What an Olive Oil Brand Needs to 'Make it Big' in the U.S.

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 annu­ally — 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 brands KeHE dis­trib­utes are among the world’s top-sell­ing, but oth­ers are far from house­hold names. They are com­mit­ted to mak­ing 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 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 speak at the 2014 NYIOOC sem­i­nar, focus­ing on olive oil brand-build­ing and dis­tri­b­u­tion.)

After estab­lish­ing the brand’s unique­ness, pro­duc­ers and mar­keters must 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 and 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. Still, it is not 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 the olive oil brands avail­able to con­sumers. 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, and e‑commerce and 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 many tar­gets.

David Neumann, pres­i­dent of Lucini, said national dis­trib­u­tors like KeHE don’t do the brand-build­ing. ​“You’ll need to do that.” Neumann said before work­ing with KeHE or UNFI, you will need ​“pull power.” In other words, your olive oil brand must already have a fol­low­ing and can attract shop­pers to the retail­ers who bring it in.

Neumann called Reyes ​“a pro­gres­sive thinker” regard­ing the olive oil cat­e­gory. 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, and 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 that 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 returned 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 can 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.