Italian Exporters Double Down on U.S. Market Despite Tariff Risks

Summary

Italian olive oil exporters are prepar­ing for poten­tial tar­iffs from the Trump admin­is­tra­tion by devel­op­ing con­tin­gency plans and strength­en­ing U.S. oper­a­tions, such as estab­lish­ing facil­i­ties in New Jersey. To main­tain qual­ity con­trol and opti­mize logis­tics, com­pa­nies like Agritalia have imple­mented pro­pri­etary soft­ware to fore­cast demand and man­age sup­ply chains, while also focus­ing on con­sumer edu­ca­tion and mar­ket­ing to pro­mote high-qual­ity extra vir­gin olive oil in the U.S. mar­ket.

Italian olive oil exporters are demon­strat­ing resilience in the face of poten­tial tar­iffs threat­ened by the Trump admin­is­tra­tion.

“We gained expe­ri­ence in 2019 with a sim­i­lar sit­u­a­tion. Since then, we’ve devel­oped con­tin­gency plans with our clients to respond effec­tively to pos­si­ble crises, at least in the short term,” Sergio Massa, the founder and chief exec­u­tive of Agritalia, told Olive Oil Times.

Agritalia accounts for six per­cent of Italian extra vir­gin olive oil exports to the United States and ben­e­fits from decades of expe­ri­ence.

“U.S. domes­tic pro­duc­tion can­not sat­isfy olive oil demand,” Massa said. ​“Everyone at the table rec­og­nizes that we must col­lec­tively find a way to address poten­tial tar­iffs pos­i­tively.”

The pro­duc­ers behind Bono, the largest Sicilian olive oil exporter to the U.S., which estab­lished a multi-pur­pose facil­ity in New Jersey less than two years ago, share Agritalia’s per­spec­tive.

“Tariffs tar­get­ing Italian olive oil would have a neg­a­tive impact on Bono USA, as well as the broader indus­try,” said Salvatore Russo-Tiesi, pres­i­dent and chief exec­u­tive of Bono USA.

“We remain hope­ful that any trade or polit­i­cal issues can be resolved in a way that sup­ports fair com­pe­ti­tion and con­sumer access to high-qual­ity prod­ucts,” he added.

U.S. olive oil imports have sig­nif­i­cantly accel­er­ated since the 1990s. According to International Olive Council (IOC) data, U.S. imports grew from 90,000 met­ric tons in 1990/91 to 200,000 tons in 1999/2000.

This trend con­sol­i­dated in sub­se­quent years, reach­ing 258,000 tons in 2009/10 and 391,000 tons in 2019/20. The IOC expects imports to increase fur­ther in the cur­rent crop year, reach­ing 398,000 tons.

The U.S.‘s role as a sig­nif­i­cant global olive oil importer results from the con­sis­tently ris­ing demand for the prod­uct.

“Throughout the 1980s, olive oil con­sump­tion steadily grew, but extra vir­gin olive oil remained just a niche seg­ment of the mar­ket,” Massa recalled, not­ing the vari­ety and dif­fer­ent grades of olive oil avail­able at the time.

“It was­n’t until the 1990s that extra vir­gin olive oil began gain­ing broader dis­tri­b­u­tion, thanks largely to increased travel to Italy, the ris­ing pop­u­lar­ity of Mediterranean cui­sine and the piv­otal role played by the food ser­vice chan­nel,” he explained.

In the last five years, over­all U.S. olive oil con­sump­tion has twice exceeded 400,000 tons, approach­ing the con­sump­tion lev­els of Mediterranean olive oil-pro­duc­ing coun­tries such as Spain and Italy.

However, total U.S. olive oil pro­duc­tion for the cur­rent sea­son is expected to reach only 10,000 tons.

Given this sig­nif­i­cant gap between con­sump­tion and domes­tic pro­duc­tion, Italian exporters have strength­ened their U.S. oper­a­tions over recent years.

“The New Jersey facil­ity has sig­nif­i­cantly boosted our U.S. busi­ness, enabling us to reach excit­ing new lev­els,” Russo-Tiesi said. ​“Having all oper­a­tions housed in a state-of-the-art facil­ity pro­vides us full con­trol over the sup­ply chain, from Italy to the end con­sumer.”

“This has been cru­cial for main­tain­ing qual­ity con­trol, opti­miz­ing logis­tics, enhanc­ing mar­ket­ing efforts and dri­ving growth, all of which con­tribute to increased cus­tomer sat­is­fac­tion,” he added.

Supply chain man­age­ment and tech­no­log­i­cal inno­va­tion have dri­ven Agritalia’s devel­op­ment in the U.S.

The com­pany explained that its auto­mated replen­ish­ment pro­gram has reli­ably sup­plied Italian and European food prod­ucts to North America for sev­eral years.

The pro­gram relies on pro­pri­etary soft­ware that ana­lyzes sales data and accu­rately fore­casts pro­cure­ment needs for each cus­tomer.

