Why This Entrepreneur Jumped Into Making Olive Oil, Despite Knowing It Would Take Years to Get off the Ground
In this ongoing column, The Digest, Entrepreneur.com News Director Stephen J. Bronner speaks with food entrepreneurs and executives to see what it took to get their products into the mouths of customers.
By Rob McGavin's estimation, it took about a decade to get his business off the ground.
Those seeds, pun intended, were planted while the Australian was in college. That's where he met Paul Riordan. They bonded over their farming backgrounds and aspired to produce olive oil right in their home country. The was just one problem.
"How long it takes from when you want to produce olive oil until you actually get it in hand," he says. "I'm talking five years by the time you grow the tree to a size that you can plant, find the land to plant it, irrigate it and then wait another three years to get some oil."
The pair created a business plan in 1996 and then raised AU$15 million Australian dollars from friends and family.
"What slowed us down quite a bit were the trees we wanted to plant. The right varieties that would give us the best chance of success weren't in Australia, so we had to import them and get in through quarantine and customs," McGavin says. "We never thought it'd be this massive."
They planted the first trees in 1999 and produced the first oil in 2002. A processing plant that crushes the olives was built the next year. The pair started selling oil to other distributors, and in 2006, one of its customers, Cobram Estate, offered to sell the brand to McGavin and Riordan.
Cobram Estate has been called the best olive oil brand in Australia and is sold in more than 4,000 stores in the U.S., including in Albertsons, Safeway, HEB, Whole Foods, Sprouts, Wegmans and Osco locations.
Entrepreneur.com spoke with McGavin about his personal reason for being in this business, the challenges of olive oil and how the company utilizes influencers.
This interview has been edited for length and clarity.
What particularly interested you about olive oil?
A health angle. My mum died of breast cancer when she was 39, and I was 8. My dad got cancer at 48. [Paul and I] just thought that olive oil was a healthy product, there was a lot of increasing demand, we weren't producing any locally and it had a fairly questionable reputation that it was fairly adulterated.
It was a combination of those things that made Paul and me think that if we do our homework we can make this a good industry for Australia, ourselves and shareholders.
Were you always entrepreneurial from your youth?
I was very driven to do well, and I remember going to the bank and borrowing AU$30,000 [Australian dollars] when I was 19 or so to buy cattle. We lived in the middle of nowhere and were always working on the farm. Being on a farm is a great place for anyone to develop those entrepreneurial skills, because [we are] talking about do we sell our cattle, do we buy more, is this drought coming, are we making any money? I never seem to worry too much about risk. I always think long term, just make sure you don't go broke.
What are the biggest issues of working in the olive oil industry?
The major problem is that, unfortunately, olive oil is the most adulterated or most faked food ingredient in the world. With that comes a lot of challenges.
The way we [overcame this] was we focused on quality and called out why fresh extra virgin tastes better, smells better and is better for your health. We involved ourselves with an ethical movement to just do the right thing. We call out cheats. We know that once people taste it they just can't go back to the shitty stuff.
Our philosophy is just make the right investments for five to 10 years. It doesn't matter how long it takes as long as you don't go broke or compromise quality. Deal with good people, produce a really high quality product and the rest will follow.
What is the biggest challenge in your industry and how were you able to overcome it?
The biggest challenge is educating consumers. If you don't know what you're doing, and you just buy on price or habit, you'll almost certainly get ripped off. You've got to know and trust the source.
If people know what I know and they have the money, there's no chance they wouldn't buy the highest quality extra virgin oil, because the science is very clear.
What marketing tactic has been the most effective for the brand?
Getting influencers, particularly in the area of health, to take the time to understand the difference and the science. We do that by taking them to our groves, showing them how we do it and they taste the oil.
When you look at just how much science is behind disease prevention and health in olive oil, it's so easy it sells itself. But it is hard to get the message out and we use influencers to do that. (Examples can be found here, here and here.)
What's the most unusual thing about working in the olive oil industry?
We're investing heavily in oil that won't come until 2022-23, but you have to plan that far ahead and a lot of capital goes out the door. It creates some pretty big barriers to entry and isn't for everyone. It's not cookie cutter. Every year, every patch and variety is different and you keep striving to do better.