Goya Spain GM Says the Global Olive Oil Sector Potential Lies with Young Consumers

Summary

Goya Foods, founded by Spanish immi­grants in New York City, has focused on inter­na­tional olive oil com­merce since its incep­tion, with founder Prudencio Unanue import­ing olive oil from Spain and bot­tling it in Brooklyn. The com­pany now exports olive oil to 20 coun­tries, with a focus on the United States, and aims to edu­cate con­sumers on the health ben­e­fits and qual­ity of olive oil, espe­cially in emerg­ing mar­kets like China and Japan. Despite chal­lenges like tar­iffs and poor har­vests, Goya Foods remains com­mit­ted to main­tain­ing its Spanish ori­gin and pro­vid­ing con­sumers with a qual­ity prod­uct.

Since the com­pany was founded by Spanish immi­grants in New York City nearly nine decades ago, Goya Foods has spe­cial­ized in inter­na­tional olive oil com­merce.

Founder Prudencio Unanue moved from Burgos, in the autonomous com­mu­nity of Castile and León, to the United States in 1921 and founded a gro­cery store that sold Spanish prod­ucts to the American mar­ket in 1936.

“It started with olive oil, olives and pre­serves,” Antonio Carrasco, the gen­eral man­ager of Goya en España, told Olive Oil Times. ​“At first, he imported the olive oil from local pro­duc­ers and pack­ers. Later he set up his own bot­tling line in Brooklyn and imported the olive oil in bulk from Spain.”

Now, the com­pany exports extra vir­gin olive oil pro­duced exclu­sively in Andalusia and bot­tled in Seville to 20 dif­fer­ent coun­tries. However, Goya con­tin­ues to focus on the United States, the world’s largest olive oil importer.

While he high­lighted the many chal­lenges fac­ing the growth of the global olive oil trade, Carrasco said there is plenty of mar­ket share avail­able to olive oil pro­duc­ers, but their focus must be on fla­vor, health and qual­ity over price.

“The growth poten­tial of the olive oil mar­ket world­wide is great,” he said. ​“Currently, olive oil makes up less than two per­cent of the total veg­etable fat con­sump­tion. In other words, we have sig­nif­i­cant growth poten­tial.”

Carrasco said olive oil is a unique prod­uct that must be posi­tioned between the worlds of wine and veg­etable oils.

Like wine, olive oil’s mar­ket share growth depends on con­sumers valu­ing the prod­uct for its organolep­tic qual­i­ties.

However, Carrasco points out that con­sumers drink wine alone and, based on the price, bot­tle and label design and fla­vor, decide whether or not they like the brand.

Conversely, con­sumers are less likely to try olive oil by itself. Instead, olive oil is mixed with other ingre­di­ents and heated or con­sumed raw amongst the med­ley.

This is where olive oil inter­lopes with the world of oilseeds and veg­etable oils. Still, it stands out, boast­ing a health­ier pro­file in terms of fat con­tent and phe­no­lic com­pounds, but its price remains closer to that of wine than rape­seed or sun­flower oil.

“Price is an ele­ment that always goes against olive oil,” Carrasco said. ​“It is always the most expen­sive fat. There is also a lack of habit in many coun­tries. That is to say, in Mediterranean-pro­duc­ing coun­tries, olive oil is a sta­ple prod­uct. It is not con­sid­ered a gourmet or a spe­cialty prod­uct like it is in the rest of the world. Still, this is chang­ing lit­tle by lit­tle.”

Carrasco views young peo­ple across North America, Latin America and Asia as the key demo­graphic to change the pre­vi­ous olive oil con­sump­tion par­a­digm.

“Young peo­ple are learn­ing more about the health ben­e­fits of a healthy diet, a Mediterranean diet,” he said. ​“We have to develop the prod­uct among young peo­ple, who are the ones who will demand this type of prod­uct in the future; a prod­uct that is healthy that is sus­tain­able.”

As a result, Carrasco said Goya Foods works with chefs and influ­encers and other forms of social media mar­ket­ing to meet young peo­ple where they are and make a case for olive oil.

Carrasco said the olive oil cul­ture of China remains an imped­i­ment to the expan­sion of the brand there. While the appetite for olive oil has grown in China in recent years, Carrasco said Chinese con­sumers still see olive oil as a spe­cialty food and novel gift, not a kitchen sta­ple.

“We have not had that suc­cess in China because it is a mar­ket in which olive oil is con­sid­ered a gift,” he said, not­ing that 80 per­cent of olive oil sales in the world’s sec­ond-largest econ­omy are for gifts in Goya’s expe­ri­ence.

