By Denise Johnson
Olive Oil Times Contributor  |  Reporting from Boston

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.

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.

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.

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