Europe

Report Advises Greek Exporters to Innovate

After an analysis of the American olive oil market, the Greek Embassy in Washington says innovation is the key for Greek olive oil exporters.

Mar. 19, 2018
By Costas Vasilopoulos

Recent News

Con­sump­tion of olive oil in the United States has increased by 250 per­cent dur­ing the last 17 years and by 2.48 per­cent in 2017 com­pared to 2016, reach­ing a total of 326,000 tons.

Most of the olive oil con­sumed in the coun­try is imported from Spain and Italy, while domes­tic pro­duc­tion cov­ers less than 5 per­cent of the demand.
See more: The Best Greek Olive Oils
Embrac­ing a health­ier lifestyle, Amer­i­can olive oil con­sump­tion has shown a steady rise, mak­ing the coun­try a key mar­ket for pro­duc­ers from around the globe.

This should not go unno­ticed by Greek pro­duc­ers and exporters, who need to think out of the box if they want to suc­ceed in the Amer­i­can mar­ket.

These and many more find­ings are con­tained in a report on the U.S. olive oil mar­ket, released last month by the Office of Eco­nomic and Com­mer­cial Affairs of the Greek Embassy in Wash­ing­ton, D.C. The report pre­sented the cur­rent sta­tus of the mar­ket and iden­ti­fied trends and oppor­tu­ni­ties for exist­ing and future exporters from Greece.

The U.S. olive oil mar­ket car­ries its own unique char­ac­ter­is­tics. The Depart­ment of Agri­cul­ture (USDA) has set stan­dards for the dif­fer­ent types of olive oil, but accred­i­ta­tion is not manda­tory. This means that a ship­ment of olive oil can be imported and named extra vir­gin with­out check­ing whether it com­plies with the stan­dards for the grade.

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Also, there are no qual­ity con­trols for olive oil imposed by the Food and Drug Admin­is­tra­tion (FDA) nation­wide; instead, each state has estab­lished its own pro­ce­dures and con­trols and only dur­ing recent years Amer­i­can pro­duc­ers have urged the reg­u­lat­ing author­i­ties to put some lim­i­ta­tions and stricter con­trols on imported olive oil.

And while U.S. con­sumers increas­ingly replace but­ter and other oils with olive oil, it seems that they lack a com­plete appraisal for the prod­uct with one in three con­sumers stat­ing that choos­ing which olive oil to buy is con­fus­ing. They usu­ally buy their oil judg­ing by two fac­tors: price and the type of oil, with extra vir­gin being by far their top selec­tion. Also, many con­sumers are will­ing to pay a pre­mium for extra vir­gin olive oil of high qual­ity from spe­cialty stores.

Domes­tic pro­duc­ers in the U.S. have been gain­ing mar­ket share with one com­pany, Cal­i­for­nia Olive Ranch, account­ing for around 65 per­cent of inter­nal pro­duc­tion. The 2017 pro­duc­tion of olive oil has reached approx­i­mately 14,000 tons in Cal­i­for­nia, largely due to the mod­ern auto­matic pro­cess­ing meth­ods.

Clas­si­fi­ca­tion of olive oil in the coun­try is based on its type (vir­gin or non-vir­gin), the size of the con­tainer (smaller or big­ger than 18 kilos), and the coun­try of ori­gin.

Apart from extra vir­gin, vir­gin, and plain olive oil, organic olive oil is another option for U.S. con­sumers. There are strict direc­tives regard­ing the term organic,’ and the tag USDA Cer­ti­fied Organic” on a product’s label indi­cates that the prod­uct com­plies with the reg­u­la­tions for organic food. These reg­u­la­tions apply to both domes­tic and imported organic olive oil.

The pen­e­tra­tion of olive oil in Amer­i­can house­holds has increased by 30 to 50 per­cent dur­ing the last five years and the annual con­sump­tion is about 1.1 liters per per­son. The East Coast is where most of the olive oil is con­sumed, due to the con­cen­tra­tion of pop­u­la­tion and, his­tor­i­cally, the tra­di­tions of immi­grants from Italy.

The South-Atlantic region is sec­ond with 23 per­cent of total con­sump­tion, fol­lowed by Mid-Atlantic with 18 per­cent (data of 2016). The Pacific region, where domes­tic olive oil is made, ranks third with 12 per­cent of total con­sump­tion.

