`Cobram Estate's Rob McGavin - Olive Oil Times

Cobram Estate's Rob McGavin

Oct. 6, 2010
Sarah Schwager

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Growing an olive tree is easy, but mak­ing it fruit con­sis­tently is very dif­fi­cult and that’s been to our advan­tage.”

This is how Rob McGavin, Co-Founder and Executive Chairman of Australian olive com­pany Boundary Bend, and its famous extra vir­gin olive oil brand Cobram Estate, describes just how dif­fi­cult it is to get a thriv­ing olive oil busi­ness up and run­ning. But this is exactly what he has done, trans­form­ing the com­pany into Australia’s largest ver­ti­cally inte­grated olive oil com­pany in just over 10 years.

Mr. McGavin, brought up on a sheep and cat­tle farm in west­ern Queensland, got his finan­cial start” in the wine busi­ness. He was on a rugby tour in Ireland when he noticed the buzz about Australian wine and started to think about what he could do that might be dif­fer­ent. At that time the mar­ket was still rea­son­ably depressed, it hadn’t boomed, but you could say it was on the way up,” he said.

And so he enrolled in an Agribusiness Administration course at Markers Oldham College in Geelong, Victoria in 1992 at the age of 23 before going on to buy a small 35-acre vine­yard in South Australia. Over the next seven years he built that small piece of land into a vine­yard of more than 600 acres, sell­ing 80% of the com­pany in 2003.

It was dur­ing this time that he teamed up with a col­lege friend, Paul Riordan, who was look­ing into the olive indus­try. Mr. McGavin says at the time the Australian Government was doing a lot of work in olive oil and, after invest­ing heav­ily in vine­yards, he was look­ing to do some­thing else. The loss of both par­ents to can­cer also inspired him to look beyond money mak­ing and into pro­mot­ing health­ier eat­ing, such as extra vir­gin olive oil.


I had a lot of expe­ri­ence devel­op­ing a hor­ti­cul­tural busi­ness and Paul hadn’t but he’d done a lot more work on the indus­try and what vari­eties we should plant to get it off to a good start,” he said. As far as where to plant and sites and where to develop them, I sup­pose that was my area of exper­tise.”

He said from then it took a num­ber of years before the first soil was turned. Mr. Riordan trav­eled over­seas and spent some months with the world’s lead­ing olive oil experts in Israel, Italy, Greece and Spain, and chose five vari­eties that would be their major pro­duc­ing vari­eties. These were imported to their nurs­ery in Australia from the mother trees in Israel, because they were wor­ried those grown in Australia might not be true to type or genet­i­cally cor­rect.

We decided quite early on that we needed 1000 hectares (2471 acres) of olives if we wanted to give our­selves a good chance of suc­cess,” he said. That was rea­son­ably ambi­tious at the time. There were no groves in Australia that were any­where near that size. So it came with a lot of risks that we prob­a­bly weren’t fully aware of at the time. But when you’re young and ambi­tious you always look to the pos­i­tives and think you’ll be able to man­age the neg­a­tives. Which we have but it’s been pretty hard work.”

The pair finally decided to plant 200 hectares (about 500 acres) in the first year, which was going to take about AU$7 mil­lion (US$6.78 mil­lion), of which they had nowhere near. So in good old coun­try style, they got fam­ily and friends together to invest in the first grove which was planted in late 1999 at Boundary Bend in north­ern Victoria. They did the same thing in 2000 and again in 2001 until they had 500 hectares planted. We hadn’t achieved our goal of 1000 hectares but we got a pretty good start and then we thought we bet­ter con­cen­trate on mak­ing sure it worked,” he said.

The busi­ness hit the ground run­ning when Argentinean olive oil expert Leandro Ravetti joined the com­pany as Executive and Technical Director in 2001. By 2004, the com­pany was pro­duc­ing 25% of Australia’s pro­duc­tion in olive oil but with just 2.5% of Australia’s planted area. So we were really doing well. There had been lots of peo­ple that planted groves that just were not per­form­ing at all,” Mr. McGavin said.

Timbercorp, a large Australian olive, almond and blue gum com­pany with 2770 hectares of olive groves, was one of these. So in late 2004 it engaged Boundary Bend, which from the same age tree was pro­duc­ing seven times what Timbercorp was gen­er­at­ing, to man­age its grove. As Boundary Bend was doing so well with its groves, Timbercorp decided to keep plant­ing olives, and increased its total area includ­ing loan groves up to 6500 hectares (16,000 acres).

Then last year Timbercorp was forced into liq­ui­da­tion, along with numer­ous other com­pa­nies that went down dur­ing the global finan­cial cri­sis. We were for­tu­nate enough to be able to buy all its olive groves from the liq­uida­tor,” Mr. McGavin said. We owned the pro­cess­ing plant, the har­vesters. It was just too risky for any­one else.” He said this was a fun­da­men­tal change in Boundary Bend’s busi­ness putting it in a very good posi­tion in the mar­ket.

But jeez we’ve had some dif­fi­cul­ties,” he said. It is just tough. And I would say 95% of peo­ple who go out and plant an olive grove – even if they’re in the indus­try – really strug­gle, because it is very, very dif­fi­cult to make them con­sis­tently pro­duce – to get your pol­li­na­tion right, nutri­tion, water, pro­cess­ing, logis­tics right – so that you’ve got an excel­lent qual­ity EVOO out the other side at a com­pet­i­tive price.” This is a con­stant strug­gle for the indus­try, with the price of EVOO just ter­ri­ble”.

