While debate swirls around how to ensure the quality of extra virgin olive oil in the United States, Europe and elsewhere, consumers in India are getting an entirely different message.
In a new campaign rolled out by the country’s largest olive oil marketer, it’s the lowest edible grade — one that can’t even legally be called “olive oil” in most places — that Indians should turn to for a healthier diet: Introducing the only major campaign in the world to promote olive pomace oil.
It’s all under the direction of VN Dalmia, 57, son of pioneer industrialist Ramkrishna Dalmia, and the chairman of Dalmia Continental, the company behind Leonardo Olive Oil.
He is the president of the Indian Olive Association, a former president of the Indo-American Chamber of Commerce, a trustee at the Darden School of Business at the University of Virginia, and a Knight Commander of Italy for his contribution to the development of friendly relations. “I am conscious of my responsibilities and weigh my words carefully as I speak,” he told Olive Oil Times.
Dalmia has been criticized for choosing to concentrate marketing efforts on the lowest oil grade but he says his critics have it all wrong. “Criticism is misconceived and displays a lack of understanding of the realities of the Indian marketplace,” he said.
“We have various companies, associations, consortia and even the IOC trying to introduce new ‘Mediterranean’ and other diets, new tastes, etc. and concurrently telling us that (extra virgin) tastes ‘better.’ This is akin to taking coconut oil to Italy or Spain and telling them that their food would taste better if cooked in coconut oil or, for that matter, mustard oil to France and proposing the same to them! Good marketing consists of determining and giving the customer what she wants and needs rather than trying to shove your product down her throat and tell her what is better for her.”
After pressing olives into oil, what’s left is the residue called pomace: the solid remains of the olive including skins, pulp, seeds, and stems. There is such a little amount of oil left in the pomace that it cannot be extracted by pressing, but only through industrial refining including the use of chemical solvents (like hexane), extremely high heat and deodorization.
Olive pomace oil is used by institutional food services, restaurants and pizzerias. It is often picked up by unwitting shoppers swayed by the romantic packaging with its misleading wording and low price — unaware that they’re not actually buying olive oil at all.
It’s the olive pomace grade that Dalmia emphasizes in a new mass-market campaign in India under the slogan “Go Indiano.”
“We decided to focus on Indian cuisine and daily use because that is where the volume would come from. We introduced Leonardo Olive Pomace Oil because of the way Indian food is prepared,” Dalmia said. “Everyday Indian food involves high-heat cooking. Extra virgin olive oil presented problems with frying: it was unstable at high temperatures and it imparted an olive flavor to the food and thus changed the taste. As a result, people who tried it concluded that olive oil was unsuitable for Indian cooking and abandoned it. Olive pomace oil presented none of these problems.”
Abandoned is right. In a 2008 interview, Dalmia predicted consumption of olive oil in India would reach 25,000 tons in 2010, and 42,000 tons in 2012 — forecasts that turned out to be way off. Last year the total was 4,000 tons, this year it might be 6,000 — incredibly small numbers for 1.2 billion people. It would equal about 1/4 of a tablespoon per year for the average Indian, or about one-ten-thousandth of what the typical Greek consumes — or less than one-hundredth of the average American.
Jean-Louis Barjol, the executive director of the International Olive Council has called the results in India a “disappointment,” and has since put the IOC’s limited promotional dollars to work elsewhere.
Meanwhile, Dalmia Continental has announced a plan to spend Rs. 60 crores ($13 million) on getting the word out, and it is inviting investors to come along for the ride. “We have several offers for participation in our growth equity and are evaluating the proposals. We shall make announcements shortly,” VN Dalmia said.
Dalmia’s $13 million campaign dwarfs the $1.7 million the International Olive Council hopes will have an impact in the world’s biggest market. And the differences just get starker from there.
The IOC’s North American olive oil promotional campaign was launched at a small Lincoln Center photo op that coincided with New York’s Mercedes Benz Fashion Week, featuring EVOO cocktails and an aspirational message that likened olive oil to the “little black dress.”
