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Olive Oil Industry Fights Label Fraud

 

By Lorrie Baumann

Olive oil industry experts are enlisting retailers to improve the quality of the olive oil assortment on their shelves and to educate consumers that the low-price olive oil they can buy on some retailers’ shelves isn’t a quality extra-virgin olive oil, regardless of what it says on the label. While it’s not necessarily easy for the average consumer to know if the olive oil they’re buying is truly a high-quality oil, it is very easy to identify a very cheap oil as a fraud, says David Neuman, CEO of Gaea North America, a subsidiary of Greek olive oil maker Gaea.

When you’re selling as a retailer a liter of extra-virgin olive oil for $7, that’s not possible. Organic extra-virgin olive oil being sold for $5.99 a liter. It isn’t possible. You can’t make it for that,” he said.

You could ask, how do they do it? How do they sell an EV for $4.99?” adds Alexandra Devarenne, Co Founder of Extra Virgin Alliance, a nonprofit trade association representing producers of extra virgin olive oil from around the world. “It’s not really an extra virgin olive oil,” she said.

The product in that bottle is very likely all olive oil, since the presence of other oils, such as canola or soybean oil, is easily detected. Although other oils can be mixed into olive oil and then sold as pure extra-virgin olive oil, the relative ease of detection and clear illegality has discouraged that particular fraud in U.S. retail, she says. The fraud that’s more often perpetrated on American retailers and consumers involves the adulteration of extra-virgin olive oil with lower grades of olive oil to produce a mixture of inferior oils that’s then labeled and sold as extra virgin. “That’s possible, and it’s undercutting the market for true extra virgin,” Devarenne said.

Widescale fraud is made possible because olive oil as a category is worth more than $1 billion a year in U.S. sales, and of that, more than 98 percent is imported, Neuman said. “With olive oils, there are a lot of foreign entities labeling things extra virgin that don’t meet the standards. The rest of the world is sending whatever they want to America. Grocers are selling what they need to to meet the demand,” he said.

That leaves the producers of genuine high-quality extra virgin olive oils – the kind that have been shown actually to have the health benefits and flavor that Americans are often seeking when they choose to buy olive oils, struggling to compete in a marketplace in which their oils, which have to sell at prices that reflect what it actually costs to produce them, sit on the shelf next to commodity-grade oils with much lower prices. Retailers are in a similar bind, according to Maria Reyes, Director, Vendor Management at KeHE Distributors. “It’s a business and we all have to make money including the retailers. There are a lot of oils out there and consumers are confused or simply don’t know the right olive oil to buy. The challenge is how we get the consumers to be educated about olive oil so that they are able to make the right decision as to what they’re buying off the shelf,” she said.

KeHE is getting more and more requests every year from over-stressed retailers who are asking for help with category reviews and product tastings, partly because they’re finding it more difficult to find the time to educate themselves about a product that’s often regarded as a commodity instead of as a specialty category like wine or cheese, Reyes says. “The challenge is that they’re requesting the information, they give us the time, and they listen,” she said, “But then, ‘How do we do this? How do all of us find the time to do this?’”

They think of olive oil as an everyday food, but it’s as technical as wine – it has a standard of identity; it’s regulated,” Neuman added. “But grocers generally just don’t have the time to investigate. One buyer may be buying half the center store. They sometimes do two reviews a year for each category. Plus, they go to trade shows, etc.”

They’d like retailers to regard olive oil as a category more similar to wine, for which many specialty markets have a sommelier who has invested a significant amount of time to learn about the products their store is selling. But short of that, they’d like to see grocery retailers supporting their buyers in gaining some training about olive oils. “Anyone who cares enough to learn can learn. It’s not necessary for a buyer to go to multiple trainings to make a big difference. It’s enough to want to learn and to taste and to seek out people who are experienced,” Devarenne said. “You may not become an expert taster – that takes years – but you can become a competent taster pretty quickly.”

It’s not super-easy, but it’s also not rocket science,” she added. “And it really is important. Otherwise, you’re just at the mercy of the person who comes in and says it was done the way his grandfather did it, and then you taste the product, and if you know nothing, then you still know nothing. Do the same research you’d put into other purchases. We need to convince people that there’s information out there, and there’s good unbiased information out there. They just have to care enough to look for it.”

The investment is worthwhile for retailers because specialty food consumers are looking for premium products. Americans are not using a lot of olive oil now, especially in comparison to consumers in European olive-oil producing countries, but as they learn more about the value of high-quality oils and their range of flavors and varieties, there’s a lot of room for American consumption to increase, according to Neuman. “There’s nothing else in the grocery story that costs $17 per unit and drives a 40 percent to 50 percent gross margin,” he said. “Retailers win when they’re selling a better product at a higher price. The producers win because we can afford to pay farmers premium prices. And the specialty consumer wants to be taught how to use good product…. There is a lot of room for premium brands.”

 

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