Time, patience and a lot of money. Those are the things an olive oil producer needs to grow a brand in the world’s biggest market, according to the category manager for one of the largest national distributors.
Maria Reyes oversees seven categories for KeHE Distributors, the Chicago-based company that serves everyone from gourmet retailers to the world’s largest chains. Reyes takes a special interest in olive oil. “It has become my pet project because I find it interesting, and I think there’s important information we need to convey to consumers: that you can’t just buy anything.”
Reyes grew up with olive oil and has used it in her own kitchen over the years but never gave it much thought until recently. “It wasn’t until about two years ago that I started to ‘get it,’ ” she said, referring to an understanding of quality, consumers’ lack of knowledge on the subject and the pervasiveness of mislabeled olive oil.
Reyes called an “eye-opener” a study that revealed consumers actually preferred the taste of old, oxidized olive oils over fresh, more pungent ones. “Consumers don’t know that the precious antioxidants are spent by the time olive oil tastes the way they’re used to it tasting — that fresh and bitter is good. They just don’t know.”
That Reyes “gets olive oil” is not a trivial matter. The impact of her “pet project” trickles down everywhere, from your local wine shop to the anchors of regional malls; through hospitals, book stores, big online retailers, gift shops, natural food stores and the largest supermarkets in the country. KeHE sells more than $15 million worth of olive oil every year — more than 2.5 million bottles (or units), making the company one of the country’s top movers of liquid gold.
Are her retailers also “getting it?” Reyes said they are: “Last November I applied this new way of thinking during a category review for the Midwest region of one of our major national retailers — they were the first to embrace it. Then I tried it in the Southwest — they were the second to embrace it. Then the Southeast.”
Then KeHE had its own national trade show where customers were offered a tasting lesson with California Olive Ranch miller Bob Singletary, and author Tom Mueller signed copies of his book “Extra Virginity.” Producers including Lucini helped get the message out to the thousands of retailers attending the yearly event.
At the show, KeHE challenged retailers to think of olive oil differently with event materials that called out: “Premium extra virgin olive is like a fine wine!” and retailers were invited to learn how to conduct their own one-on-one seminars with customers on the finer points of olive oil tasting and appreciation. “Since then two other regions have signed on. They have a mini version of what we had at our show and there is momentum buiding,” said Reyes.
KeHE’s olive oil catalog includes more than fifty olive oil brands including Colavita, Alessi, Mantova, Monini, Gaea, California Olive Ranch, Vero Andino, Columela, Coosur, Bellucci Premium, Deleyda, Olave, Lonely Olive Tree, Lucini, Bari, Taste The Truth and Esti.
Some of the brands KeHE distributes are among the world’s top-selling, but others are far from being household names. What they share is a commitment to make the necessary investments to grow their brand nationally: investments of time and money. Reyes said the challenge is, “how do you get the consumer to buy your item?”
First, it helps to somehow distinguish your brand from the rest of the pack. Reyes said she watched the results of this year’s New York International Olive Oil Competition “with great interest,” bringing in two of the winning brands, and she is using the results as a point of reference for the world’s best olive oils. (Reyes will be a speaker at the 2014 NYIOOC seminar, which will focus on olive oil brand-building and distribution.)
Having established the uniqueness of the brand, producers and marketers will need to settle in for the long haul. Reyes said it can take years for big things to happen and you will need a lot of patience, paired with a solid work ethic.
And not least, Reyes said, you’ll need a good amount of money. “There are many expenses related to building a brand. Retailers have different fees, there are show expenses, promotions, advertising with us and the retailers, demos and slotting.”
How much are we talking about? Reyes said it’s hard to put a number on the marketing war chest an olive oil producer will need, but she suggests $50,000, at a minimum. “And when all is said and done, there is never any guarantee,” she warned.
Of course, partnering with a national distributor like KeHE, (or its counterpart in the natural foods space, UNFI) is one way, but it is by no means the only avenue for olive oil producers seeking to build their businesses. After all, the fifty-plus brands KeHE represents amount to just a fraction of all of the olive oil brands available to consumers, and KeHE’s $15 million is a small, albeit impressive, slice of the $900 million American pie.
Producers and marketers can also turn to regional distributors, direct sales, e-commerce and they can work with merchants directly. Some retailers prefer to import their pallets and barrels of olive oil straight from producers, instead of working with middlemen.
Fairway Market, for example, counts dozens of NYIOOC-winners among the staggering selection of olive oils in its thirteen specialty stores, importing every bottle directly from the source. Fairway works with countless importers and distributors, including KeHE and UNFI, said Ian Pilarsky, Fairway’s director of specialty grocery, but not for olive oil, which the retailer regards as a flagship category.
But for those producers, importers and marketers who have lots of olive oil to sell and have their sights set on the many channels that piece together the world’s largest market, KeHE is a partner who can hit a lot of targets.
David Neumann, president of Lucini, said national distributors like KeHE don’t actually do the brand-building. “You’ll need to do that.” Neumann said before working with the likes of KeHE or UNFI, you will need “pull power.” In other words, your olive oil brand needs to already have a following and the ability to attract shoppers to the retailers who bring it in.
Neumann called Reyes “a progressive thinker” when it comes to the olive oil category, and said her olive oil pavilion at the KeHE show placed her front and center in an industry in dire need of major decision makers who take the time to understand its complexities.
Reyes is known as a serious manager adverse to taking risks. “You need to bring the retailer to them, not the other way around,” Neumann said. KeHE and UNFI are not where you go to introduce your brand to the marketplace, they are who you might work with to reach the next level. For example, forget working with UNFI if you don’t already sell your product in Whole Foods Market.
So, how does a small or mid-size olive oil producer in Greece, Italy, or Spain figure out the intricacies of the American mass market? Neumann said it can’t be done. You need to hire someone — a brand management consultant in the States who understands how it all works and can navigate your brand through it all.
Putting it bluntly, Neuman said you’ll need an attractive product at a sharp price, brokers and commissioned sales agents out on the street, retailers already carrying your product, and lots of cash for trade shows to get started with one of the major distributors. And you’re just getting started.
When Gaea Products first approached Liberty Richter, a major importer and marketing company who serves the largest distributors including KeHE, UNFI and Haddon House, Gaea CEO Aris Kefalogiannis was told to come back after the Greek producer could show sales of at least $300,000. So Kefalogiannis hired a brand manager to set up a U.S. sales office. Two years later, he went back to Liberty Richter and signed a deal.
“In the beginning I traveled to the U.S. every other month, sometimes for weeks at a time, going door-to-door with our sales people,” Kefalogiannis said, echoing the level of commitment needed to break into the mainstream American retail market. Kefalogiannis said he worked at keeping the start-up costs to a minimum, yet they amounted to “more than $100,000, less than $200,000.”
Maria Reyes is “a rare exception,” Kefalogiannis said, which this industry desperately needs. “You know this is not an easy category — it requires expert knowledge. It is extremely important that Reyes has devoted the time to develop such expertise and she’s applying that to her work.”
One can’t help wondering how, after paying Liberty Richter, KeHE, and everyone else along the line, Kefalogiannis is able to pay farmers a fair price — fairer, in fact, than most growers in Greece. “This is the name of the game,” Kefalogiannis responds, admitting his margin is razor thin. “We didn’t go into this blindfolded. It’s all about adding value. The future of olive oil depends on this. We lose our advantages if we don’t work for, and recognize, the quality.”
Olive oil brand-building and distribution will be the topic of a two-day seminar at the 2014 New York International Olive Oil Competition.