How a Chilean Disrupter Shook Up the Country's Olive Sector

In 2001, Alfonso Swett, the Chilean busi­ness­man and entre­pre­neur, was dri­ving through sprawl­ing olive farms in Spain when he had an epiphany.

“He started to real­ize that in Chile, the con­di­tions are sim­i­lar, specif­i­cally in the mid­dle of the coun­try,” Claudio Lovazzano, the mar­ket­ing man­ager of Olivos del Sur, told Olive Oil Times.

At the time, olive grow­ing in the coun­try was parochial in the very lit­eral sense of the word. While olive trees had been brought to Chile by the mis­sion­ar­ies who fol­lowed the con­quis­ta­dores in the 1500s, their cul­ti­va­tion had not expanded far beyond the devoutly Catholic coun­try’s monas­ter­ies and parishes.

However, the turn of the 21^st cen­tury was also a moment when winer­ies were expand­ing into the fer­tile hills of the coun­try’s cen­tral val­ley. Vintners saw the poten­tial of the ter­roir and Mediterranean cli­mate.

Swett – who has led five com­pa­nies, advised the gov­ern­ment on for­eign pol­icy and teaches at the pres­ti­gious Pontificia Universidad Católica de Chile – sensed the moment was ripe to begin plant­ing olive trees to pro­duce olive oil.

By 2004, he planted his first olive trees in high den­sity. In 2007, Olivos del Sur har­vested for the first time.

“The idea was to be very focussed on high qual­ity but always think­ing about how to do so in vol­ume,” Lovazzano said. ​“At that time, he was a pio­neer of plant­ing trees in high vol­ume.”

Swett, who made mil­lions find­ing ways for com­pa­nies to oper­ate more effi­ciently, believed the tra­di­tional har­vest­ing of Spain was an inef­fi­cient use of cap­i­tal and human resources and a detri­ment to qual­ity.

To make sure he was get­ting his mechan­i­cally-har­vested olives trans­formed into oil as quickly as pos­si­ble, he built a mill in the cen­ter of his first grove.

“One of our main secrets for pro­duc­ing high-qual­ity olive oil is we can har­vest and get the olives to the mill very quickly, in just two hours,” Lovazzano said. ​“It was a state-of-the-art con­cept at the time.”

When Swett began plant­ing olive trees, Chile had about 6,000 hectares of com­mer­cial olive groves. Now, there are 28,000 hectares of olive groves planted in Chile, of which 2,500 belong to Olivos del Sur. With an annual pro­duc­tion of roughly 4 mil­lion liters, Swett’s com­pany is the largest olive oil pro­ducer in Chile.

Swett, who was edu­cated in the United States and sits on the board of a Peruvian com­pany, has always had an inter­na­tional mind­set. He saw the poten­tial for extra vir­gin olive oil in the Brazilian and North American mar­kets. Now, 50 per­cent of Olivo del Sur’s annual pro­duc­tion is exported.

Of that, Lovazzano said 50 per­cent is des­tined for Brazil, where the brand has proven to be immensely pop­u­lar. Olivos del Sur also exports to Canada, Mexico and the United States. The lucra­tive East Asian mar­ket is also in its sights, with some sales already tak­ing place in Japan and plan­ning under­way to expand fur­ther.

As a result of its expan­sion into the North American mar­ket, Olivos del Sur decided to enter the NYIOOC World Olive Oil Competition, the world’s largest olive oil qual­ity com­pe­ti­tion. Lovazzano said the awards, along with its com­pet­i­tive prices, help the com­pany con­vince dis­trib­u­tors to carry their brand.

“When you go to pitch to a dis­trib­u­tor, and you say, here’s my brand, and these are the awards that we are win­ning, they say fan­tas­tic,” he said.

Since first enter­ing its O‑Live & Co brand in 2020, Olivos del Sur has won a Gold and two Silver Awards at the NYIOOC.