“We real­ized there’s no need to keep inven­tory sit­ting in ware­houses in the U.S.,” Massa said. ​“Our pro­pri­etary soft­ware can accu­rately fore­cast demand for any given prod­uct at any spe­cific retailer, right down to the local area.” 

By lever­ag­ing detailed his­tor­i­cal data span­ning up to 104 weeks and spe­cific infor­ma­tion from retail part­ners, the com­pany under­stands how each prod­uct per­forms at every dis­tri­b­u­tion cen­ter, account­ing for store trends, sea­sonal fluc­tu­a­tions, pro­mo­tions and new store open­ings.

“Our pre­dic­tions have proven incred­i­bly pre­cise, boast­ing a 97.5 per­cent accu­racy rate,” Massa said. ​“Even spe­cial pro­mo­tions and tar­geted offers are seam­lessly inte­grated into our fore­cast­ing model well in advance.”

“This means we can inform every sup­ply-chain part­ner up to three months ahead of time, ensur­ing what’s gen­uinely needed is shipped to dis­tri­b­u­tion cen­ters in the U.S.,” he added.

Through its affil­i­ates, Agrilogistica and Agriusa, the com­pany directly man­ages all oper­a­tions, from extra vir­gin olive oil pro­duc­tion to the final dis­tri­b­u­tion.

To ensure com­plete con­trol of extra vir­gin olive oil sold in the U.S. through its sup­ply lines, Agritalia devel­oped con­trol pro­ce­dures known as the Agritalia Sensory Chemical System (ASCS), work­ing in col­lab­o­ra­tion with International Olive Council-cer­ti­fied lab­o­ra­to­ries.

The com­pany describes it as a pro­pri­etary qual­ity-con­trol sys­tem designed to ensure authen­tic­ity, qual­ity and trace­abil­ity of extra vir­gin olive oil through­out the entire sup­ply chain, from raw mate­r­ial selec­tion to bot­tling and final dis­tri­b­u­tion.

The sys­tem sets rig­or­ous sen­sory and chem­i­cal spec­i­fi­ca­tions for each type of olive oil to suc­cess­fully mar­ket prod­ucts in the U.S., with­stand logis­tics chal­lenges, and pre­serve qual­ity.

These chem­i­cal val­ues, stricter than the IOC’s, are adjusted every six months because olive oil qual­ity changes sig­nif­i­cantly over time fol­low­ing har­vest and milling.

Through batch analy­ses, the com­pany can guar­an­tee that the prod­uct shipped from Italy is pre­cisely the same prod­uct deliv­ered to U.S. cus­tomers.

ASCS, annu­ally cer­ti­fied by inde­pen­dent cer­ti­fi­ca­tion body FoodChain ID, relies on a net­work of IOC-cer­ti­fied lab­o­ra­to­ries to ver­ify the prod­ucts’ sen­sory pro­files. The sys­tem also addresses spe­cific logis­tics chal­lenges affect­ing prod­uct qual­ity.

“Some of our great­est chal­lenges occur dur­ing win­ter, par­tic­u­larly in north­ern U.S. states such as Michigan, where extremely low tem­per­a­tures can cause delays, some­times last­ing weeks, along rail trans­port routes,” Massa noted.

In such sce­nar­ios, con­tain­ers may sit idle in ter­mi­nals, requir­ing trans­fers and addi­tional han­dling.

“Products risk freez­ing. During our stud­ies, we’ve closely ana­lyzed how freez­ing impacts extra vir­gin olive oil by exam­in­ing sam­ples shipped back to us,” Massa said.

While he said that the freez­ing and thaw­ing do not sig­nif­i­cantly degrade any of the extra vir­gin olive oil’s qual­ity para­me­ters, Massa added that it can affect some sen­sory char­ac­ter­is­tics. 

“These insights were cru­cial. They’ve enabled us to define pre­cise tech­ni­cal spec­i­fi­ca­tions that safe­guard the product’s integrity through­out its shelf life, even under extreme con­di­tions,” he said.

Beyond refin­ing pro­ce­dures and tech­nolo­gies, Italian exporters believe much work remains to bring high-qual­ity extra vir­gin olive oil to the U.S. mar­ket.

“Consumer aware­ness remains a chal­lenge,” Russo-Tiesi noted. ​“Many U.S. con­sumers may not fully rec­og­nize the dif­fer­ences between authen­tic, cer­ti­fied extra vir­gin olive oil and lower-qual­ity alter­na­tives.”

“That’s why con­tin­u­ous edu­ca­tion and mar­ket­ing are essen­tial. We remain com­mit­ted to vig­or­ous out­reach pro­grams to high­light Bono extra vir­gin olive oil’s supe­rior qual­ity, trace­abil­ity, and health ben­e­fits, ensur­ing con­sumers can make informed choices,” he con­cluded.