Report Advises Greek Exporters to Innovate

Latest 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 Also: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.

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.

• Greek Embassy in Washington, the Olive Oil Market of USA