australian olive oil market

SSeeccttiioonn 22

OOlliivvee AAuussttrraalliiaann RReeppoorrttMay 2003

Section One – Australia Report56

IInnttrroodduuccttiioonnAustralia’s consumption of oils and fats shares much in common with that of northern European countries such as the UK and Germany with increasing consumption of oils because of concerns with health issues. Vegetable oils are gaining shareat the expense of fats and recent growth in the share of the Australian oils retail sector accounted for by olive oil has been rapid. However, the share of Australian retail margarine and spreads sector still averaged 80% in the late 1990’s.

There is some evidence that the growth in olive oil consumption has plateaued in Australia. From 1997 to 2000consumption of olive oil in Australia had been steadily increasing, but it experienced a downturn in 2001. In 2001consumption was around 28,000 tons, down from a high of 31,000 tons in 2000, and a low of 17,500 tons in 1997.

Most olive oil is imported and Australian imports of olives and olive oil have been increasing by over $A13 million a year.

Currently Australian produces around 1,000 tons of olive oil annually and annual sales of Australian olive productsamounted to $A1.3 million in 1998. It has been very difficult to establish exactly how many olive groves there are inAustralia1, but indications are that there are more than 15,000 small to medium growers. The Olive Industry2 believes that 37% of growers plant no more than 500 trees and 90% of growers have 5,000 trees or less.

Based on available data, The Loyalty Factor estimates that by 2007 the annual olive oil yield from plantations will bearound 45,900 tons and at current consumption levels, olive oil production is likely to be in excess of domesticconsumption.

1 http://www.victorianolivegroves.com/grow.html2 Corkindale, David; Professor of Marketing Management Adelaide University


IInnttrroodduuccttiioonn ccoonntt......

While per capita consumption of olive oil in Australia is the highest outside of the EU nations, it is still relatively smallwhen compared to the EU. In 2001 for example, Australians consumed around 1.66 kgs (1.82 litres) of olive oil,compared to Spain, whose population consumed 16.55 kgs (18.20 litres) per capita.

Despite its growth in popularity, olive oil still only represents around 6% of all oil consumed in Australia and while up to70% of the population report to having used olive oil, consumer research indicates that there is a relatively small group ofheavy users.

The volume of consumption of Australian oil is very much supply driven. Through the 1980’s sunflower seed oil was themajor domestically produced and consumed oil. This has since been replaced by canola oil which reflects the increase inlocal production of canola in Australia.

The leading oil brand in Australia is Bertoli which accounts for around one fifth of the retail sector by value. Meadow Lea Food leads the range of brands in the margarine sector with around 40% of the retail market. In all oils and fats sectors,the consumers’ desire for value plus retailer power is influencing the growth in share accounted for by own brands.

The majority of Australian-produced olive oils are extra virgin and positioned as boutique/speciality olive oil. Thispositioning is clearly demonstrated by the number of oils that are available in designer bottles, in small sizes (with 375mlthe most popular), retailed mostly through boutique outlets. Generally a 375ml bottle has the premium price point ofaround $20.

The message conveyed therefore, is Australian oils are not for every day use but for special occasions.

According to the Landline report in May-02, the market distribution leaders for olive oil are Woolworths and Coles whosell four litre cans of olive oil for $14.50. Most of these oils are Spanish and Italian with the Moro brandpackaged/processed in Australia.


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Local production is set to exceed local demand

Currently, olive oil consumption in Australia is around 28,000 - 30,000 tons and local production is around 1,000-1,500tons. But based on an analysis of groves currently under cultivation in Australia, TLF estimates that by 2007 local olive oilproduction will be around 46,000 tons. Clearly then, based on current consumption levels, local production will exceedlocal demand once the trees mature.

This presents a number of issues:

1. At present most olive oil is imported and key brands in the market are extremely strong, backed by multi-nationalorganisations with marketing savvy and huge resources. Imported product has a distinct price advantage in the market over local products. It will be difficult for lone locally produced brands to compete against imported brands without support.

2. Locally produced product is positioned at the premium end of the market and currently demands high prices.Clearly not all locally produced products will be able to compete in this small market niche and even premium brands willincreasingly come under price pressure as more products become available in increasing quantities. It is inevitable there will be a shakeout in the market.

3. Consumption in the local market has stabalised, but as the years go on, even more local product will be available.This means that Australia is likely to become an excess producer of olive oil. Local producers may need to play on theworld-stage, competing not only with experienced EU producers and marketers but with many new-world producers aswell.


