hold­ings of Kailis Organic.

We approach a crit­i­cal moment in our evo­lu­tion in this rela­tion­ship with the olive tree.- Mark Kailis

He is the son of Peter Kailis, the founder of the huge Red Rooster restau­rant chain, and the grand­son of George Peter Kailis, who began a Perth seafood busi­ness in 1917 that would be the begin­ning of a fam­ily busi­ness empire. Mark Kailis has nearly two decades of agribusi­ness man­age­ment expe­ri­ence includ­ing wine mak­ing.
See Also:Chinese Investors Purchase Australia’s Kailis Organic
Kailis Organic has been in the pre­mium extra vir­gin olive oil mar­ket for about nine years sell­ing their ​“Premium Blends” of Frantoio (50%), Leccino (25%) and Coratina (25%) vari­eties, as well as organic extra vir­gin olive oils infused with blood orange and lime. Last year the com­pany sold 160,000 liters of extra vir­gin olive oil of which 57% was organic. About two-thirds of last year’s sales were for Kailis Organic branded prod­ucts, with the remain­der sold into the bulk com­modi­ties mar­ket.

“There has been aware­ness about the size of the organic indus­try and his­tor­i­cal growth as a tar­get for future growth,” Kailis told the Olive Oil Times, when asked how recep­tive insti­tu­tional investors have been to his ambi­tions to ramp up to an organic olive oil mega-pro­ducer. ​“With the ques­tion of sus­tain­abil­ity and car­bon foot­print, organic olive groves have an advan­tage by not using fos­sil fuel fer­til­iz­ers and uti­liz­ing car­bon sequen­tion car­bon man­age­ment prac­tices such as cover-cropping. From this per­spec­tive, insti­tu­tional funds under­stand the ben­e­fits organic has over con­ven­tional farm­ing and mar­ket­ing.”

Although Kailis Organic has been cater­ing to the high-end, it’s the mid­dle mar­ket that Kailis has his sights on. ​“Our cur­rent stock­ists pre­dom­i­nantly rep­re­sent a mar­ket for our Premium Range,” said Kailis, ​“a range which has been in the Australian mar­ket place for almost 10 years, posi­tioned to the spe­cialty retail sec­tor, and inter­na­tion­ally in 7 coun­tries includ­ing Germany, Asia and the UK.”

At a time when world­wide olive oil prices are crit­i­cally low, Kailis knows he has his work cut out for him. ​“With the cri­sis that’s existed in the last you know two years in the world, there has seen com­mod­ity prices drop just about every­where” he told the Finance News Network. ​“Olive oil hasn’t been any dif­fer­ent; it has suf­fered com­mod­ity loss in con­ven­tional olive oil. In organic olive oil, cer­tainly in the organic sec­tor, there has been a drop.”

Still, Kailis expects with the acqui­si­tion to increase effi­cien­cies nec­es­sary to com­pete at a time when global com­modi­ties are under extreme price pres­sures. ​“With increased pro­duc­tion comes increased economies of scale. The Premium Range will undergo prod­uct exten­sion and re-launch, com­pet­i­tively posi­tioned and attrac­tive to more mar­kets both domes­tic and inter­na­tional,” he told us.

Kailis Organic mar­kets and sells its organic EVOO under brands includ­ing Kailis Organic Premium Range, Chef’s Blend and Splish.

Splish, a prod­uct spe­cially designed to give Kailis Organic a posi­tion in the mass-supermarket sec­tor, is also tar­geted towards grow­ing the company’s export sales. The inno­v­a­tive tetra pak pro­vide com­pet­i­tive advan­tage due to its qual­ity, organic sta­tus and min­i­mal envi­ron­men­tal impact.

We asked Kailis about his com­pa­ny’s inno­v­a­tive approach to pack­ag­ing. ​“Kailis Organics Premium Range is pack­aged in glass bot­tles. Splish is pack­aged in a 100% recy­clable tetra pak using the inno­v­a­tive, spe­cially designed Prisma sys­tem for olive oil.”

“The tac­til­ity and the gor­geous nature of glass will always have a place in the mar­ket, it is tra­di­tion and it is what look peo­ple expect, how­ever, Kailis Organic believes being organic is not enough, at the core is a desire to con­tribute to a bet­ter planet. This means focus­ing on pack­ag­ing and sup­ply chain design and method­olo­gies so the orga­ni­za­tion’s envi­ron­men­tal respon­si­bil­ity is total and not just about good farm­ing and man­u­fac­tur­ing processes.”

Kailis Organic con­tin­ues to expand into the food ser­vice sec­tor with its vol­ume prod­uct Chef’s Blend and intends launch­ing second-tier prod­ucts in the near future to fur­ther diver­sify and com­pete in what Kailis calls ​“an excit­ing and dynamic envi­ron­ment.”

With high-den­sity olive farms sprout­ing up from Chile to China, the Great Southern acreage is sur­pris­ingly, well, low-den­sity. Kailis told us his Dandaragan prop­erty which rep­re­sents around 18% of the total grove area has plant­ing den­si­ties of 555 which is con­sid­ered to be high den­sity. ​“As for the bal­ance of our prop­er­ties, den­si­ties are 333 per hectare con­sis­tent with non-high den­sity grove set-ups.”

Despite grow­ing up in an Australian fam­ily dynasty of sorts, Mark Kailis does­n’t seem to mind rolling up his shirt sleeves and he told us he enjoys the olive oil biz. ​“The olive oil busi­ness is a pure expres­sion of ter­roir with lit­tle inter­fer­ence from man – in other words, the qual­ity of our end prod­uct is pro­duced in the olive groves with the inter­ac­tion of pro­cess­ing rep­re­sent­ing a sim­ple but crit­i­cal aspect to the final prod­uct, for this I have a sense of purity of prod­uct that can be expressed in dif­fer­ent years the effects of good farm man­age­ment and mother nature.”

Kailis had this thought as we left him to get back to his rais­ing of $30M:

“After 7,500 years of pro­duc­tion of olive oil world-wide, we approach a crit­i­cal moment in our evo­lu­tion in this rela­tion­ship with the olive tree. Critical in the sense that the world other than tra­di­tional coun­tries is rapidly becom­ing more edu­cated about qual­ity aspects of good extra vir­gin olive oil. The neces­sity and the growth that will occur in the next 20 years will be a direct result of this edu­ca­tion and com­mu­ni­ca­tion tools such as Olive Oil Times. Higher demand will be placed on sell­ers to ensure what is stated as ​‘EVOO’ – actu­ally is both extra vir­gin and from an olive tree. This pres­sure is where demand in high-qual­ity fresh, legit­i­mate EVOO will come from and both the old world and new world pro­duc­tions must become aligned with this mes­sage.”

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