While in India, the campaign is aimed at getting people to move up from unhealthy seed oils by explaining that olive oil doesn’t have to be expensive: By using olive pomace oil and “reusing it up to three times,” olive oil’s famous health benefits can be obtained affordably and without altering the taste of traditional India dishes, the pitch goes.
“We should not waste time and energy in criticizing different grades of olive oil or each other,” Dalmia suggested. ” Olive oil purists, in their zeal to promote the benefits and taste of extra virgin, miss the point, he said. “Internecine squabbling will not serve to grow the world market.”
Olive Oil Times contributing writer Vikas Vij acknowledged the different market segments and what drives their decisions: “Health is the primary concern of urban Indians, and they will need a scientific assurance that olive pomace oil is at least ‘not worse’ than their existing cooking oils in terms of health,” Vij said from Delhi adding, “however, rural and less affluent Indians may opt for olive pomace oil due to economic compulsions if it is effectively cheaper than other cooking oils.”
Nidhi Jhingan, a 39-year-old professional and married mother of two children in Delhi wonders if the approach employed by Dalmia and others might prove to be shortsighted: “Olive pomace oil may initially sell due to consumer confusion about the difference between pomace oils and higher grades. That is not a sustainable strategy in the long-term. It is better to present scientific facts and comparisons with other traditional Indian cooking oils, and let the consumer make an informed choice. Consumer education about extra virgin and pomace oils is critical for any responsible Indian olive oil producer as well as the government. ”
Of course with big risks come big rewards. “We agree that olive oil consumption in this giant country is minuscule but are encouraged by the potential,” Dalmia said, but he admitted he’s not alone: “This notion that a quick buck can be made by importing a container of olive oil has been the sure road to ruin for many and creates havoc in the market. However, a slow process of consolidation is taking place, a few brands are gaining prominence and I expect that many brands will fall by the way-side in the next 2 years.”
Meanwhile, India is a mess when it comes to health and VN Dalmia thinks olive pomace oil is one product that can reverse the deadly trend: “India ranks as World No.1 in cardiac patients. More than 100 million people in India suffer from heart disease. 31 percent of urban Indians are either overweight or obese. 140 million people in India have high blood pressure,” Dalmia said. “Over 40 percent of urban Indians have high lipid levels. India is the diabetic capital of the world with an estimated 51 million people affected. The situation is already a national emergency. We need a healthy oil. Olive oil, including olive pomace oil, is the world’s healthiest edible oil.”
Olive Oil Times: Indians are interested in olive oil. We know this because around 10 percent of the readers of Olive Oil Times are in India. Why do you think there is this high level of interest?
VN Dalmia: There exists a highly educated and cultured super-elite in India which, though an infinitely small percentage, ends up comprising a ‘large’ number given our total population of 1.2 billion.
The reason lies in the fact that with rising purchasing power, education and world travel, Indians are becoming increasingly exposed to new concepts in health and cooking. The West switched to olive oil in the ‘90s. As Indians traveled abroad increasingly, it was a matter of time before they became aware of the benefits of olive oil.
The national health situation is also making more people interested in healthy edible oils.
Are you involved in any olive cultivation project in India? What do you think of these initiatives?
No. We are not agriculturists and olive cultivation would require a great deal of backward integration. The next stage for us in backward linkages would be packing or bottling. After that would be refining and blending, then pressing and after that, growing. My company is a marketing and distribution company.
However, I strongly support olive cultivation in India and am very enthused by the project in Rajasthan.
Please describe your relationship with the International Olive Council.
As the President of the Indian Olive Association, I am invited to meetings of the Advisory Committee of the IOC. The Indian Olive Association is a signatory to the Quality Control Agreement of the International Olive Council and hence, I also attend these meetings.
When we first saw your “Go Indiano” advertisement, we were surprised to see the oil in the picture was olive pomace oil. You have been criticized for promoting olive pomace oil more than other grades (for example the “olive oil” grade). Can you please explain why you have decided on this strategy?
Leonardo has two extra virgins — regular and gold — and an olive oil, all of which we promote to target customers through suitable media and channels. Olive pomace oil was selected for the mass media campaign. These are early days. The campaign will develop.