KKeeyy IIssssuueess

Local Producers are generally inexperienced in the industry

Local producers appear to be polarized into two key groups: larger (often investor) consortiums which are becominginvolved in crushing and marketing activities as well as cultivation; and small operators with small groves. The majority ofgrowers have little experience in either the cultivation or marketing of olive oil.

This is opposed to a very organised and savvy world stage, with multi-national brands, and large grower consortiums(although the industry itself in Europe could still be described as a cottage industry). The traditional growers of olive oil arealso heavily subsidised and have the strength of the EU backing them. Spain, as the largest producer country, the largestexcess producer and largest net exporter, is very active, and works to open new markets, predominately using a price-pointmarket development strategy. Spain also has invested in new producer countries such as Argentina. This does not take into account the fact that olive oil is only part of a much larger world market, the fats and oils market where the competition is even fiercer.

The Consumer is uneducated

While olive oil consumption has increased primarily due to concerns with health issues within the marketplace, mostconsumers are unable to articulate the benefits of olive oil over alternative oils, which indicates that should prices increase, they will seek out cheaper alternatives. This is a worldwide issue and not just applicable in the Australian market. Theconsumer is also relatively unsophisticated in discerning a premium quality product from a lesser quality product. Theytend to depend on price and packaging to help them make their selections. Consumers generally find the stronger taste of premium oils too strong for their palate.


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Olive oil is not viewed as an everyday product

With the exception of the traditionalist and perhaps the confident gourmet consumer segments, olive oil is not generallyviewed as an everyday cooking oil. The premium positioning of the local product has probably supported this perceptionin the marketplace. In order to absorb local production, olive oil needs to be positioned as an everyday alternative.


RReeccoommmmeennddaattiioonnss

From the perspective of a market growth strategy, the home market (Australia), even considering all the issues associatedwith it (not the least of which is competing against imported lower-cost alternatives), cannot be ignored.

Producers will need to re-think their positioning and marketing strategies. Clearly the market cannot sustain a volumepremium end market with premium pricing. There will always be a place for this market position (although even in thissector there is bound to be a shake-out in the industry with so much volume coming into the market).

Producers compete with imported product. Australian producers need to develop an Australian brand/product which hasa unique point of difference, and one that is carefully targeted to particular consumer segments. This will involve craftingoils to tastes, new packaging ideas (away from bottles and cans), a unique market positioning (market-freshness), and afocus on educating the market to the benefits of olive oil over other alternatives.

Olive oil producers need a strong and united Industry Body to compete both here and overseas. This is possible and thewine-industry is a great example. The industry will need to work towards driving down production costs, investing ininnovation and research and lobbying for government support. Consumer education, while the responsibility of everyone,also requires a united approach and a pool of marketing dollars to draw upon. Industry education is also critical to a strong and viable industry.

Olive oil must be taken out of the “occasion” use and be placed firmly in the every-day usage camp. For this to happen,many threads need to be woven together. Price, packaging, positioning, product crafting to palate, and so on.

And finally, there are some overseas markets that are worth investigating further. These markets are covered in more detail in the individual market reports for the UK, the US and Japan. Recommendations for Australian product in these markets are covered in those reports.


Key Recommendation

Without making a conscious decision and because of extensive olive grove plantings, Australia is about to become a keyolive oil producer, therefore greater volumes of oil will become available every year. Producers will have to take theinitiative now, in order to avoid pain later.

Although there are some key issues to be addressed, both as an industry and as an individual producer, the outlook couldbe very positive for these reasons:Australians are the largest per capita consumers of olive oil outside the EU countries The country has an ideal climate in which to cultivate olives Australia has always been a more efficient primary producer than EuropeThere is an emerging trend by consumers towards health and healthier eating habits, and There are several economies which are ripe to develop and build as the population increases their consumption of oliveoil.

But some work is required and key factors include: Price, Packaging, Product Taste, and a strong industry body.

The Marketing JobImport replacement, through product differentiation with product, packaging, education and competitive pricing.


OOvveerrvviieewwAs the economic health of a country is an important indicator of fats and oils consumption, it is a critical factor inassessing the potential and future potential for marketing of olive oil.

Economic Outlook

Australia’s economy has performed particularly strongly throughout the 1990s, and is now in its eleventh successive year of growth – accompanied by low inflation, which has averaged around two per cent over the period.

