Good oil brings success

CALEB HARRIS
Last updated 05:00 29/07/2013
Colin and Nalini Baruch
ORGANIC GROWTH: Colin and Nalini Baruch in their olive grove just outside Martinborough.

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Colin Baruch knew he was on to a good thing when a woman on a zebra crossing stopped, pointed at his car's company logo, and grinned at him through the windscreen: "I buy that oil!"

But street-level brand recognition for Baruch's premium, extra virgin olive oil did not happen overnight. Baruch's father emigrated to New Zealand in 1952 from California, where the olive oil-rich Spanish and Mexican cuisines are prominent.

The family invested in farming in Canterbury, and Baruch grew up dreaming of working the land. Meanwhile, his wife-to-be Nalini was brought up in India with home-ground spices and "large, wonderful family meals".

Married and working in Wellington - where Baruch still commutes daily to his job at MetService - the couple looked at Marlborough before buying a lifestyle block planted in olives and called Lot Eight, just outside Martinborough in Wairarapa.

While their professional backgrounds are not in the food industry, the couple have always loved eating out.

"We were involved in the food industry in Wellington as customers and friends, and it's important not to get too far from town, so to speak."

That proved key to business success, Ms Baruch, a barrister, explained.

"The food service market seemed untouched in terms of extra virgin olive oil."

While Lot Eight's first customer was a retailer, Kirkcaldie & Stains, 60 to 70 per cent of their business is now servicing chefs. They also constitute a key plank of Lot Eight's business model - networking.

"If they're convinced that your product is good enough, they have no problem sharing it with [other chefs] and recommending it." Also, chefs let the product shine.

"Chefs don't just put it out there as a bowl of oil with bread - it's part of their recipes," Ms Baruch said. "It's a key [business] growth factor."

Fittingly, that growth has been organic, Baruch said. He cited the company's second attempt at the tough US market.

The couple are in San Francisco this month at a showcase event hosted by New Zealand Trade and Enterprise (NZTE) during the America's Cup.

It is a poignant trip for Baruch, whose father grew up in the area. But it also exemplifies the virtues of growing slowly within your business's limitations, he said.

"When we first went [to US, in 2002], we were going to conquer the world." But, realising neither their brand nor their product had enough international presence to succeed, they came home and consolidated.

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"You have to understand your retailers . . . Working with them as opposed to at them, pushing your product on them."

There have been problems along the way. In a harsh 2007 frost they "lost everything", which taught them not to put all their production eggs in one basket. Now they also source olives from Kapiti and Hawke's Bay.

Another business decision was to always give customers more than what they could whip up at home; examples are Ms Baruch's spice or citrus fusions, her blending of olive varieties for specific food matches, and Lot Eight's home-grown gourmet foods.

Because the industry is seasonal, staffing is minimal.

Contractors spray, press, harvest, cart and bottle while the Baruchs do their own sales and marketing, distribution and blending, and supervise everything else.

Lot Eight uses only small, dedicated supplier groves, which is mutually beneficial as 80 per cent of olive-oil overheads appear "after the grove gate".

"It keeps their costs down and our quality up."

Baruch said his business was profitable but declined to specify margins, citing commercial sensitivity. He added that Lot Eight was still essentially a "niche" business, compared with the volumes bigger companies were bottling.

His business's success was mainly achieved by "standing behind the brand" - hard work, but fundamental with a high-end product, he said. "It's very hard to sell something if you don't live it."

BY THE NUMBERS

3500: Litres of extra-virgin bottle-ready olive oil; another 3500 litres on call. In 2002, its first production year, there were 400 litres.

$33.99: Price of a 500ml bottle of Lot Eight at Kirkcaldie & Stains; this compares with $8.39 for 500mls of imported extra virgin olive oil at a supermarket. A Kirkcaldie's saleswoman said Lot Eight was "not expensive" for a premium, artisan olive oil.

24: Chefs supplied (including two in San Francisco and New York), also 12 retailers and an online shop. Up from one retailer (2002) and two chefs (2005).

1997: Lot Eight's 400 trees planted.

2002: commercial production.

2013: international marketing.

- BusinessDay.co.nz

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