Upscale items continue to be the growth segment in the category of oils and vinegars, retailers say, at least in some parts of the country.
Sales in the balsamic-vinegar category increased 5% in 1999 to $31.5 million, according to panel data from ACNielsen, Schaumburg, Ill., while olive-oil sales increased only 0.7%, accounting for $335 million in sales. According to Dick Sullivan, president of the North American Olive Oil Association, Matawan, N.J., olive oil, which has a household penetration of about 29%, has plenty of room to grow.
"We need a more aggressive promotion program," said Sullivan. "A lot of Americans are unfamiliar with olive oil and don't know how to use it."
Meanwhile, retailers like the upscale Andronico's Markets, based in Albany, Calif., are doing brisk business on the high end of this category. At Andronico's, most customers buy olive oil rather than corn oil or other vegetable oil, and some people are even willing to spend $80 or $100 for a bottle of balsamic vinegar.
"We have a pretty good selection of oils, with about a 50/50 split between everyday olive oils and premium or gourmet oils, which can cost $35 or more," said Rob Giusti, gourmet buyer. The stores carry Greek, Spanish, Italian and even domestic oils.
One trend in the vinegar category is that more people are producing the balsamic varieties, although they are still imported. However, the Napa Valley is producing zinfandel and champagne vinegars, Giusti said, and Andronico's also carries raspberry vinegar along with some very expensive balsamic imports.
Andronico's promotes olive oils about once per month, sometimes with the help of demos, but showcases vinegars "a little less often."
Upscale oils also get a fair amount of exposure at D&W Food Centers, Grand Rapids, Mich., where they can command 2 to 4 feet of the standard 8-foot cooking-oil set, said Tom Wolffis, category manager. Vinegars are allocated to a 4-foot section, with both commodity and balsamic and other specialty vinegars included in the set.
"The [upscale] vinegar is a pretty hot category," said Wolffis. "Most promotion is done through incremental display at retail and tie-in displays, but it depends on the clientele. Our higher end stores do more displays."
Oils are promoted in the same way, or with passive (unmanned) demos, where people can come to a table set up with bread and oil and try a particular product.
D&W does some price promotions, but because of the differences in demographics and customer preferences across stores, most promotions are done at unit level," Wolffis said.
According to Wolffis, the biggest opportunity in olive oil is to increase overall product awareness.
"There aren't many restaurants that are using breadsticks and olive oil for dipping sauce, for example," he said.
Sullivan of the NAOOA said he also believes that greater awareness in the restaurant channel can generate sales in the grocery aisle.
"More than half of olive oil is consumed in restaurants, and there are tremendous growth possibilities there," Sullivan said. "Supermarkets look to distributors and suppliers to promote the product. Supermarkets are increasing shelf space in the oil section, which is the best thing to do to help sales [at retail]."
Extra-virgin olive oil continues to be where the industry is still seeing increases, according to both Sullivan and William Monroe, president and chief executive officer of Bertolli USA, Secaucus, N.J., the largest supplier of olive oil in the United States. The company said that sales of extra virgin last year were up 9.3% for the whole category. Bertolli's introduction of a new extra-virgin variety, "Gentile al Palato," boosted the company's extra-virgin business by 31.6% in 1998 and 16% last year.
"The business is being driven by flavor segmentation," said Monroe, who told SN he believes that supermarkets need to tie in more items with olive oil, especially more upscale items. "The olive-oil consumer is different from [other] vegetable-oil consumers. They are buying the better cuts of meat, the radicchio lettuce, the imported products, and they are increasing the ring through the register."
Some supermarkets that have a big business in olive oil sell their own private-label brand alongside the name-brand companies'. For example, Shaw's Supermarkets, East Bridgewater, Mass., has been selling its own brand of olive oil in three varieties, as well as balsamic vinegar, for about three years.
At Spartan Stores, a wholesaler in Grand Rapids, Mich., olive oil accounts for about 20% of the shelf space devoted to oils in stores and about 12% to 13% of the profit, according to Rich Greg, category manager and buyer.
Despite the popularity of olive oil in some parts of the country, it still remains a slow mover in some other regions. For example, Tim Wagner, a marketing specialist for Harps Food Stores in Springdale, Ark., which has 42 locations in northwest and central Arkansas and eastern Oklahoma, said most of his customers use other vegetable oils. While the chain does carry several varieties of olive oil in some locations, in areas where per capita income is about $20,000, people will choose a less-expensive product.
"If we noticed a trend, we would start promoting it more, but if we put out an endcap or something like that, it would just sit there," noted Wagner. "Also, there has been a lot of improvement in the vegetable oils. They are higher quality and even low fat, and consumers don't feel that the oil they are buying is not healthy."
At Tidyman's, Greenacres, Wash., olive-oil sales are "lackluster," according to sales and marketing vice president Mike Racine. His customers normally buy oils like Wesson and Crisco, which are frequently promoted in his stores. Moreover, he's increased his canola-oil offerings.
Tidyman's does have a 3-foot section of upscale oils and vinegars, which is near the gourmet department. The regular set of oil is 12 to 16 feet. The retailer stocks just a few shelves of flavored vinegars, including balsamic, which has lost steam, Racine said, and promotes olive oil a few times a year, especially during its Italian food promotions, which are usually held in the fall.