Year 1999 2000 2001 2002 2003 2004 2005Population (millions) 18.97 19.20 19.44 19.68 19.92 20.16 20.41GDP Growth (%) 4.5 3.9 3.7 2.7 3.0 2.8 2.5

GDP per Capita (US$) 20,773 21,917 23,103 23,839 24,718 25,605 26,447

Source: MTI calculations from IMF/OECD

Difficulties in key export markets have depressed capital investment in certain industries, particularly manufacturing andcommodity-related areas, with prices for key commodities down.


Production

Oil Seed Crops

StructureThe Australian oilseed market is based on a system of oil bonuses, which has not only provided better returns to growers,but also substantial incentives to breeders, as well as improved agronomic practices. The Australian Oilseeds Federation(AOF) is the key industry body, which brings together all sectors of the supply chain.

Oil Seed ProductionThe specialist oilseed crops grown in Australia are sunflower, soybeans, canola, safflower and linseed. However, byAustralian agricultural standards, the oilseeds industry is a relatively young industry.

The climate allows for the double cropping of cereal grains in many areas. Canola has recently been grown as an alternativewinter crop to more traditional crops such as wheat. Summer crops include sunflower, soybeans and cotton, which areproduced in Queensland and northern New South Wales. Soybeans produced in the main cropping belts are dependent on irrigation water.

Australia’s oilseed production for 1999 reached 3.1 million tons, up 54% from the previous year. Total planted oilseed area increased by 40%, equivalent to almost 2.5 million hectares with Canola being the most significant. In 1999 Australiaproduced a record Canola crop reaching 1.73 million tons.

The last 12 years have seen the rapid rise in the popularity of Canola, with production in 1997-98 reaching 855,000 tons, up 37% on the previous year.

Total Australian oilseed production is expected to be recorded at 3.7 million tons for 2000, up 19% from a productionlevel of 2.5 million tons in 2000. This increase is largely due to growth of Canola production.


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Genetically Modified IssueThere is widespread rejection of GM foods in Europe and parts of Asia. In Australia there is growing public opposition to GM foods. Australian farmers are being urged not to grow GM Canola, however pilot crops have been implemented.

OilsProductionIn 1999, Vegetable oil production was recorded at 511,270 tons, up 3% from the previous year, reflecting a rise of oilseedproduction. Canola was the most significant with oil production reaching 167,248 tons down 24% on the previous year.Fro2000, Vegetable oil production is forecast at 500,000 tons down 2% on 1999 due to reductions in the oilseed crop.

Production of Oilseed by type 1999

Canola

56.3%

Sunflowerseed

6.7%

Cottonseed

32.4%

Soyabeans

3.5%

Others

1.1%

Source: USDA



Exports

Oil SeedsAustralia exported 2 million tons of oilseeds of which Canola was the most traded, with China the most important export market. Australian oilseed exports to China totalled $A164 million in 1998/99, to Pakistan $A56 million, and to the EU$A43 million. In December 1999, however, China cancelled an order of 100,000 tons of Canola from their three majorproducers including Australia

Australia is also well placed geographically to serve the Japanese market and exports of oilseeds to Japan and the EUshould increase. In 1998, the EU bought some 340,000 tons of Australian Canola and traders expected this to double in1999.

OilsOut of the total production of vegetable oils, 15% is exported predominantly to Southeast Asia, East Asia and the Sub-Continent. Total exports for 1999 reached 72,000 tons, up 7% on the previous year. The most significantly traded oil wasCanola and in 1999 43,000 tons were exported followed by cottonseed with 22,000 tons exported.

Imports

Oil SeedsIn 1999 total imports of oilseeds reached 31,000 tons, down 28% on the previous year. The most significantly importedoilseed in 1998/99 was soybeans however, imports of soybeans into Australia reduced by 39% in 1999 over the previousyear due to anti-GM sentiment.



Australia is focusing on China as the largest long-term potential customer for export of oils, as well as Japan, Taiwan,South Korea, Bangladesh and Pakistan.

Vegetable Oil Production, Imports and Exports by volume 1996-2000

Consumption

The consumption of Australian oil is very much supply driven. During the 1980’s the major domestically produced andconsumed oil was sunflower seed oil. This has been replaced by canola oil.

Oil Consumption by type 1999

Source: USDA

Olive Oil

5.5%

Canola

23.0%

Sunflower

16.0%

Cotton

15.6%

Soyabean

4.8%

Palm oil

25.0%

Others

10.1%

0

200

400

600

800

1000

1200

1996 1997 1998 1999 2000f

Pro

du

cti

on

& E

xp

ort

s,

('000 t

on

nes)

170

180

190

200

210

220

Imp

orts

, ('000 to

nn

es)

Production Exports Imports

Source: USDA


OOvveerrvviieeww ccoonntt……Total Australian consumption of vegetable oils rose to 437,000 tons in 1999 up 6% from a consumption level of 412,000tons in 1998. The highest consumed oils in Australia are palm oil, canola oil and sunflower seed oil, which accounted for25%, 23% and 16% of consumption respectively in 1999. Consumption of palm oil is entirely accounted for by imports.