Criticism is actually misconceived and displays a lack of understanding of the realities of the Indian market-place. Leonardo was the first to recognize the actual needs of the Indian consumer.
When we entered the market in 2003, total imports were barely 500 tonnes and mostly olive oil. The brands were all imported and sold to consumers for body massage or, to a lesser extent, Italian cuisine. There was no promotion or education about product or usage.
When Leonardo entered, we decided to focus on Indian cuisine and daily use because that is where the volume would come from. We introduced Leonardo Olive Pomace Oil because of the way Indian food is prepared. Everyday Indian food involves high-heat cooking. Extra virgin olive oil presented problems with frying: it was unstable at high temperatures (smoke point 180 degrees C) and it imparted an olive flavor to the food and thus changed the taste. As a result, people who tried it concluded that olive oil was unsuitable for Indian cooking and abandoned it. Olive pomace oil presented none of these problems.
The Indian consumer uses oil to cook, not to flavor. Olive pomace oil is neutral in flavor and has a high smoke point (238 degrees C). In India, oil goes into the pan first as the basic cooking medium. The seed oils that find favor with Indians are much cheaper than even olive pomace oil. While we try to educate Indians about the usage of olive oils in 1/3 to 1/2 the quantity of other oils, the cost differential is still so high that Indians balk at switching. Olive pomace oil is already 3 – 4 times the cost of the most common seed oils used in middle-class homes like sunflower oil, for example. To ask them to switch to olive oil, 6 to 7 times more expensive, for everyday use, would be proposing the impossible to consumers and they would reject such a proposal at sight.
Leonardo launched olive oil (smoke point 220 degrees C) almost two whole years later for Western cuisine and body massage. Hence, Leonardo proposed clear product segmentation: high-end extra virgin for raw use as dressing and flavoring, intermediate olive oil for light cooking as in Western cuisine and body massage and the cheapest oil, olive pomace oil, for everyday cooking use. This segmentation found acceptance and defines the Indian market today.
Leonardo’s pricing strategy was very clear. We would reduce consumer prices in order to expand the market. Before us, importers sold various brands at very high margin and had low volumes. Our aim was to make the product accessible to expand the market. So, at launch, we brought down prices in the market as follows:
• 1 ltr. extra virgin from Rs. 750 to Rs. 530 ($10.37 to $14.68)
• 1 ltr. pure olive oil (two years later) from Rs.650 to Rs.460 ($9.00 to $12.72)
• 1 ltr. olive pomace oil from Rs.500 to Rs.270 ($5.28 to $9.78)
Subsequently, prices have fluctuated as per global prices and marketing strategies.
There are other issues: we have various companies, associations, consortia and even the IOC trying to introduce new ‘Mediterranean’ and other diets, new tastes, etc. and concurrently telling us that EV tastes “better”. This is akin to taking coconut oil to Italy or Spain and telling them that their food would taste better if cooked in coconut oil or for that matter, mustard oil to France and proposing the same to them! Good marketing consists of determining and giving the customer what she wants and needs rather than trying to shove your product down her throat and tell her what is better for her.
In addition, as your readers are aware I am sure, the new Australian standards have forbidden the use of the term ‘Extra Light’. IOC itself does not have a category such as Extra Light. Extra Light is an immensely misleading term and leads the consumer to believe that the oil is somehow less in calories and lighter in content. As you know well, this is not the case. As you must know, Extra Light is merely olive oil with a lower than normal percentage of a blended virgin. Despite the lower percentage of virgin, the price of Extra Light is not much cheaper than olive oil. I wonder why you and your readers don’t speak out against this clear mis-labeling and consumer malpractice.
You have been the president of the Indo-American Chamber of Commerce, you are a trustee of Darden, and an international businessman. You must know that if you tried to promote olive pomace oil in the United States, you would not get a favorable response. Pomace is better than what Indians have used, but it is not as healthy as other grades — which would also be suitable for Indian cooking. It is all a matter of cost? Why should Indians cook with a lower grade than Americans, Europeans or Australians?
I am also a Commendatore or Knight Commander of Italy. I am conscious of my responsibilities and weigh my words carefully as I speak.