I would say it’s below cost pro­duc­tion for almost every­one in the world,” he said. This means that this is a pretty excit­ing indus­try going for­ward because I’ve been in agri­cul­ture long enough to know that when the price is down for long enough no one plants and no one invests in plan­ta­tions, which hasn’t really been hap­pen­ing in any way for the last 10 years, so there’s no new sup­ply com­ing in, but there’s sus­tained world­wide growth in demand for EVOO. So when it turns, when there’s not enough extra vir­gin around, by the time some­one thinks about plant­ing it’s five years until they’ve got any sort of pro­duc­tion, when China’s com­pound­ing 60% growth per year as well as India and other places.”

Another one of the strug­gles that the Australian olive indus­try has had to face is severe drought. I would say that one of the main rea­sons Timbercorp went into liq­ui­da­tion was the drought,” Mr. McGavin said. It cost them tens of mil­lions of dol­lars in leas­ing extra water.” The south of Australia is now cross­ing its fin­gers and wav­ing good­bye to the drought, with the Murray-Darling Basin stor­ages above 66% and the Hume dams at 77% full and fill­ing fast, lev­els it hasn’t seen in 10 years.

As far as the Australian olive oil industry’s posi­tion world­wide, Mr. McGavin says it is still very small. But he says it is in a great posi­tion to grow, with a num­ber of changes sig­naled. As far as where we stand, we’re a low cost pro­ducer of very high qual­ity olive oil with a really good oppor­tu­nity to grow. But for some­one to make the invest­ment the price needs to go up in olive oil because you just couldn’t jus­tify plant­ing a great big olive grove at these cur­rent prices.

I would expect a very sus­tained increase in price for EVOO world­wide, because I know that it’s the only oil prod­uct that’s healthy and unadul­ter­ated and nat­ural, and that’s what con­sumers want. I think Australia is pretty well posi­tioned, because we are the only coun­try that has devel­oped a model for mod­ern olive grow­ing. We’re get­ting 10 times the yield of the world aver­age so we can con­tinue to expand here but we can also con­tinue to roll our model out to places like Argentina. Argentina is obvi­ously a lot big­ger pro­ducer than us but its qual­ity is of a lower stan­dard because they hand­pick so much.” (Boundary Bend owns 1,500 hectares (3,700 acres) of free­hold land, highly suit­able for olive devel­op­ment, with sig­nif­i­cant reserves of water in the province of San Juan, Argentina” accord­ing to its web­site.)

I think Australia is piv­otal to the future of the olive indus­try. There are going to be some pretty major advances in the Southern hemi­sphere in the next 10 years as far as our posi­tion in the world mar­ket,” says McGavin.

He says there is also the world­wide issue of olive oil stan­dards and adul­ter­ated oils, with a large por­tion of EVOO con­sumed world­wide sold as EVOO but actu­ally con­tain­ing seed oils and refined oil. So as coun­tries such as Australia and the US enforce label­ing there’s going to be a big gap between EVOO and the rest because the con­sumers are there for it and the sup­ply will not be there,” he said.

Mr. McGavin says Australian con­sumers are the luck­i­est and most spoilt con­sumers in the world” in terms of the qual­ity of oil they can buy in the super­mar­ket ver­sus the price. An exam­ple of this is its every­day super­mar­ket brand” Cobram Estate Fresh and Fruity, which last month was announced as the Gold and Champion Commercial EVOO win­ner in the pres­ti­gious Sydney Royal Fine Food Show. How many gold medal olive oils are not expen­sive that you can buy in the super­mar­ket?” he says. The con­sumers here don’t real­ize it but I know we’re onto some­thing.”

Mr. McGavin says this is largely due to its pro­duc­tion method­ol­ogy, the fact that it’s been able to mechan­i­cally har­vest, and the way it’s piggy-backed off the wine indus­try for clean­li­ness and time­li­ness. This means that our cost of pro­duc­tion isn’t a lot more but our qual­ity is absolutely bril­liant and right up there in the top 2% of qual­ity of any­where in the world but it isn’t just a few liters, it’s our whole pro­duc­tion,” he says. That pro­duc­tion this year amounted to 36,400 tonnes of olives and approx­i­mately 6.5 mil­lion litres of olive oil.

Mr. McGavin’s pas­sion for the indus­try is matched only by his spirit. At just 41, he has achieved what many could only dream of. He con­tributes this to deter­mi­na­tion, work­ing hard and work­ing smart. And it is hon­esty and integrity and being down to earth,” he said. If you haven’t got that through your busi­ness, and you don’t prac­tice that, you might be lucky and be suc­cess­ful but it won’t last.”

But he says the most impor­tant thing is hav­ing a long-term view. Don’t worry about tomor­row, worry about 3 to 5 to 20 years,” he said. Always some­thing goes wrong. The price goes against you, the cur­rency goes against you, but if you aver­age over the long term, it’ll be fine. If you’re forced to sell in bad times that’s when there’s trou­ble.”

Mr. McGavin said Cobram Estate’s suc­cess lies in its care­ful approach to every aspect of the busi­ness. The say­ing in our busi­ness is that you don’t add on another busi­ness unit unless you’re going to con­tinue run­ning your exist­ing busi­ness as well as or bet­ter than you were before’, so we’ve got just the great­est team of peo­ple in every aspect of the busi­ness. And I think if you’ve got really good peo­ple and you’ve got a really good cul­ture in your busi­ness it goes a long way to suc­cess.”

With more gold medals and busi­ness awards under their belt than you could poke a stick at, their meth­ods are obvi­ously work­ing.

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