RetailThe value of the retail market for oils and fats averaged at around $A600 million in the late 1990’s. Price growth in the oils and fats retail sector have lagged behind the general CPI due to increased competition as well as the product profile for oils and fats - which is a basic item commonly used as a loss leader.

Australia’s consumption of oils and fats shares much in common with that of northern European countries such as the UK and Germany. There is increasing consumption of premium oils such as olive oil and concern with health issues.Vegetable oils are gaining share at the expense of fats and recent growth in the share of the Australian oils retail sectoraccounted for by olive oil has been rapid. Australian imports of olives and olive oil have been increasing by over $A13million a year and annual sales of Australian olive products amounted to $A1.3 million in 1998 due to a marketing effort in the country.

In the late 1990’s, the share of the Australian retail sector accounted for by margarine and spreads averaged 80%.Margarine and spreads continue to gain share by value at the expense of butter due to promoted health considerations and the introduction of new value added items. The share accounted for by butter is expected to continue declining, althoughthis decline is levelling off, and the successful introduction of new products, such as spreadable, will add stablility to theshare.

The leading oil brand in Australia is Bertoli which accounts for around one fifth of the retail sector by value. Meadow Lea Food leads the range of brands in the margarine sector with around 40% of the retail market. In all oils and fats sectors,consumers’ desire for value, and increasing retailer power is influencing the growth in share for own brands.



Consumption

From 1997 to 2000 consumption of olive oil in Australia had been steadily increasing, but it experienced a downturn in2001, primarily reflecting higher retail pricing in the 1999/2000 year. In 2001 consumption was around 28,000 tons.

Consumption of Olive Oil

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1997 1998 1999 2000 2001

While per capita consumption of olive oil in Australia is the highest outside of the EU nations, it is still relatively smallwhen compared to the EU. In 2001 for example, Australian’s consumed around 1.66 kgs (1.82 litres) of olive oil, compared to Spain, whose population consumed 16.55 kgs (18.20 litres).

Olive oil still only represents around 6% of all oils consumed in Australia. While up to 70% of the population report ashaving used olive oil, consumer research indicates that there is a relatively small group of heavy users.

Source IOOC


OOvveerrvviieeww ccoonntt......

As a ‘healthy oil’, olive oil competes with canola oil, which over the last 12 years has seen a rapid rise in popularity.Australia grows canola and production in 1997-98 reached 855,000 tonnes, up 37% on the previous year. Canola is nowthe second most consumed oil after palm oil, overtaking the popularity of sunflower oil.

0.002.004.006.008.00

10.0012.0014.0016.0018.00

Italy

US

France

Portugal

Japan

Spain

UK

Germ

any

Canada

Australia

Olive oil per capita consumption in Kgs

1997

1998

1999

2000

2001

Source: IOOC/TLF

Section Two A Australia Report71

State % # of Trees# of Ha (Trees

per Ha) Fruit (Kg) Oil (lt) Oil (Tonnes)

8,500,000 250 40 6

NT 0%Tas 2% 170,000 680 6,800,000 1,020,000 918Qld 14% 1,190,000 4,760 47,600,000 7,140,000 6,426NSW & ACT 23% 1,955,000 7,820 78,200,000 11,730,000 10,557Vic 27% 2,295,000 9,180 91,800,000 13,770,000 12,393SA 17% 1,445,000 5,780 57,800,000 8,670,000 7,803WA 16% 1,360,000 5,440 54,400,000 8,160,000 7,344Unrecorded destination 1% 85,000 340 3,400,000 510,000 459

100% 8,500,000 34,000 340,000,000 51,000,000 45,900

Yield by 2007

Main Producing Countries in 1999

360,000

562,000

1,370,000

92,000

40,500

65,000

35,000

60,000 3500352,500

SpainItalyGreecePortugalTurkeySyriaTunisiaMorocooOthers EUOthers World

OOlliivvee OOiill PPrroodduuccttiioonnCurrently Australia produces around 1,000 tons of olive oil annually. But based on available data, The Loyalty Factorestimates that by 2007 the annual olive oil yield from plantations will be around 45,900 tons. Currently (2000) consumptionin Australia is 28,000 tons, which represents around 6% of the total oils market. Olive oil production is likely to be inexcess of domestic consumption by 2007.

