Award-Winning Chilean Producer Eyes Lucrative Brazilian Market

Over the past 15 years, no coun­try has seen olive oil pro­duc­tion and exports increase as quickly as Chile.

According to data from the International Olive Council and pro­ducer asso­ci­a­tion ChileOliva, pro­duc­tion sky­rock­eted from 5,000 tons in the 2006/07 crop year to 21,000 tons in the 2022/23 crop year.

Over the same period, exports have risen from 1,000 tons to an esti­mated 16,000 tons, a 1,500-percent increase.

Located in the Maule Valley, about three hours south of Santiago, Las Doscientos has been in the van­guard of Chilean pro­duc­tion and exports.

The com­pany started in 2005 by pur­chas­ing the first 200 hectares of land, later planted with Arbequina, Picual and Frantoio.

“At that time, there was not much infor­ma­tion in Chile because there were no olive oil plan­ta­tions, there were table olive plan­ta­tions fur­ther north, and there were a few other com­pa­nies already in the olive oil busi­ness, but there was no more than that,” José Pablo Illanes, gen­eral man­ager of Las Doscientos and direc­tor at ChileOliva, told Olive Oil Times.

However, the loca­tion in the val­ley, near Talca, proved to have a suit­able micro­cli­mate for olives. The region was already becom­ing well-known for local wine pro­duc­tion and received a Protected Geographical Indication cer­ti­fi­ca­tion from the European Union in 2003.

An engi­neer by train­ing, Illanes joined Las Doscientos after work­ing in finance and inter­na­tional trade.

“And through those turns in the road, I entered the world of olive oil,” he said. ​“I had to develop our olive oil brand when Chile did­n’t have a rep­u­ta­tion as a coun­try of olive oil pro­duc­ers. We were rec­og­nized for the wine, fruit and salmon, but not for olive oil.”

“I saw this as a titanic bat­tle of how to con­vince the con­sumer and the pub­lic that Chile was a good pro­ducer,” Illanes added. ​“I think that through­out all these years, we have a brand that is posi­tioned and rec­og­nized not only in Chile but in the larger global mar­ket.”

Las Doscientos found quick suc­cess and bought about 300 hectares to plant more olive trees in 2008. Now, the com­pany has 700 hectares of olive groves.

Like many New World olive oil pro­duc­ers, the com­pany has grown chiefly at inten­sive farm­ing to achieve economies of scale. Roughly 60 per­cent of the company’s groves are Arbequina, with 20 per­cent each for Picual and Frantoio.

Approximately 80 per­cent of the groves are mech­a­nized, with the remain­ing 20 per­cent located in ter­rain too tricky to mech­a­nize and har­vested tra­di­tion­ally. As a result, the com­pany usu­ally does not strug­gle to find enough work­ers dur­ing the har­vest.

“At the same time, we built a won­der­ful mill with the lat­est tech­nol­ogy,” Illanes said. ​“The first olive oil sales began in 2009 when we placed a small vol­ume of olive oil in local super­mar­kets, and then in 2012 onwards, we began export­ing.”

According to Illanes, Brazil is the pri­mary des­ti­na­tion for exports from Las Doscientos and many other Chilean pro­duc­ers. Brazil is one of the world’s ten largest olive oil con­sumers, with the vast major­ity sup­plied by imports.

“We are the sec­ond largest exporter of olive oil to Brazil with more than ten clients in on and off-trade,” he said. On-trade refers to restau­rants, and off-trade refers to super­mar­kets and spe­cialty stores.

The com­pany exports to more than 12 coun­tries, includ­ing Bolivia, Colombia, Mexico, Russia, the United States and Uruguay, but Illanes said his main focus is on Brazil.

“Our focus has been mainly on the Brazilian mar­ket, which has a con­stant demand and a very good appre­ci­a­tion of extra vir­gin olive oil,” he said.

He added that Chilean pro­duc­ers have a com­pet­i­tive advan­tage in Brazil since most European coun­tries pay a 10 per­cent tar­iff on their olive oil exports while Chilean pro­duc­ers ben­e­fit from a free trade agree­ment.

“Apart from the tar­iff advan­tages, there are logis­ti­cal advan­tages,” Illanes said. ​“It takes a week for a truck to go from our mill to super­mar­ket shelves in the south of Brazil or São Paulo.”

