Australia’s largest olive oil producer, headquartered in Corio, is making inroads into Japan, Korea, and the US.
Cobram Estate Olives isn’t letting a pandemic get it down.
The company, which produces 70% of the nation’s extra virgin olive oil from 2.4 million trees covering 6,584 hectares in northern Victoria, is a prime example of how companies can successfully diversify their export business.
Even during tough times.
Despite challenges created by COVID-19, the business – which owns the two top-selling Aussie extra virgin olive oil brands, Cobram Estate and Red Island, with combined national supermarket sales of $135 million per annum – is focusing more on exports as 60% of its Victorian plantations reach maturity.
That plan includes developing the Japanese and Korean markets, in addition to channels already established in the Chinese and US markets.
Eyes on North Asia
“Japan’s the largest consumer of olive oil in Asia, followed by China and South Korea,” notes Ashley Read, Cobram Estate Olive’s bulk sales manager. “Olive oil’s consumed in Japan through retail and foodservice, with Tokyo housing more than 2,000 Italian restaurants alone. Therefore, opportunities for a multi-channel strategy exist, and we can target our products to customers in each channel with relatively small amendments to what we sell in Australia.
“Whilst China is an important country in our Asian export strategy, other markets in the region also offer great opportunities for expansion. We need to keep working on understanding more about these markets.”
Domination in the United States is in the company’s sights, too. It’s already the third largest producer there, accounting for 20% of the US annual olive crop.
Does Ashley see an even stronger future in California?
“Absolutely,” he replies, noting that Cobram Estate Olives has been building production in a big way in the US since 2014.
Along with over 149,000 trees planted on 305 hectares, they own a nine-acre property in Woodland, California, with olive milling capacity of 40 tonnes of fruit per hour, 2.9 million litres of olive oil storage and warehouses covering about 5,000m².
“Cobram Estate was the 10th ranked olive oil brand in the US and the fastest-growing mainstream olive oil brand in US supermarkets (with sales growth of 93%) over the 12-month period to April 2021,” Ashley says, and he forecasts an even greater sales uptick as they plant more trees in California and expand US distribution.
United Kingdom on the horizon
Since exiting the European Union, the United Kingdom is also on the company’s radar.
But removing tariffs will need to be achieved to unlock that sales stream for Australia. Currently, the UK charges a tariff on Australian olive oil which advantages the traditional olive growing markets of Spain, Italy and Greece.
“The UK doesn’t grow olives, so this tariff no longer makes sense now the UK has left the EU,” Ashley explains. “It’s making UK consumers pay more for high-quality, healthy Australian extra virgin olive oil. The Victorian Government has worked closely with us in advocating to Australian negotiators the commercial gains that would flow from tariff free access for Australian olive oil in the Australian UK Free Trade Agreement currently being finalised. We hope to be in a position to target UK retailers with Cobram Estate in the near future.”
Not all smooth sailing
While all these plans are indeed ambitious, the business has taken a hit since the pandemic began, Ashley will be the first to admit.
“Our export orders have certainly been impacted, especially in markets where we have a heavy reliance on foodservice such as Bali and Thailand. We’ve still been shipping product overseas, but on a much-reduced capacity: we’re lucky that the Australian sales are strong and able to soften the blow of reduced sales in other regions. We’re paying more for freight and receiving a vastly-reduced service level. We struggle to secure space on vessels, and when we do secure space, bookings are cancelled at the last minute, or we’re moved to later vessels.”
Yet through it all, quality has been their winning point of difference. The company’s olive oils stand out because they’re traditionally higher quality (albeit higher priced) than those from Europe and South America, according to Ashley. “We’ve developed the Australian market targeting consumers who will pay a premium for quality and superior health benefits. We aim to replicate this strategy in export markets. We’ve proved this is possible in the US and in a smaller sense throughout Asia. Our strategy is to target partners in export markets, be they distributors or retailers, who understand how to market quality, natural food products.”
Cobram Estate has extensively engaged with the Victorian Government on its international export journey since 2003.
International introductions and connections have been made through the Victorian Government Trade and Investment offices network, enabling strong outcomes with distributors and retailers. And the company has participated in Global Victoria‘s inbound and outbound missions to expand their international footprint and increase exports.
A recipient of the Global Gateway Program, Cobram Estate is using this grant to gain in-depth consumer and competitor insights as it looks to pursue new markets.
Ashley’s top three pandemic business tips
1. Pivot quickly to new opportunities
“Overnight our foodservice business was reduced to a negligible volume, and our retail business increased significantly. With lockdowns coming and going in most countries, be flexible with packaging and line space.”
2. Have back-up options for logistics
“We’ve always sent oil around the world using traditional methods of shipping. These options have been disrupted, and I’ve been required to promptly go back to the drawing board to ensure we can fulfill orders. This has involved leaning on current suppliers leveraging good relationships, and working with new suppliers to come up with innovative solutions.”
3. Take a longer-term view
“We’ve focused on the growth strategy that has been in play for years. The pandemic won’t have a negative impact forever. I’ve displayed more caution when working with new partners, reigning in credit and pushing for Free On Board terms where there’s instability between governments. But we just need to keep the ideas flowing, keep having productive conversations and be ready to execute.”