Lovazzano con­tends that Chile – with an aver­age annual pro­duc­tion of 20,000 tons – is an ideal place to grow olive trees. ​“We don’t have many pests like the olive fruit fly. We don’t have Xylella fas­tidiosa,” he said.

Despite the coun­try’s ongo­ing drought, Lovazzano believes that olive grow­ers can con­tinue to thrive, but only if they adapt mod­ern agri­cul­tural tech­niques.

“We started using pre­ci­sion agri­cul­ture in 2018 when we real­ized that the drought was becom­ing a huge prob­lem,” he said. ​“We needed to find an alter­na­tive way to man­age our resources bet­ter.”

“We con­tinue work­ing on our pre­ci­sion farm­ing tech­niques,” Lovazzano added. ​“These allow us to make bet­ter deci­sions in terms of using our irri­ga­tion sys­tem.”

Olivos del Sur uses drones to fly over the olive groves. Sensors on the drone are able to deter­mine soil mois­ture lev­els, devel­op­ment of buds dur­ing the flow­er­ing phase and sev­eral other key met­rics.

This helps the com­pa­ny’s agron­o­mists deter­mine which sec­tions of the groves require more water and which do not. Data gath­ered from the drones also helps them deter­mine which sec­tions of the grove are ready to har­vest first and which need a bit more time.

Lovazzano believes all large-scale olive grow­ers will need to adapt sim­i­lar sys­tems soon to remain com­pet­i­tive.

While pur­chas­ing and oper­at­ing the drones and installing the soft­ware require sig­nif­i­cant invest­ment, the value of doing so has already become evi­dent.

Ahead of the 2022 har­vest in Chile, most of the pro­duc­ers inter­viewed by Olive Oil Times cited drought as a major con­cern. At the time, Lovazzano said Olivos del Sur had man­aged its water resources well enough not to be affected.

Fortunately for all Chileans, there has been ample rain­fall since the autumn (from March to June in the Southern Hemisphere). However, Lovazzano believes the drought will con­tinue to be a chal­lenge in the medium term.

While the pro­duc­ers at Olivos del Sur may not be too con­cerned about drought – unlike their peers on the other side of the Atlantic – they are more con­cerned by ram­pant global infla­tion and the sup­ply chain cri­sis, par­tially caused by China’s Zero-Covid pol­icy.

Lovazzano added that these inter­na­tional issues have been com­pounded by eco­nomic uncer­tainty in Chile sur­round­ing the run-up to a recent ref­er­en­dum in which vot­ers rejected a newly-drafted con­sti­tu­tion.

“The sit­u­a­tion keeps the eco­nom­ics very uncer­tain, ​“he said. ​“Of course, the inter­na­tional sit­u­a­tion does not help. Prices are ris­ing, and every­thing is more expen­sive than it was last year. That’s a sit­u­a­tion you can­not sup­port for a long time.”

Like other pro­duc­ers, Lovazzano said ris­ing prices of fer­til­izer, pack­ag­ing mate­ri­als and fuel had forced the com­pany to increase its prices.

However, he added that Olivos del Sur con­tin­ues to look to the future despite the chal­lenges fac­ing it in the present.

Since the Covid-19 pan­demic led to wide­spread lock­downs in Chile, Lovazzano said the com­pany had vastly expanded its dig­i­tal foot­print, invest­ing more in e‑commerce and online mar­ket­ing.

Olivos del Sur has also rec­og­nized the exis­ten­tial threat cli­mate change poses to agri­cul­ture and has taken steps to become more sus­tain­able.

“We were the first olive oil pro­ducer in the world to be cer­ti­fied as car­bon neu­tral,” Lovazzano said. The com­pany off­sets its car­bon diox­ide emis­sions through approved car­bon mar­ket schemes.

“We really believe that some­thing like that can make a dif­fer­ence,” he con­cluded. ​“To be a sus­tain­able olive oil pro­ducer helps you make more good deci­sions in the future.”

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