Has Berio struck oil in spreads market?

Filippo Berio’s new spread has twice the olive oil content of rivals – but at the cost of a high retail price. Will consumers pay up? asks Caroline Parry

Olive oil brand Filippo Berio is planning to lift the lid off the olive oil spread market this autumn when it launches its first brand extension, Filippo Berio Olive Spread (MW last week). The move by the UK’s market leader in olive oil (22 per cent share), will coincide with Unilever Bestfoods’ rebranding of Olivio, the leading olive oil spread brand, as Bertolli.

Olivio launched in 1991, effectively creating the olive oil spreads market, and now has a 57 per cent market share. The olive oil spread segment of the yellow fats market is now worth £60.2m, according to TNS Super Panel figures for the 52 weeks ending June 22.

But the olive oil spread category has slowed, experiencing just 0.4 per cent growth in value sales in the past year, though volume sales increased by 3.5 per cent, according to the latest TNS data. Volume sales for the yellow fats market – worth £797.5m – fell three per cent last year and value sales grew just one per cent.

Apart from the olive oil spread category, functional health products (such as Unilever’s Flora pro.activ and Johnson & Johnson’s Benecol, which help to reduce cholesterol) and spreadable butters – which offer the taste of butter but are convenient to use – are the driving force behind growth in yellow fats. Industry experts say competition from these two latter categories has eroded the growth of olive oil spreads, but it is hoped that this autumn’s flurry of activity will reignite consumer interest in the segment and kick-start growth.

Yellow fats manufacturer Matthews Foods makes a number of private label products for the major multiples and has the long-term licence to manufacture and distribute Filippo Berio Olive Spread. Marketing director Dave Coulson believes the product, which costs £1.49 for a 500g tub, will create a premium tier in the olive oil spread market that in turn will bring new consumers to the segment.

Unilever Bestfoods senior brand manager Nicolas Fidry agrees: “People are still looking for what they perceive as a healthy alternative to butter products. The latest initiative by ourselves and Filippo Berio will attract newcomers and build sales value.”

Coulson claims the key difference between the Filippo Berio spread and the main olive oil spread brands – Olivio and Dairy Crest’s Carapelli and Argento – is the olive oil content. The Filippo Berio spread has a 41 per cent olive oil content compared with Olivio’s 21 per cent and Carapelli’s 18 per cent content.

Filippo Berio country manager Walter Zanre says the high level of olive oil is the only reason the brand was happy to move into the new market as it was keen not to jeopardise its heritage as an olive oil brand. This is also the reason why it is not planning any further brand extensions.

Filippo Berio is owned by Salov, an independent family-run company that bought the business in 1919 from the founder’s daughter. The brand is now worth £20m and exports to 47 countries. Its biggest markets are the UK, the US and Japan. The Filippo Berio brand does not exist in Italy. Instead its products trade under the name of Sagra.

The Filippo Berio launch has been welcomed by the yellow fats industry because of the new investment it will bring, although some insiders question how far the brand can go with just the £1m through-the-line campaign that has been planned. They fear that, without more support, the spread will fall victim to its premium price. “Consumers are promiscuous in yellow fats and the purchase decision is often down to which brand is on special offer,” says one.

In contrast, Unilever’s rebranding of Olivio is being supported by a £5m marketing spend that will include TV advertising and in-store activity.

But an insider says: “I think in the early days of the rebrand consumers may be confused. However, in the long run it will be a good thing for the spread and the olive oils spread section.”

The rebrand is part of Unilever’s “path to growth” strategy, under which it is developing a number of master brands. Insiders say the relaunch will help create a manageable pan-European brand for Unilever while helping to boost sales of the Bertolli olive oil range, which only accounts for 3.4 per cent of olive oil sales.

The olive oil spread segment is expecting a further burst of activity from Dairy Crest once it has decided how to develop the Carapelli brand, which it acquired last November. Sales of its olive oil account for a 4.6 per cent share of the market; its olive oil spread an 18 per cent share.

Industry observers predict that growth in the yellow fats market will continue to be driven by taste and health benefits, and that the olive oil spread segment should benefit from this, despite the recent slowdown. Olivio has played on these factors by using images of the Mediterranean lifestyle and sprightly pensioners since launch. Now Filippo Berio, by relying on its heritage in the olive oil market, is hoping to push the spread segment further and carve out a premium-priced niche of its own.

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