“So you have to have a dis­tri­b­u­tion to reach that gift mar­ket,” Carrasco added. ​“But, growth is very dif­fi­cult and very slow from the point of view of con­sump­tion and health. It is a growth in gifts at a cer­tain time, such as the Chinese New Year.”

Carrasco said com­pa­nies must have excel­lent sup­ply chains and rela­tion­ships in China to exploit these moments in the mar­ket. If com­pa­nies miss the key hol­i­day sea­son, sales will be slower.

Apart from the United States, which he empha­sized remains the com­pa­ny’s pri­or­ity mar­ket, Carrasco said Goya Foods focuses on Japan, where there is an emerg­ing olive oil cul­ture, South Korea, Canada, Mexico and north­ern European coun­tries.

Due to its deep roots in the coun­try, espe­cially among the United States’ vast Hispanic com­mu­nity, Goya Foods will always focus on the U.S., even as it has become an increas­ingly risky mar­ket for Spanish olive oil pro­duc­ers.

Unlike oth­ers, Carrasco said that Goya Foods refused to change its busi­ness model when a 25-per­cent tar­iff was imposed on pack­aged Spanish olive oil imports to the U.S. due to a trade feud between the U.S. and Europe sur­round­ing sub­si­dies for air­plane man­u­fac­tur­ers.

“When we had 25 per­cent tar­iffs due to the United States impos­ing those tar­iffs, we, like every other brand, had a choice,” Carrasco said. ​“Goya had the option of buy­ing the oil in Portugal, Morocco or Turkey and rebot­tling in the United States. All these options were given to us to avoid the tar­iff.”

“But we decided to main­tain our Spanish ori­gin despite the 25 per­cent tar­iff, and dur­ing those six to eight months that the tar­iff lasted, it was a com­pet­i­tive dis­ad­van­tage,” he added.

Unlike some of its peers in Spain, who source olives and olive oil from across the Mediterranean, Goya Foods also faces a com­pet­i­tive dis­ad­van­tage after poor har­vests, such as the one Spain just expe­ri­enced.

“We do not have the abil­ity to buy olives and olive oil from other coun­tries,” Carrasco said. ​“This sea­son, we are at a dis­ad­van­tage because of this posi­tion.”

“But we have to take care of our brand and Spanish ori­gin,” he added. ​“We have based our brand devel­op­ment and mar­ket­ing on qual­ity and our Spanish ori­gin.”

While Spain’s low­est har­vest of the past decade may have dis­rupted the com­pa­ny’s abil­ity to pro­duce as much olive oil as nor­mal, Carrasco believes that qual­ity is more impor­tant, espe­cially in the United States.

As a result, he believes that com­pa­nies must teach con­sumers, jour­nal­ists and influ­encers how to taste olive oil and under­stand the organolep­tic dif­fer­ences between extra vir­gin and vir­gin olive oils rather than solely rely­ing on phys­io­chem­i­cal met­rics.

Carrasco added the com­mon belief that extra vir­gin olive oil pro­duced in the United States, specif­i­cally California, is inher­ently supe­rior to extra vir­gin olive oil pro­duced in the rest of the world is coun­ter­pro­duc­tive.

“Californians are doing their job defend­ing the California lobby,” he said. ​“It is very strong, and, well, they are cam­paign­ing against imported oils.”

“But really, it is not to say that California oil is not good and imported oil is bad,” Carrasco added. ​“There are Californian oils that are very bad, and there are imported oils that are very bad, but there also are imported oils that are good.”

Carrasco said efforts to cre­ate this zero-sum world do a dis­ser­vice to American con­sumers, and he pointed out that California will never pro­duce enough olive oil to meet domes­tic demand, so clas­si­fy­ing all imported olive oil as low qual­ity and pos­si­bly fraud­u­lent turns off poten­tial cus­tomers to any olive oil rather than grow­ing the con­sumer base.

“I believe that in the end, what we have to give the con­sumers is brand secu­rity,” he said, cit­ing the role of awards – such as the three Gold Awards won by Goya at the 2023 NYIOOC World Olive Oil Competition – in this process.

“In other words, like with any other prod­uct, the con­sumer has to trust the brand, and the brand has to give con­fi­dence to the con­sumer that they are buy­ing a qual­ity prod­uct,” Carrasco con­cluded. ​“That is what we are try­ing to do at Goya.”