Even if the long-touted E.U.-Mercosur free trade agree­ment is signed, he is not wor­ried about increased com­pe­ti­tion. Brazil is a South American free trade group mem­ber, while Chile is not.

Illanes esti­mates that Chilean exports make up roughly five per­cent of Brazilian imports and see plenty of room for com­pe­ti­tion.

“If the tar­iff changes, it will not affect Chilean imports because the Brazilian con­sumer already rec­og­nizes Chilean olive oil as a very high-qual­ity prod­uct,” he said. ​“I believe that olive oil exports will con­tinue to grow.”

Winning inter­na­tional qual­ity awards, includ­ing a Gold and Silver Award at the 2023 NYIOOC World Olive Oil Competition and local awards in Brazil, improve the company’s prospects as an exporter, Illanes said.

Since Brazil passed its label­ing law in 2016, he said awards and other types of recog­ni­tion have become very impor­tant for Brazilian con­sumers.

Along with exports, Illanes said Las Doscientos is also one of the lead­ing brands in Chile. He esti­mates Chilean olive oil pro­duc­tion sat­is­fies about 90 per­cent of domes­tic demand.

Still, Illanes said there is plenty of work to edu­cate Chilean con­sumers, as per capita con­sump­tion remains rel­a­tively low. According to the International Olive Council, Chile will con­sume 9,500 tons of olive oil in 2022/23. The coun­try has a pop­u­la­tion of about 18.5 mil­lion peo­ple.

“What could hap­pen in Chile with olive oil may be what hap­pened with wine,” he said. ​“Twenty years ago, Chileans either drank white or red wine. Now, they drink Cabernet Sauvignon or Carmenere.”

“These awards are valu­able for us both in the Chilean and export mar­kets,” Illanes added.

He said win­ning inter­na­tional qual­ity awards helps pro­duc­ers from non-tra­di­tional coun­tries estab­lish the same name recog­ni­tion that olive oil brands from Spain, Italy and Greece enjoy.

“Our strat­egy is to edu­cate con­sumers so they can under­stand – sim­i­larly to wine – what is the dif­fer­ence between an Arbequina, Picual and Frantoio,” he said. ​“To this end, we have been using social media.”

Illanes added that many Chileans con­sume olive oil blends, and his com­pany seeks to edu­cate con­sumers about mono­va­ri­etals. By under­stand­ing the dif­fer­ent organolep­tic qual­i­ties of mono­va­ri­etals, con­sumers can begin to develop pref­er­ences for olive oil as they would for wine.

For Illanes and Las Doscientos, this year’s NYIOOC awards capped off a suc­cess­ful har­vest, and he is look­ing for­ward to another pro­duc­tive year in 2024.

“The over­all har­vest in Chile was very good,” he said. ​“The har­vest was much bet­ter than last year.”

In 2022, a severe frost in May, just as the har­vest began, resulted in a sig­nif­i­cant drop in pro­duc­tion. Illares esti­mated the reduc­tion to be about 20 per­cent.

“This year, the weather was with us, which is essen­tial for a good har­vest, and the yields, in our case, were very high,” Illanes said.

Illanes said the Maule Valley had received plenty of rain, refill­ing reser­voirs and other aquifers before the har­vest.

“We are con­fi­dent that in 2024, we will achieve a har­vest equal to or bet­ter than the one we already had,” he said. However, he noted that this summer’s weather con­di­tions – sum­mer runs from December through March in the Southern Hemisphere – would play a sig­nif­i­cant role in deter­min­ing how the next har­vest evolves.

Looking ahead, Illanes believes that Las Doscientos must con­tinue to grow to meet ris­ing demand in South America, espe­cially Brazil while edu­cat­ing con­sumers in Chile to develop its olive oil cul­ture.

“The main chal­lenge for our com­pany is to con­tinue grow­ing,” Illanes said. ​“We want to reach an approx­i­mate sur­face area of 1,200 hectares. We want to sell more than 3 mil­lion liters of oil.”

“Today, we are sell­ing 1.7 mil­lion liters,” he con­cluded. ​“To achieve this, the chal­lenges are to invest in sur­face area planted, machin­ery and con­tinue pro­mot­ing our brand, which, after many years, we already con­sider to be very con­sol­i­dated in the mar­ket.”