The report stressed that, due to the size of the coun­try and its big pop­u­la­tion, even a slight rise in demand would have a huge impact on the total con­sump­tion of olive oil. On the other hand, an increase in demand also pre­sup­poses that con­sumers are well-informed about olive oil and its value.

The mar­ket is dom­i­nated by Spain and Italy, but olive oils from Greece, Por­tu­gal, Morocco, Tunisia, Turkey and South Africa are also present, among oth­ers. Apart from pack­aged olive oil prod­ucts, imports of bulk olive oil have sig­nif­i­cantly increased in the U.S., to be processed by local bot­tlers and pack­ag­ing facil­i­ties: in 2016, 42 per­cent of the imported olive oil was in bulk, com­pared to only 16 per­cent ten years ago.

When it comes to pack­ag­ing, con­sumers pre­fer con­tain­ers of 325 to 562 ML and tend to shy away from con­tain­ers smaller than 300 ML and big­ger than 3 liters.

Exports of olive oil from Greece to the USA have almost dou­bled in vol­ume dur­ing the last five years from 5,500 tons in 2012 to 9,000 tons in 2016, with Spain and Italy being the lead­ing exporters to the U.S. with about 139,000 and 132,000 tons respec­tively. In 2017, tak­ing into con­sid­er­a­tion the data avail­able (Jan­u­ary to May), Greek exports slightly decreased by 2.2 per­cent com­pared to 2016.

In such a big and chang­ing mar­ket, com­pe­ti­tion is nat­u­rally fierce, and Greek exporters have to strive should they want to expand their sales port­fo­lio or win their first cus­tomers on the other side of the Atlantic.

More than 500 brands of olive oil are sold in the coun­try with con­sumers show­ing lit­tle loy­alty. How­ever, Bertolli, Fil­ippo Berio, and Pom­peian were the mar­ket lead­ers in 2015 with 47 per­cent of total sales, and pri­vate label prod­ucts occu­pied a sig­nif­i­cant por­tion of the mar­ket with 36 per­cent of total retail sales.

Pri­vate label prod­ucts are usu­ally cheaper than their branded com­peti­tors, and this is the main dri­ver for the emer­gence of store brands. Mar­ket research con­ducted by the Office in Novem­ber 2017 gave a price range of $9.05 — $11.51 for a liter of pri­vate label extra vir­gin, and a price range of $8.79 — $24.69 for a liter of extra vir­gin from well-known brands. Olive oil from Greece is usu­ally on the cheaper side, with Span­ish and Ital­ian oils sell­ing at higher prices.

The report noted that the two major dis­ad­van­tages of the Greek olive oil indus­try are high pro­duc­tion costs and lack of dif­fer­en­ti­a­tion, with the lat­ter lead­ing to an over-reliance on exports in bulk. The motto of the rapidly grow­ing global indus­try of con­sumer goods is inno­vate or per­ish,” and the need for inno­va­tion is obvi­ous in Greek olive oil prod­ucts.

A field for inno­va­tion could be the pack­ag­ing of olive oil: novel pack­ages can over­take com­peti­tors by cov­er­ing the need of Amer­i­can con­sumers for prac­ti­cal­ity and ease of use. For exam­ple, the caps of bot­tled olive oil sold by Crisco dou­ble as a mea­sure to allow for an exact quan­tity to be con­sumed, while remain­ing oil can be chan­neled back to the con­tainer. Another case is San­tini, which sells its olive oil includ­ing a dis­charge spout inte­grated within the bot­tle, mak­ing it pop­u­lar among buy­ers.

Other ideas in the report included pro­vid­ing a small plate in the pack­age to serve olive oil as a dip, or to accom­pany the con­tainer with a small box of related condi­ments. Amer­i­can con­sumers want food that comes in easy-to-use and ready-to-eat pack­ag­ing that makes their every­day meals sim­pler and eas­ier, the report found.

The report con­cluded that Greek olive oil exporters should focus on three para­me­ters: qual­ity, price, and pack­ag­ing. Mas­ter­ing these would pro­vide them with the com­pet­i­tive advan­tage to pen­e­trate the ever-expand­ing and promis­ing olive oil mar­ket.





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