Local olive oil marketer Piquant Blue plans to build a $1 million distribution plant in Melbourne to handle major overseas growth as it capitalises on the burgeoning Australian olive oil industry.
Local olive oil marketer Piquant Blue plans to build a $1 million distribution plant in Melbourne to handle major overseas growth as it capitalises on the burgeoning Australian olive oil industry.
The company is on track for a June 2006 launch into the massive US supermarket sector.
Piquant Blue was established in early 2003 amid a rapid growth in the number of managed investment schemes promoting olives and other agriculture products.
Managing director Andrew Konowalous said olive production had grown rapidly in recent years but there was limited capacity in the marketing and distribution of the product.
“There is a tendency in Australian agriculture to invest in production but not distribution. So our business model is to not grow trees but buy from producers,” he said.
Piquant Blue was designed to be a simple business with significant growth potential, but Mr Konowalous told WA Business News it had been hard work to get to the business to its current position.
“It wasn’t until last year that the company started to hit its straps,” he said.
Piquant Blue began by testing the market with its premium quality gourmet extra virgin olive oil product, njoi, in 2003, when production volumes were low. The company listed on the Australian Stock Exchange in January 2004, which provided the capital platform it needed for expansion.
The launch of its core redisland brand followed in mid 2004, with the company subsequently securing prime shelf space in Woolworths, and more recently Coles supermarkets across Australia.
Redisland’s success in the local market is evidenced by the fact that, in the standard one litre market space, only multinational brand Bertolli outsells it.
While Piquant Blue has established its domestic base, Mr Konowalous said the company was “born looking global”.
The company’s overseas efforts began in the UK with 18 months research and development, which included distribution in selected gourmet outlets.
From there it turned its attention to the US market, where it followed a similar R&D and gourmet distribution strategy, before taking on the supermarket trade conservatively estimated at 10 times the size of the Australian market.
Distance from the US market proved an immediate hindrance to brand development, however, and Piquant Blue soon appointed a US manager.
The push into the US has been aided by a set of favourable circumstances.
Europe, the key global olive producer with 1.5 billion tress (compared with the eight million in Australia) has had three successive poor seasons due to frost and drought. This has resulted in price rises for olive oil of around 40 per cent, which has led US buyers in search of alternative suppliers.
The Free Trade Agreement signed between Australia and the US in January 2005 also has had an effect, with tariffs and trade barriers between the two countries effectively removed. As a result, the only significant cost for Piquant Blue as it enters the US market is that associated with transport.
With a continuing eye to the future Mr Konowalous and his team are pursuing further offshore growth.
“We already have a presence in Sweden, and have touched Hong Kong with gourmet distribution and will now roll-out to supermarkets there,” he said.
“The UK is our next big step, and with the import tariff system that applies in Europe, our distribution model will have to be very tight to over come it.”
Locally, the company has about 70 per cent unused distribution capacity at its Perth plant, and with plans for the new Melbourne facility, is well placed to handle future growth.
