Challenges and Opportunities in the Table Olive Sector

The case study of the

USA specialty food retail sector

Constantinos ConstantinidisPELOPAC Mediterranean Food Specialties

Changing Retail Environment

Changing Culture

Source: Hartman Group

Traditional experiential, self-expressingPlanned, rational utilitarian lifestyle-based, creativity-focused, authentic

• Shopped for staples & ingredients • Planning• Pantry stocking• Familiar foods

• Shop for meals & snacks• Spontaneity• Small trips & fill-in shopping• New & unique foods

From cooks ….to eaters

Food Culture is also changing

As American culture is changing

Snacking is a key driver of consumption, and American consumers are demanding more healthy, convenient & inspirational snacks

▪ Snacks represent over 50% of all meal occasions.▪ Eating is more fluid, consumers eat whenever and wherever they

want. ▪ Snacks break the culturally defined rules of meals and reflect the

kind of flexibility that consumers are seeking. ▪ Consumers expect snacks to offer physical, emotional, social &

cultural experiences.

Sources: Hartman Group, Nielsen 2016

Changing Food Habits

▪ 77% of meal occasions involve at least some prepared foods▪ 42% of meal occasions involve ALL prepared foods

Cooking is becoming “meal assembly”

Changing Value Drivers

Source: Deloitte: Food Value Equation Survey 2015

Purchasing decisions are based on a mix of traditional & evolving value drivers.

Price, Taste, Convenience continue to be most important.

Evolving drivers – Health & Wellness, Safety, Social Impact, Experience – are gaining importance and are no longer niche.

Transparency is an overarching driver

Shoppers’ loyalty: a mythdespite time-pressure, consumers DO NOT want a one-stop shop

Source: The Hartman Group, Food Shopping in America 2017 report

Changing Channel Engagement

Channel Shopped in past year

Stock-up Fill-in Hard-to-find items

Today’s meal

Has become important to meet

needs of household

Supermarkets 90% 51% 22% 18% 7% 47%

Mass merch.(eg Wal-Mart)

85% 34% 42% 14% 6% 41%

Club Stores(eg COSTCO)

47% 56% 19% 19% 3% 50%

Drug Stores(eg Walgreens)

42% 7% 48% 26% 10% 31%

Convenience (eg 7-Eleven)

24% 2% 34% 11% 20% 20%

On line 18% 17% 20% 49% 4% 49%

Specialty 15% 11% 12% 64% 9%39%

Source: Deloitte, The 2014 American Pantry Survey

Sources: The Hartman Group, Food Shopping in America 2017 report, FMI U.S. Grocery Shopper Trends, 2017.

Changing Channel Engagement

Grocery remains the most used channel, but its dominance is steadily decreasing

Limited assortment (Club, Aldi, TJ) channels are growing in importance and have a significant cost advantage

Convenience and alternative channels provide a higher level of accessibility

Online shopping shows significant growth and threatens brick and mortar establishments

The US Table Olive Market: Challenges

Overall table olive consumption is declining

Source: IOC – 11.17

Co

nsu

mp

tio

n (

1.0

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to

ns)

210 203 240 210 210 210.5 185 215 206 206

2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

214,6204,4

-5%

Table Olive imports remain essentially stable

Source: IOC – 11.17

Imp

ort

s (1

.00

0 t

on

s)

126 185 138 132 143 135.5 152 154 146 146

2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

144,8

146,7

+1%

Low Overall Household Penetration

Source: Nielsen, 2016

30 - 40% of American consumers will not eat an olive under any circumstance because they dislike the taste. This leaves a potential consumer base of 60-70% of consumers.

At the same time, olives have a household penetration of only 23%. This means that a large segment of potential consumers are notcurrently purchasing olives.

Those who do buy olives (the 23%), exhibit a purchase frequency of about 5 shopping trips per year – which is the second highest, after salad dressings.

Limited Demographic Penetration

Current Core Consumer

• Ages 35-64

• HH with 2 to 5+ members

• Annual HH income of >$70k

• White/Caucasian, Hispanic/Latin

• Consumers with cultural ties to olive growing regions

Underpenetrated

• Ages <35 (Millennials)

• Single-person HH

• HH income <$70k

• African American, Asian

Source: Nielsen, 2016

Are There Opportunities?

Despite these challenges – or perhaps because of them – there are unprecedented opportunities

Yes

Sweet Spot: The U.S. Specialty Food Market

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Total Sales of Specialty Olives

There is an opportunity:

Specialty table olive sales

continue to grow

How can we take advantage of this trend?

Who is the specialty food consumer?

Core Specialty Food ConsumersAge Main Shopping Channels Use & Purchase Drivers

Baby Boomers54-70 +

Supermarkets Use in everyday meals and as treats.

Driven by excitement and health claims

Generation – X

40-53

Farmers Markets Use in everyday meals, snacking, as treats and on special occasions

Driven by health claims & recommendations

Millennials

22-39

Natural Stores, Mass. Merchandisers, Club Stores, Specialty Food Stores, Online, Convenience Stores Specialty foods are part of their lives so they shop wherever is more convenient

Use in everyday meals, snacking, as gifts and treats, to share at work, to serve guests and on special occasions

Driven by impulse, convenience, desire to share, entertain, impress

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The Key

We need to understand

the reality of the new retail environment,

who our new target consumers should be &

how to talk to them about

what makes our products special

Unlocking the opportunitiesEngaging the consumer

The Story

Consumers need to hear the story of the product. They want to feel connected and engaged

Life in the Mediterranean basin has always been

intertwined with the olive tree and it still continues to

nourish the body and spirits of people.

3.000 year-old olive tree Vouves, Crete

Hercules, Athena & olive treeRed figure kylix, 480 – 470 B.C.

We are blessed with a product that has a beautiful story

Consumers have social and environmental concerns. We need to provide information that matters to them about our

products: Show them where olives come from and how we harvest them, and promote the unique natural way of curing them.

The Origins

Health & Wellness is one of the strongest value drivers for all consumer segments.

Table olives – especially naturally cured olives – have been associated with a variety of health benefits which may be attributed to specific nutritional or bioactive components including:

▪ Monounsaturated fatty acids including oleic acid▪ Polyphenols, including hydroxytyrosol and

oleuropein▪ Triterpenoids including maslinic and oleanolic acid▪ Probiotic microorganisms

The Benefits

Relate to the needs of the consumer

Consumers across all generational cohorts are using an increasing number of channels. They expect to have food choices available to them wherever they decide to shop.

We have to develop product offerings that are convenient, easy to snack on and that allow them to share and engage

socially with others.

The Table Olive Industry

needs a change in mindset

from producing a commodity to

creating an engaging, relevant and

accessible product

Midday July…

Even if there were

no olive groves,

I would dream them up

- Odysseas Elytis