Australia is still a relatively minor player in production terms, compared with the EU countries and Tunisia.


PPrroodduuccttiioonn ccoonntt……

Australia’s production was 5,000 metric tons in 2001/02 which, even when compared to so-called “new world producer”countries, is still relatively small.

'New Producer Countries"Production Metric Tons

2001/02

15,500

10,000

18,000 3,500

5,000

7,0002,500

2,000

1,000

1,000

500500 7,500

Algeria

Argentina

Croatia

Israel

Cyprus

Jordan

Lebanon

Palestine

Australia

Egypt

Libya

Iran

Mexico


PPrroodduuccttiioonn ccoonntt……

However, many “New Producer” countries currently consume what is produced, although Argentina appears to beincreasing production, even though it already exceeds consumption, indicating a likely growing net exporter status. Indeed, Spanish firms in particular have been investing in Argentina.

"New Producer" Countries

Production compared to consumption

2001/02

050,000

100,000150,000200,000250,000

Algeria

Argenti

na

Croatia

Israe

l

Cyprus

Jorda

n

Leba

non

Palesti

ne

Austra

liaEgy

ptLib

ya Iran

Mexico USA

Yugos

lavia

Other

Met

ric T

ons Production

Consumption


OOlliivvee PPrroodduuccttiioonn

Olive Groves

It has been very difficult to establish exactly how many olive groves there are in Australia3, but indications are that there are more than 15,000 small to medium growers. The Olive Industry4 believes that 37% of growers plant no more than 500trees and 90% of growers have 5,000 trees or less.

The industry appears to be polarised with a few big groves and many small ones.

Smaller growers are unlikely to process their own fruit and are often part of a district co-operative or a corporate group.Many of these small groves are not even registered as an olive grove and are not clearly visible within the industry. Thus,finding the names and mapping the location of groves is an inexact exercise. However, research has revealed informationon around 6,500 groves, not all of which could be identified, nor located. Those groves that can be located are shown onthe map on the following page. Many of the larger plantations such as Olivecorp, Boort, Koorian (Moltoni), andCoonalpyn are investor projects managed by investor companies. The Yallamundi Grove from Australian Olives is a good example of this.

3 http://www.victorianolivegroves.com/grow.html4 Corkindale, David; Professor of Marketing Management Adelaide University


OOlliivvee PPrroodduuccttiioonn ccoonntt......

Mapping the Groves

Most olive groves are planted in the south, east and west of Australia, where the climate is more likely to mirror theMediterranean climate of Europe.

The Trees and ProductionA conservative estimate puts the number of commercial olive trees coming into production by 2007 as between 4 and 7million5. The ABC’s Landline program suggested in May 2002 that there were between 7 and 8 million trees increasing to30 million trees by 20206, while the National Olive Industry Conference in Adelaide 2002 estimates 8,500,000 million trees.

5 Olivebusiness.com – Marketing Challenges for The Australian Olive Oil Industry6 Landline ABC TV 19/5/02

WA16%

NT0%

Tas2%

Qld14%

NSW & ACT23%

Vic27%

SA17%

Unrecordeddestination

1%



Note: For a legend of numbers refer to the table “Olives Groves in Australia” in the Appendices

