DIY distribution key to success for Olivado
12 Mar 2018 | ExportNZ
Supply and distribution are two of the biggest issues Kiwi exporters are faced with, especially when it comes to food and beverage products.
I caught up with Jason Vokes who runs the New Zealand operations of Olivado from Kerikeri, to learn how this company have overcome both issues to grow into the biggest producer of organic avocado oil in the world.
Olivado was set up in 2000 by a group of guys, including the current CEO Gary Hannam. After about 5 years, it became apparent that the business model needed reviewing. Volumes hadn’t increased a great deal, high costs of sourcing oil and pursuing distributors in each market meant the product had a very high price once on the shelf overseas.
Gary had always wanted to go direct to supermarkets, and in 2009 he took over the business. The turnover then was about US$1M worldwide, now it’s up to US$10.5M.
“He has achieved this through a) pursuing the bulk oil market and opening up organic sourcing in Kenya, and b) opening our own marketing companies in Europe and the States,” says Jason.
“We now have one person in each market who is solely responsible for selling, but we use service warehousing and bottle and distribute the product ourselves. The result is that the product is competitive in the local markets against the equivalent quality olive oil.
“We learnt the only way to be price competitive was to keep control of our distribution costs.”
Kenya came about through solving the supply problem, as NZ has a relatively small avocado crop, and an irregular supply, in 2010 the company looked around the world to find another crop. It opened a factory in Kenya, contracting 1800 local farmers to produce organic avocadoes, which are then pressed for oil.
Olivado is now the largest producer of organic avocado oil globally – about 96% of the world’s supply. It has produced 150 metric tonnes of conventional avocado oil in NZ this year, and 300 metric tonnes of organic oil in Kenya this season.
It also bottles organic oil in the UK to supply supermarkets, and has a service warehouse in Finland that supplies European supermarkets.
The other part of the business is bulk oil, selling organic avocado oil to the large cosmetics companies and companies that broker oil to other companies.
The Kerikeri factory processes NZ avocado oil and bottles it for the rest of the world. It’s also where customer service and global sales and marketing and is done – appealing to the health-conscious and foodie markets.
“People aren’t deep frying like they were, so they aren’t buying cheap, higher volume oils so much,” says Jason. “The Olivado brand stands for high quality culinary oils, with health and dietary benefits. We also produce organic and fair trade products where possible.”
As for the future, Jason says they could sell three times the amount of oil they currently produce, so are actively looking for a way to increase their supply. “We’re cultivating a new crop in Tanzania and will be opening a pressing plant there in the next 12 months.
“We’re also moving into the Australian market, and will continue to grow our customer base in Europe and the US.”
So, as production expands and mouths around the world need feeding, the global Olivado story looks set to continue well into the future.
Jason’s Tips for Exporters:
- If possible, control the distribution chain yourself. You may need to run at a loss for a while, but it means you can compete at the right price in the market, especially if you're an FMCG.
- Otherwise choose a distributor that has demonstrated success with a similar product or within the right channels for you, and talk to them openly about costs – theirs and yours.
Catherine Beard is Executive Director of ExportNZ, which serves its members via regional offices throughout the country. To find your nearest office go to www.exportnz.org.nz