The most common cooking oils used in India are seed oils. Olive pomace oil has a vastly better fat composition than seed oils. It has the same high monounsaturated fat as olive oil and virgin oil, the same low saturated fat and the same percentages of oleic acid with the same attendant health benefits. The only difference is that it is solvent-extracted, but so are all the seed oils. So, if you are comparing with seed oils, olive pomace oil is a vast improvement.
Most seed oils, in addition, have low monounsaturated fat, high poly-unsaturated fat and higher saturated fat than all grades of olive oil. High PUFA oils are more vulnerable to lipid peroxidation (rancidity). This is especially important in high temperatures as in India. High PUFA oils also present problems in any extended frying. High MUFA oils are much more stable in terms of both rancidity and frying needs.
Leonardo does not propose olive pomace oil as a substitute for extra virgin oil or olive oil. Olive pomace oil is a substitute for sunflower, mustard, peanut and other seed oils.
Actually, olive pomace oil is exported in decent quantities even to the US. I could ascertain the numbers but several companies told me that it formed more than 10 percent of their exports to the US. More than 100,000 tonnes of olive pomace oil are produced annually worldwide and the quantity consumed in India is only a small percentage of world production. Do you know that even in an essentially extra virgin producing country like Greece, 17 percent of their domestic consumption of branded olive oil is olive pomace oil? In Italy, olive pomace oil is used for the preparation of ‘taralli’ and ‘focaccia’, a typical southern pizza, and for frying. It is all a matter of whether you are looking at it top-down or bottom-up, i.e. as an upgrade from seed oils or a down-grade from virgin.
Leonardo is the early leader in India, but the total olive oil consumption of this giant country is still very small. What is the biggest challenge you face to popularize olive oil use among Indians?
The challenges are as follows:
- To overcome the impression that olive oil is essentially a massage oil. To educate consumers that it is an edible oil.
- To educate consumers that it is suitable for Indian cooking.
- To educate consumers about the health benefits.
- To overcome consumer resistance to a vastly higher price.
We agree that olive oil consumption in this giant country is miniscule but are encouraged by the potential. In terms of numbers, we do not agree with the aggregates of 300 million persons for a target universe of the Upper Middle Class (UMC) and Upper Class (UC) population in India bandied about by the World Bank and the like. Our estimates of the Indian UMC and UC, more or less consistent with several serious studies, are much more realistic and conservative. We estimate the UMC and UC population at about 55 million currently. We define our UMC segment to be within an income range of US $ 10,000 to 20,000 per annum and our UC to be above US$20,000 per annum. Branded oil, as a percent of all oils sold in India, is a mere 10 – 12 percent of the market, and demand for branded oils is growing at about 10 percent per annum. Per capita consumption of edible oil in India is a mere 10 kg per annum. Olive oil is an infinitesimally small percentage of branded oil and its potential is, thus, vast.
Assuming that olive oil for edible purposes, consumed by both institutions and individual consumers is 2,000 tonnes or 2 million liters (50 percent of total imports in 2010, the rest being an estimate of oil for massage use) and assuming that the average household consumption of olive oil in UMC and UC households is 1 liter per month or 12 liters per annum, currently, olive oil is used by 166,667 households or 833,333 persons. On a conservative basis, this is the number of olive oil consumers in India and this number is shamefully small!
For the future, Leonardo agrees with the growth rate, predicted by the same serious studies, of UMC households at 18 percent and UC households at 21.5 percent. Our target universe presently is 55 million persons or 10 million households. Our target is to have 20 percent of this universe or 11 million persons or 2 million households consuming olive oil. At a rate of 12 liters per annum per household, this translates to a demand of 24 million liters or 24,000 tonnes per annum, a respectable size indeed. But we can achieve this only through a sustained and united effort if we all work together.
Indians are facing a health crisis – like in other countries – from modern stresses and lack of exercise. Are you concerned about this trend? What should be done about this?
