California Olive Ranch: ‘The global olive oil industry is going through a fundamental transition'
“The domestic industry has seen incredible growth over the past 10-12 years and California producers probably account for more than 98% of what’s produced here [in the US],” Kelley told FoodNavigator-USA.
The company doesn’t disclose financials, but is generating revenues in the “low nine figures,” while its CAGR in the past 10 years in “something like 40% per annum,” he claimed.
“Our orchards in CA are remarkably different than traditional orchards in Europe. They are 100% irrigated and we’ve got greater control over quality, and tend to see higher than average yields as we can manage inputs very carefully. We also use mechanical harvesting to pick our olives at the time when it’s optimal to produce extra virgin olive oil [EVOO]. In the history of our company, less than 1% of our cumulative production has failed to meet the California standard for EVOO, which is the strictest in the world.”
We control every aspect of the production process
Founded in 1998, California Olive Ranch now supplies more than half of the olive oil produced in the US and grows around 12 cultivars including Arbequina, a broadly planted cultivar in Spain producing a milder fruitier oil; Koroneiki, the most broadly grown cultivar in Greece; and a Spanish cultivar called Arbosana boasting a more floral, herbaceous, flavor profile.
“If you were to open a bottle of California olive oil and some imported brands or private label products, you’ll see a contrast in smell and taste because we control every aspect of the production process,” he claimed.
“The problems can start in the orchard. If you harvest too late and the olives are overripe on the tree, which is common in traditional groves, they’re more susceptible to fungus and mold; they will ferment the moment they come off the tree or when they are still on the tree. Then in the mill, if the fruit is not of optimal quality, mills sometimes raise the temperature to increase the amount of fat they can remove, which can lead to degradation and can leave a burnt favor or it will remove the volatiles and leave a nearly flavorless oil.
“You can also get rancidity during the storage process if the temperature is not right or if there is exposure to oxygen or light. Our storage facility is under a constant inert gas blanket, so our oil never comes into contact with oxygen.”
California Olive Ranch plants orchards in uniform lines to allow for mechanical harvesters to collect the fruit, speeding up the process, slashing labor costs, and minimizing the time between harvesting and milling, while tracking the health of the plants and the soil. It also has a zero waste approach, recycling water, tree trimmings, and fruit pomace.
The largest grower of olives in the US, the company also works with growers in California and elsewhere, and supplies olive oil under the California Olive Ranch brand, and private label products for foodservice. It has recently raised $35m from a US-based institutional investor and its founding investors in Spain.
The United States has no mandatory grading standard for olive oil
But what about extra virgin olive oil standards?
“The United States has no mandatory grading standard for olive oil,” said Kelley. “In 2014, California Olive Ranch and other processors lobbied our state government to implement the Olive Oil Commission of California to define grading standards for California olive oil. And today, all growers with 20+ acres must conform to those standards, which are the strictest in the world.
“The reason to do that was simple, to differentiate our product and hold it to the highest standards possible and ensure consumers are getting what they pay for. However, there’s no mandatory federal standard for EVOO [to which imported products must adhere].”
While there are standards for EVOO in other markets, meanwhile, they typically apply to olive oil sold in those countries, not olive oil produced there, and exported to the US, for example, he said.
Back in 2006, the average Whole Foods store would have 125 SKUs of olive oil
So how do retail buyers think about the olive oil category, and how interested are they in quality standards?
“When I started in 2006, I made numerous visits to retail buyers and it struck me that we were the first supplier to really do tastings with buyers, which created an opportunity to educate them on quality,” recalled Kelley.
“Fast forward to today and it’s changed dramatically. They are becoming wiser and we’re seeing some changes to the market as a result in the form of an improvement in average quality on shelf.
“But if you’re a retailer and your job is to maximize sales, price can still be the #1 decision making factor, and I’d say that there’s still a significant volume that’s not extra virgin [despite being labeled as such] at the point at which you purchase it from the shelf. But at California Olive Ranch, we’ve seen dramatic growth because we’re providing the highest quality possible at a price point that’s premium but still accessible. Higher quality oil should cost more.”
The global olive oil industry is going through a fundamental transition
He added: “We’ve seen really significant changes over the past decade. Back in 2006, the average Whole Foods store would have 125 SKUs of olive oil, now that’s not the case today, there’s been a dramatic SKU rationalization and a focus on quality. We have olive oil of the month clubs; there’s something like 500 olive oil tasting rooms.
“The global olive oil industry is going through a fundamental transition right now, going from an oversupplied low quality commoditized industry to a market where quality matters more. There has also been a decline in consumption in some of the traditional markets and a steady increase in some non-traditional markets.
“Consumption of all olive oils in the US has grown at about 3% annually in the US over the past 10 years.”