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OIL CHANGE 1996

Shoppers snatching the advertised pasta and tomato sauce off an endcap likely will have to push their carts down an aisle to get olive oil.Despite the commodity's rising popularity, continued price hikes have tarnished its luster as a promotional item, grocery buyers and merchandisers say. To deflate the effects of higher prices, retailers and manufacturers are boning up on smaller-sized containers.

Russell Redman

February 12, 1996

5 Min Read
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RUSSELL REDMAN

Shoppers snatching the advertised pasta and tomato sauce off an endcap likely will have to push their carts down an aisle to get olive oil.

Despite the commodity's rising popularity, continued price hikes have tarnished its luster as a promotional item, grocery buyers and merchandisers say. To deflate the effects of higher prices, retailers and manufacturers are boning up on smaller-sized containers. Suppliers also are boosting industry promotion.

"Because of the retails, [suppliers] are downsizing," said George King, grocery buyer at the Massillon, Ohio, division of Fleming Cos. "I carry two labels, Bertolli and Berio, and I find that the middle sizes -- the 17-ounce to 25-ounce sizes -- are the larger sellers. As a matter of fact, we don't even carry a gallon size."

Valu Food, Baltimore, has been stocking more bottled olive oils because fewer shoppers are buying the gallon tins nowadays, said Charles Alves, vice president of sales. "The price point on the smaller containers is still somewhat affordable. Sales of the larger containers [decline] when you get over the $12, $13 or $15 mark," he said.

Many customers looking for cheaper olive oil have turned to private label, which has seen a lift despite suffering the same shortages and price hikes as the brand-name imports.

Private-label volume surged 39.1% in units and 49.4% in dollars for the 52 weeks ended Nov. 5, according to Information Resources Inc., Chicago. In that period, private label had a 10.9% unit share and an 8.2% dollar share.

Randalls Food Markets, Houston, carries Food Club olive oil and may add President's Choice olive oil in the next few months, said Gary Owen, category manager.

Price isn't a sticking point with all shoppers, since many like to buy in large quantities, some retailers noted.

"Overall, customers tend not to be as price-sensitive in this area as they are in some other categories," said Ruth Kinzey, corporate communications manager at Harris Teeter, Charlotte, N.C. "Consumers tend to be more flavor-loyal -- selecting flavors such as extra light or extra virgin -- than brand-loyal."

According to Dave Renaldi, head buyer at Martin's Super Markets, South Bend, Ind., "The lower end still sells better, but it's surprising how much you do sell in the high end. We have some containers that sell for $20, and you move those, too."

Olive oil's total unit sales rose nearly 1% for the 52 weeks ended Dec. 24, according to IRI figures supplied by Filippo Berio, Hackensack, N.J. Tonnage volume fell 9.5% in that time, and dollar sales jumped 13.9%.

"There are more sales of smaller sizes because the price points are lower. The most popular size is the 17-ounce, and now the 8.5-ounce size is doing very well. And there's a substantial increase in the sales of extra-virgin olive oil," said William Monroe, president and chief executive officer of Bertolli USA, Secaucus, N.J.

At one time, 3-liter tins were 35% of olive oil volume, but now they represent roughly less than 20%, said Richard Sullivan, president of the North American Olive Oil Association, Matawan, N.J.

"What we've seen in the past year was that consumers continued to buy almost as many units of olive oil, but they were buying smaller sizes," he explained. For Berio, the 17-ounce and 25.5-ounce bottles have been getting more attention, said David Tourville, marketing director. "We used to have a 'magic feature price' on tins, $9.99 for a gallon, and we would sell truckloads of it. But now some accounts are saying to us, 'We're not going to put any emphasis on the [gallon] if it's not $9.99.' So you lack that endcap display, that 'A' feature that used to go on the front of the Columbus Day roto that would really drive traffic.

"We've seen a very large reduction in some key merchandising figures, like percent volume sold with display and things of that nature. Glass doesn't tend to be displayed because it's harder to set it up on an endcap."

Retailers and wholesalers told SN they're appalled by olive oil's soaring prices, which rose anywhere from 6% to 15% at the start of the year. However, few are taking draconian measures to deal with the hikes.

"We've maintained the same space we have had over the past year," Martin's Renaldi said, adding that the chain periodically makes olive oil a promotional feature.

"We advertise it occasionally and sometimes put up some small displays when we're promoting Italian food and salads," he said. "If it's a salad promotion, we take it right on over to produce and maybe put a stack by the lettuce and salad fixings. If it's an Italian-type promotion, it would be with pastas, sauces and Parmesan cheeses for a whole Italian meal."

The commodity also is staple tie-in at Harris Teeter. "One place where you will frequently see olive oil merchandised is with pasta or spaghetti sauce. Thus, the display will carry an Italian theme," Kinzey said.

At Randalls, olive oil has held its own on the shelf, even though cooking sprays may get additional space in a new cooking-oil planogram coming out, according to Owen. "We basically have about 12 linear feet [for olive oil] in our stores, and we're going to maintain that for now," he said.

Randalls' Owen admitted that he's been reluctant to use olive oil in a promotion. "You get to a point where you're pretty tentative about putting such a high ticket out there," he said.

David DiGeronimo, head grocery buyer at Victory Super Markets, Leominster, Mass., has taken a stand against high olive oil prices.

"Olive oil pricing is high to begin with, and now they've come out with another batch of increases," he said. "I haven't been doing any displaying or advertising. I'm letting it sit on the shelf until they get realistic with the price."

By the end of this month, the North American Olive Oil Association expects to distribute a brochure on olive oil's cooking versatility, health benefits and flavor to 100 leading supermarket chains, said spokeswoman Julie Schumacher. A toll-free consumer hot line also is planned.

Spain and Italy are the leading producers of olive oil, but last year Greek olive oil producers kicked off a U.S. marketing campaign. Led by the Hellenic Export Promotion Organization and the Greek Olive Oil Committee, it includes an aggressive public relations and advertising program plus efforts to build relationships with supermarket chains, grocery wholesalers and food brokers. The groups currently are running an extensive in-store sampling program in chains across the country.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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