Distribution of Trees by State1

Perth

Brisbane

Sydney

Canberra

Perth

Brisbane

6

26

122

4

5 6

1

8

910

11

7

14

15

16 1718

17

3

2432 36

4045

48

5147

Sydney

Canberra

1215

3

13

9

1029

7

4

14 30

161720

25

242525

27

283811

3231

26

35

34

2

21

25

33

42

44

46

39 41

15

7 2

1

6

53

8

910

11

34

127

715

10

5148

25

3340

246

9

11

1336

1620

4431

1230

383945

3543

46

119 2122 2829

18

4142 47

12435

6

118 10

131720

2 149

1218 22

293 6

5714

16 21 2426 27

311519

25

30

33

19

2631

22 23 2425 27 28 29 30

3 5 6 8 1113 20

WA Groves – Location not found

21

7 23 37

SA Groves – Location not found

4 23 2832 34

Vic Groves –Location not found

35

8 15 18 1923

NSW Groves –Location not found

2237 43 49 50

4

Qld Grove –Location not found

48

32

49

33

52

3435

50

Perth

Brisbane

Sydney

Canberra

Perth

Brisbane

Sydney

Canberra

Perth

Brisbane

66

2626

121222

44

55 66

11

88

991010

1111

77

1414

1515

1616 17171818

1717

3

2432

33

24243232 3636

40404545

4848

51514747

Sydney

Canberra

1215

3

13

9

1029

7

4

14 30

161720

25

242525

27

283811

3231

26

35

34

2

21

25

33

42

44

46

39 41

15Sydney

Canberra

1215

3

13

9

1029

7

4

14 30

161720

25

242525

27

283811

3231

26

35

34

2

21

25

33

12121155

33

1313

99

10102929

77

44

1414 3030

161617172020

2525

242425252525

2727

282838381111

32323131

2626

3535

3434

22

2121

2525

3333

4242

4444

4646

3939 4141

1515

7 2

1

6

53

8

910

11

77 22

11

66

5533

88

991010

1111

3434

112727

771515

1010

55141488

2525

33334040

246

9

11

1336

1620

4431

1230

383945

3543

224466

99

1111

13133636

16162020

44443131

12123030

383839394545

35354343

4646

111919 21212222 28282929

1818

41414242 4747

12435

611

22443355

66

118 10

131720

2 149

1218 22

293 6

5714

16 21 2426 27

3111118 10

131720

88 1010131317172020

2 149

1218 22

293 6

5714

16 21 2426 27

31

22 11449

1218

99

12121818 2222

2929293 6

5714

16 21 2426 27

313 6

5714

16 2133 66

55771414

1616 2121 24242626 2727

31311519

25

30

3315151919

2525

3030

3333

1919

26263131

22 23 2425 27 28 29 30

3 5 6 8 1113 20

WA Groves – Location not found

21 2222 2323 24242525 2727 2828 2929 3030

33 55 66 88 11111313 2020

WA Groves – Location not foundWA Groves – Location not found

2121

7 23 37

SA Groves – Location not found

77 2323 3737

SA Groves – Location not foundSA Groves – Location not found

4 23 2832 34


3544 2323 28283232 3434



3535

88 1515 1818 19192323

NSW Groves –Location not found

22223737 4343 4949 5050

4


4


44


4848

3232

4949

3333

5252

34343535

5050



Major Groves/GrowersAccording to Victorian Olives Grove the major organisations within the Australian market are Olivecorp, The Barkworth Group (Viva/Origin) and Australis Olives. From the information available it is not completely clear who the majorcompanies are and how they are set up. Some companies report having large groves and a large number of trees but do not state where these groves are all located nor whether they are all owned by the company.

OlivecorpOlivecorp, a division of Timbercorp7, has a large plantation of around 500,000 trees, to be enlarged to 1,200,000 trees,which will start producing in Autumn 2003. Olivecorp, in partnership with an Italian company, plans to build a processing plant at a cost of $25million.8 Darren Lipton from Timbercorp says the company expects to export most of the 11 million litres of oil the grove will produce to emerging markets and it is reported they have contracts with Costa d’Oro and Braha Group. This large plantation is reported as being able to provide around 25% of Australia’s olive/oil production.

The Barkworth Group/Origin AustraliaThe Barkworth Group has merged with Origin Australia and together this conglomerate currently forms the largest OliveOil grower in Australia. The group has two processing plants (Loxton & Inglewood) and markets under the Viva brandwhich is distributed by Woolwoorths, Bi-lo and other supermarkets. Viva also has its own chain of shops in three Qldshopping centres. These outlets will be expanded if they prove successful. The company states it has 1,200,000 trees ingroves in NSW, SA & Qld but does not provide their locations, nor sizes. The Gwydir Grove in Qld produces thecompany’s boutique oil brand, Gwydir Grove.

7 http://www.abc.net.au/rural/vic/stories/s399226.htm8 Landline ABC TV 19/5/02



Australian Olives LimitedAustralian Olives Limited states they have 4,348 groves over a number of projects but their locations are not given.However, the company’s major showcase grove is the Yallamundi Lagoon Plantation in Qld with 200,000 trees. This grove covers 800 Ha with 1,000 km of rows of trees.9

Australis OlivesA family owned and operated grove and processing plant in Brisbane’s market garden area. They produce their own oilsand contract process for other growers, as well as sell olive grove equipment to growers.

Frankland River Olive CompanyLocated south of Perth, with 107,500 trees planted on 430 Hectares, makes the Frankland River Olive Grove one ofAustralia’s larger groves. Only a small quantity of Extra Virgin Oil under both the Frankland River Brand and Jingilli hadbeen produced up to May 2001 but the quality is excellent and the premium oil won an award at the 2001 Perth RoyalShow.

