UK food retailers have filled their boots selling olive oil. These days they are taking a gross margin of between 30% and 40% on own label olive oil, somewhat less on branded products. Own label is more profitable because the retailer can control every last detail of the specification. But with today’s rising costs, the retailers have to curb their expectations. Besides, if Aldi and Lidl can sell extra virgin olive oil at around three to four quid a bottle, the mainstream retailers cannot afford to exaggerate their pricing.
During the 1990s the major multiples were skimming off 60p and more from every pound spent on own label extra virgin olive oil sold on a rapidly-growing market. This naked greed went unchallenged, since UK consumers trusted retailers to supply a grade of oil that merited the price being charged. No chance.
The sales director of a UK oil packer told me of his experience in those days with an own-label project with one of the big four. “I sourced an attractive bottle and filled it with a reasonable grade of extra virgin oil.” The multiple concerned stood to earn 66p in the pound on the SKU. “When I presented it to them, they turned round and said ‘fill it with shit and we’ll make 75%.’ At which point I put the samples back in my case and walked out.”
revised November 27 2021.