`California Producer Sees ‘Green Shoots’ of Growth for Industry - Olive Oil Times
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California Producer Sees ‘Green Shoots’ of Growth for Industry

By Nancy Flagg
Apr. 9, 2014 22:35 UTC
Gregg Kelley

Gregg Kelley, CEO of the California Olive Ranch knows that the olive oil indus­try is trou­bled, but sees signs of hope for a brighter future. Speaking at the New York International Olive Oil Competition con­fer­ence today, Kelley said that the indus­try is beset by a lack of con­sumer knowl­edge and ​“silent com­pet­i­tive threats,” but there are indi­ca­tions of great growth poten­tial.

​“Consumers do not know about the qual­ity of the olive oils put in front of them” and because of that, price, not qual­ity, is the pri­mary dri­ver in sales, said Kelley. Listing the top-sell­ing olive oil brands in the U.S. Kelley asked fel­low pro­duc­ers attend­ing the sold-out event audi­ence whether they could match the prices of the pop­u­lar labels. ​“Can any­one here put a half-liter of olive oil on the mar­ket for $2.81? I don’t think so. Neither can we.”

Kelley explained that with­out suf­fi­cient under­stand­ing of qual­ity dif­fer­ences, peo­ple buy what is on sale or buy famil­iar brands. He added that con­sumers are increas­ingly buy­ing pri­vate labels because they ​“don’t see the dif­fer­ence between them and the big brands.”

Another prob­lem fac­ing the indus­try is a com­pet­i­tive threat from other types of oil pro­duc­ers, said Kelley. He stated that coconut and avo­cado oil con­sump­tion rates are ​“going through the roof” and that pro­duc­ers of corn and seed oils are genet­i­cally mod­i­fy­ing their prod­ucts to allow them to be mar­keted as being ​“as healthy as olive oil.”

Despite indus­try trou­bles, Kelley is opti­mistic about the future of the olive oil busi­ness. After ana­lyz­ing olive oil con­sump­tion by coun­try, Kelley con­cluded that U.S. con­sumers should be pur­chas­ing three times more olive oil than they cur­rently do. He pre­dicts that a large growth in con­sump­tion will occur and that edu­cated con­sumers will be will­ing to pay greater prices for qual­ity oil.

Kelley com­pared the olive oil indus­try to other food move­ment trends that started in California and ended up rev­o­lu­tion­iz­ing their indus­tries. He noted that Alice Waters stim­u­lated the organic food and farm to table move­ments that spread to the rest of the coun­try. The advent of the California wine indus­try and its qual­ity prod­uct dou­bled wine con­sump­tion rates in the U.S. And, when a California man­darin pro­ducer decided to brand ​“Cuties” man­darins, man­darin sales ​“rose to a level no one would have thought pos­si­ble ten years ago,” said Kelley.

The fun­da­men­tal shifts in the food indus­tries did not just ben­e­fit U.S. pro­duc­ers, but also inter­na­tional pro­duc­ers who saw con­sump­tion growth as well. ​“The ris­ing tide has floated all boats.”

The secret ingre­di­ent that will allow the olive oil indus­try to have suc­cess sim­i­lar to the wine and man­darin indus­tries is con­sumer edu­ca­tion, explained Kelley. Consumers need to under­stand what con­sti­tutes a bet­ter olive oil and how it will improve their lives and be worth the extra money, added Kelley.

Kelley, the chief exec­u­tive of the largest American olive oil pro­ducer, described how Starbucks changed the face of cof­fee con­sump­tion in the U.S. by ​“pro­vid­ing con­sumers with an expe­ri­ence and an edu­ca­tion,” and that the olive oil indus­try can offer con­sumers a sim­i­lar edu­ca­tion and appre­ci­a­tion for olive oil.

Evidence of the ​“green shoots of fun­da­men­tal change” in the olive oil world is already here, said Kelley. While col­lec­tive growth in retail sales of lead­ing brands in the U.S. has only been about one per­cent per year, some U.S. brands that are pro­duc­ing qual­ity prod­ucts and are trans­par­ent about the qual­ity have been real­iz­ing sub­stan­tial growth, Kelley explained. He cited the California Olive Ranch’s 50 per­cent annual growth rate, Lucini’s 18 per­cent growth and Chile’s O‑Live dou­ble digit growth rate as exam­ples of the change.

Consumer edu­ca­tion is the key. Companies such as Veronica Foods and We Olive are offer­ing oils from around the world and olive oil expe­ri­ences that are crit­i­cal to the growth of the indus­try, said Kelley. His own com­pany engages in tast­ing events and works exten­sively with inter­me­di­aries, as well as retail­ers. Kelley believes the mis­sion of California pro­duc­ers is to ​“show Americans what great olive oil tastes like.”

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