Larenta OlivesLocated in WA north of Perth this grove has around 280 Ha with 160,000 trees and is building a $2million processingplant in Gingin. The company reports forward sales to Costa d’Oro.

Olea Australis LimitedThe Dandaragan Estate is in the Moore River Region north of Perth. They report 2,000 groves covering 400 Ha with more than 200,000 trees and produce a single estate premium oil sold under the Dandaragan Brand sold to a global market. The company also undertakes contract processing.

9 Australian Olives Quarterly Investment Update Newsletter, “Turning Green into Gold”, Edition 18 November 2002


KoorianWith at least 33,000 trees this grove in WA is said to set benchmarks in Olive growing and is an investment propertymanaged by Moltoni.

Section Two B Australia Report80

OOlliivvee OOiill IImmppoorrttaattiioonnAt present, Australia is a net importer of olive oil. In 2000 Australia imported around 30,000 tons of olive oil and in thatsame year consumed 31,000 tons. Australia consumes around 1% of world excess olive oil production, approximately thesame volume as Japan.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Met

ric to

ns

Italy

US

France

Portugal

Japan

Spain

UK

Germ

any

Canada

Australia

Olive oil importers

1997

1998

1999

2000

2001

NB: France, Portugal and Germany's figures understated due to intra EU imports not being recorded


PPaacckkaaggiinnggOf the 140 products for which sizes were found, 63 of these (or 45%) were for the 375ml size. Even the Viva brand ismostly bottled in 375 ml sizes for sale in supermarkets.

One product, from Koorian, is even sold in a very small 50ml bottle sold as a sample bottle. The following tablesummarises the package size points for products found.

Table: Packaging sizes for Australian Olive Oil

Most Australian-produced brands are packaged in bottles, wine bottles, tall or elegant, which are difficult to fit in acupboard or pantry and convey the message ‘special occasion use only’. All bottles were glass, some clear and some dark or green. The dark or green bottles are said to protect the oils from UV factors. Thiry-four brands or 20% of those viewedsell in bulk from 1lt to 20lts. The 1 and 2 litre range usually come in a flagon. Greater volumes are packed in tins or drums but consumers can, at some growers, have their own bottle filled.

Examples shown include dark/green bottles, an oil tin and drum, a clear glass flagon a tall designer bottle, a flip top bottle and a variety of designer bottle.

TOTAL50 ml

200 or

250 ml 375 ml 500 ml750 ml

1, 1.5 or 2

lt4 lt

Over 4 lt

/Bulk

140 1 20 63 13 5 12 12 14% of sample 1% 14% 45% 9% 4% 9% 9% 10%


DDiissttrriibbuuttiioonnWoolworth’s and Coles, Australia’s two main supermarket chains, account for 50% of the imported olive oil distributionand 43% of the total of all olive oils

eSource Tonnes

Imported 2001 30,000 95%Locally grown 1,500 4.8%Less Exported 79 0.3%Tonnes for domestic use 31,579

Source: Australian Olive Association Ltd - Conference Proceedings 2002Source: Australian Olive Industry R&D Plan 2003-2008

Distribution Type % TonnesDistribution

of Imports Outlets

Supermarket 43% 13,579 50% Woolworths & ColesGourmet Stores 23% 7,263Food Service 20% 6,316Industrial 11.5% 3,632Niche markets 1.8% 568

Section Two C Australia Report83

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Locally-produced brands

The majority of Australian-produced olive oils are extra virgin and positioned as boutique olive oil. This positioning isclearly demonstrated by the number of oils that are available in designer bottles, in small sizes (with 375ml the mostpopular), retailed mostly through boutique outlets. Generally a 375ml bottle has a premium price point of around $20. The message conveyed therefore, is Australian oils are not for every day use but for special occasions.

There are numerous brands, only some of which are discussed here. For a full list and pricing refer to the Appendicis.VIVA

Viva, from The Barkworth Group (including Origin) was launched in 199910, and was “the first mass produced Australianlabel to compete on supermarket shelves.” While, the Brand is Australian, it is blended with imported oils and will continue to be until around 2005. “We have been importing a small proportion of really top grade extra virgin oil in order to getmaintenance of flavour balance,” says Viva Olives Managing Director Mark Troy. The Viva brand is subsidised by thegroup in an attempt to gain market share.11 The brand is available in Woolworths and Coles as well as selected othersupermarkets. A 375ml bottle retails for between $4:50 and $5.50 depending on the outlet.