India ranks as World No.1 in cardiac patients with 10 percent of the population affected. The US and Europe are jointly No.2 with 7 percent each. WHO expects heart disease to be the single greatest killer in India by 2015. More than 100 million people in India suffer from heart disease. The highest growth of heart disease is among young corporate executives. Additionally, 31 percent of urban Indians are either overweight or obese. 140 million people in India have high blood pressure. Over 40 percent of urban Indians have high lipid levels. 140 million people in India have high blood pressure – 14 percent of world patients & 26 percent of the Indian population. Over 40 percent of urban Indians have high lipid levels. India is the diabetic capital of the world with an estimated 51 million people affected. The situation is already a national emergency. We need a healthy oil. Olive oil (including olive pomace oil) is the world’s healthiest edible oil.
Heart disease, to a large extent, is a lifestyle disease as are diabetes and hypertension. As the national health situation is already an emergency, the need of the hour is to promote a preventive lifestyle to the general public. What is required is education at a mass level starting at primary school about lifestyle diseases, their causes, and methods of prevention. A preventive lifestyle includes diet and exercise. A significant component of any healthy diet is a high MUFA oil. The Ministry of Health is talking about a campaign to combat lifestyle diseases. State governments also need to be involved. Meals provided by the Government to children must be prepared in healthy oils. Extensive ad and educational campaigns must be launched. Olive oil must be included in such campaigns as a healthy, high MUFA oil.
You are inviting investors to join in your expansion initiatives. How is that going so far?
Very well. We have several offers for participation in our growth equity and are evaluating the proposals. We shall make announcements shortly.
Is Borges your biggest competitor? How are you doing against them?
No, Borges is not. There are others who have been established in India longer than Borges. However, we welcome worthy competitors like Borges. As they are corporatized, they belong to the organized sector. Their marketing initiatives, like ours, will serve to grow the market. It is the small importers who import to make a quick buck that end up spoiling the market. Every importer and his cousin gets the “smart” idea of importing olive oil. As it is difficult to list a new brand in modern trade due to heavy listing fees or to place it in traditional retail due to non-acceptance of an unknown brand, they are unable to sell their product and end up liquidating stock at crazy discounts, in effect selling even below cost. This notion that a quick buck can be made by importing a container of olive oil has been the sure road to ruin for many and creates havoc in the market. However, a slow process of consolidation is taking place, a few brands are gaining prominence and I expect that many brands will fall by the way-side in the next 2 years. With gradual commoditization, margins will also reduce and consolidation will occur.
We work together with Borges and others in the Indian Olive Association. At the moment, Leonardo is by far the largest importer of olive oil in the edible segment (as opposed to the massage segment).
Sir, what would you say to our readers – people around the world who are olive oil consumers, healthy cooking enthusiasts and olive industry professionals?
I’d like to emphasize to my colleagues in the industry and to your readers that the real challenge in India is to grow the market. We should not waste time and energy in criticizing different grades of olive oil or each other. The consumption was a mere 4,000 tonnes last year and is expected to be 6,000 tonnes this year barring unforeseen economic events. These numbers are just too small and not worthy of a nation such as India. Once the total consumption grows to a respectable level and once a respectable proportion of our 1.2 billion population is aware of olive oil, perhaps we can begin to promote different grades, deride each others’ products and upgrade consumers to higher grades of olive oil. It is too early right now in the development of our market to waste time in fighting each other.
Furthermore, the total production of olive oil in the world is 3+ million tonnes. The total consumption of edible oil in India alone is above 15 million tonnes. You can imagine what is the total consumption of edible oil in the world including China. The challenge really is to spread awareness of the benefits of olive oil so that worldwide consumption of this healthy edible oil and healthy cooking habits grow and that olive oil becomes a greater proportion of oil in general use.
Olive oil purists, in their zeal to promote the benefits and taste of Extra Virgin, miss the point. Already, producers in Spain are suffering because they are unable to sell their products. This year, there will be increases of production in Turkey, Tunisia, Argentina and others. While production in Greece and Italy is expected to decline, total production will grow. Internecine squabbling will not serve to grow the world market.
Olive Oil Times is doing a yeoman job of spreading the word. I encourage you and your readers to take forward and spread an enlightened view as well as the big picture.