Viva recently opened their own retail outlets in three Qld shopping centres. These outlets will be expanded to the rest ofAustralia if they prove successful.

10 http://www.bandt.com.au/articles/5d/0c002a5d.asp11 Landline ABC TV 19/5/02

Angelina isthe face ofViva,

A Viva Shop


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GWYDIR GROVEGwydir Grove from Origin Australia, is the Group's boutique brand and is available from specialist oil outlets. The 250 ml bottle retails from $9.95; 500 ml bottles from $16.95 and tins from $72.00. Origin Australia oil is also available bulk from Flaschengeist, a new retail chain owned by Lakeland’s Olives and being introduced into Australia’s shoppingcentres. Bulk oil retails from $7.95 per litre but the price of the bottle is not included.

LAKELANDSThe Lakelands Grove only produces one kind of oil in only one size. Lakelandsopened their own retail outlets called Flaschengeist. These outlets, known as conceptshops are still in their infancy. They provide boutique bottles which can be filled with a consumer’s choice of liqueurs, wines and oils. These are frequently gift wrapped.The Lakelands oil (bottle pictured at right) retails for $20.00.

JOSEPHJoseph oils from Primo Estate in SA, are reported as the most successful Australian Oil export. A 375ml bottle starts at$21.95.



DANDARAGANThe Dandaragan oil comes from Olea Australis on the Dandaragan Estate. It is sold only in 500 ml bottles and tins of 4lt and 20lt.

AUSTRALIS OLIVESAustralis products can be found at The Brisbane Farmers Fresh & Seafood markets. The bottles retail at $12.50 for 375 ml.

OTHER BRANDSOther brands are generally boutique oils, come in 375ml size and designer bottles.

Note: Not all brands found are shown in this section. For a full list of all brands found see the Table in the Appendices.

Lyric, Cicada, , Sunrasia, Beetaloo Olive Grove, Bird in Hand, Cobram Estate, Chalkers Crossing



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Since most of the Olive Oils consumed in Australia are imported, it is difficult to calculate the market share ofAustralian grown and produced oils, but it is estimated at around 1% of the market.

The following table lists the major brands and their shares in 1997. The Australian share is a small portion of the“Others” 5.2% share. In 2002 the Lupi brand was reported as having 20% of the Italian oils sold in Australia and the Moro brand claims to have 27% of the domestic market.12

12 Figures obtained from these companies’ web sites

Brand Share (1997)

Company 1997 % Brand Country of OriginBertolli (Unilever) 20% Bertolli ItalyMeadow Lea (Goodman Fielder) 18.40% Olive Grove, Vetta Spain, ItalyMinerva (D'Oro Distributors) 15.20% Dante, Lupi Spain, Italy

Conga Foods 9.30%Moro, Val Verde, Pietro Salvo, Sasso

Imported fruit from Spain & Italy but processed in Australia

Riviana 7.10% Always Fresh SpainBorges 6.50% Borges SpainCantarella 1.90% Giralda ItalyPrivate labels 16.40% (Example: Home Brand) VariousOthers 5.20% Colavita and others Italy


PPrriicceeAccording to the Landline report in May-02, the market distribution leaders for olive oil are Woolworths and Coles whosell four litre cans of olive oil for $14.50. Most of these oils are Spanish and Italian with the Moro brandpackaged/processed in Australia.

Since Australian Olive Oils are mostly positioned in the ‘boutique’ sector with prices for a small 375ml bottle of oil starting around $20.0013, locally produced oils do not compete on price.

Table: Packaging Prices/Price Range

Highest Price by Brand – Lowest Price by Brand

13 ABC Landline 19/5/02

50 ml200 or

250 ml 375 ml 500 ml 750 ml1, 1.5 or 2

lt 4 ltOver 4 lt

/BulkAv Price 9.95$ 12.78$ 17.01$ 17.55$ 19.49$ 21.99$ 75.93$ 250.00$# of products 1 18 52 11 4 4 8 2

27.00$ 29.95$ 22.00$ 37.95$ 30.00$ 105.00$ 300.00$

Brand Koorian Vog Joseph Vog Joseph Brian'sChalker'sCrossing Vog

6.00$ 4.85$ 12.00$ 12.00$ 14.98$ 50.00$ 200.00$

Brand N/AEdenValley Viva

EdenValley

SkillyHills Viva Diana Skilly Hills

Highest Price

Lowest Price

australian olive oil market

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