In 2016, Giovanni Colavita, CEO of Colavita USA, whose olive oil is ubiquitous on the nation’s supermarket shelves, figured he had nothing to lose and maybe lots to gain in plotting a move to uncork a potential new revenue stream.
He’d been eyeing then-newbie Jet.com, the online grocer backed by e-commerce entrepreneur Marc Lore, who’d built businesses such as Diapers.com that were later sold to Amazon.
So Colavita offered the startup 180 SKUs of items like its eponymous olive oil, artisanal Fusco pasta, and Niasca Portofino beverages that it would deliver for free, in hopes of establishing a direct relationship with Jet, rather than via a distributor. And "if it doesn't work out, it doesn't work out," Colavita told CO—. Six months later, Walmart purchased Jet, and Colavita went from zero items on Walmart.com to 180 items on the site.
More recently, the company found itself saddled with a surplus of Camp 'Oro black linguini when order amounts for an Italy-to-U.S. shipment got lost in translation. In a scramble to sell the excess inventory fast, Colavita created a video romancing the brand by telling the story behind the pasta, handcrafted by three sisters in Molise, Italy. “It became the number one selling black linguini on Amazon — an unknown brand,” Colavita said. “That changed my strategy.”
These strategy-meets-serendipity scenarios inform how Colavita, who was named CEO of Colavita USA in 2008, is courting a burgeoning generation of food shoppers, theorizing that the way to millennials’ stomachs is online. In doing so, he’s looking to secure the company’s future.
The company, whose olive oil rates highly on Amazon, has been busy expanding and diversifying its U.S. e-commerce business via traditional retailers like Walmart, Kroger and Albertsons and non-traditional channels such as meal kits from HelloFresh.
At the same time, it’s nurturing the growth of Italian startup brands like Camp ’Oro pasta and Rio Mare tuna, with online storytelling that takes a page from foodie destinations like Bon Appétit and Kitchn. That’s all by design, as “I didn’t want to be a prisoner of Amazon, but a leader of e-commerce,” Colavita said.
E-commerce: ‘So important to reaching a younger target’
The U.S. is the largest segment of the Colavita Group’s Pomezia, Italy-based, $250 million global business — which it bills as the biggest importer of the country’s food to the American market. But Colavita isn’t taking that market share for granted — that would be a mistake, he said, particularly given how growth is trending.
While e-commerce makes up a still-tiny 2% to 5% of U.S. grocery sales today, according to CBRE Research, it accounts for a hefty 20% of Colavita USA’s business, logging a massive 1,700% growth rate from 2014 to 2017. The brand expects brick-and-mortar sales to rise 10% in 2019; forecasts sales via meal kits to spike 50%; and anticipates triple-digit e-commerce growth, fueled in part by grocery delivery services such as Instacart.
The figures glimpse the consumer of the (near) future.
According to a Nielsen report, millennials are driving the rise of online shopping for fast moving consumer goods (FMCG), with 61% saying they buy FMCG products online, while purchasing more meal kits than the average U.S. household.
“Our average [brick-and-mortar] consumer is 35 to 50 [years old],” Colavita said, “but e-commerce is reverse — the oldest is 35,” he said. “E-commerce and HelloFresh are so important to reaching a younger target, who might never make it to a store.”
Before taking flight, first online push fumbles
Colavita USA started tiptoeing into the online business over a decade ago.
Beauty industry veteran Alessio Rossi, general manager of Bare Minerals, the former head of e-commerce for Lancôme and a mentor to Colavita, nudged him to explore food sales online, noting the kinship between food and beauty in the consumer marketplace. “We often pair food and cosmetics in terms of the consumer, to understand trends,” Colavita said.
The brand’s initial online efforts failed. “We were spending blind without a return on investment, and consumer engagement was not happening,” he said.
It became apparent that “if you really want to play out there, you have to have an organization.”
So in 2009, at its headquarters in Edison, New Jersey, Colavita put together a dedicated e-commerce team with supply chain, marketing and social media expertise, as well as on-site photographers and videographers to shoot product, as it shifted gears from direct-to-consumer sales to forging partnerships with Amazon and the e-commerce sites of traditional retailers.
In 2015, Colavita’s business with the nation’s biggest online retailer went from shipping pallets of merchandise to truckloads. It boasts 200 SKUs and 60 different items on the site today, he said.
The company has been ramping up its investment in e-commerce ever since, opening a second distribution facility in Dixon, California, in 2018 to support mounting online orders and its growing California olive oil business. The Colavita Group also owns manufacturing centers in Rome, Italy and operates a warehouse in Waco, Texas.
When Amazon bought Whole Foods in 2017, the food and grocery industry finally “woke up” to the realization that the online world exists, and it was time to invest, Colavita said. By that time, Colavita USA had already paid its e-commerce trial-and-error dues. “We were in the right place and the right time, and were organized,” he said.
A tour of the company’s distribution facility in Edison, where floor-to-ceiling racks hold pallets of merchandise, tells its growth story. Workers stack boxes of product earmarked for the trucking company that transports Amazon orders. Other HelloFresh-marked boxes are hoisted onto racks four pallets deep. Gallons of canola oil roll along a conveyor belt on a machine that slaps labels on the bottles, while off the warehouse floor, items from Niasco Portofino lemon marmalade and Molivo California olive oil to Rachael Ray beef-flavored stock are tucked away in a room on retail-like shelves.
Nurturing food startups
For Colavita USA, key to diversifying its e-commerce business and product mix is shepherding the growth of food startups online, versus in-store, where smaller food brands get lost on an aisle dominated by market giants, and where costs like slotting fees, what brands pay retailers to have their product placed on shelves, are prohibitively expensive.
By contrast, “We’re able to help small companies through our e-commerce organization,” Colavita said.
Today, Colavita is bringing to the U.S. market brands such as Mulino Bianco and Rio Mare, Italy’s number one cookie and tuna brand, respectively, and Beebad, Italy’s first energy drink, which is “based on honey and tastes like a mojito,” he said.
These smaller, imported brands speak to the sensibilities of millennials, who’ve come of age in the global economy amid foodie culture and the healthy-eating movement.
We’re able to help small companies through our e-commerce organization.
Giovanni Colavita, CEO, Colavita USA
Strategize
Colavita USA is expanding into non-traditional (meal kit, e-commerce) markets in an effort to court the millennial demographic. Read more about how your business can, too, attract this demographic.
“The young consumer travels more and wants to know more — that’s the e-commerce consumer,” Colavita said. “That’s why we have a videographer and photographer to tell the story,” he said. “The new generation understands that Italian food is good — that’s not enough. They want to know who’s behind [the product] and are more open to trying other countries’ food, like Morrocan olive oil.”
And it’s not just millennials. “Consumers’ food preferences, search behavior and paths to purchase are evolving, requiring food brands to adapt and expand their product and recipe content to compete against recipe sites and e-tailers,” according to the GartnerL2 Digital IQ Index: Food US 2019 report.
A resulting content-and-commerce model has emerged in the consumer economy, as food brands explore ways to resonate with today’s savvy shoppers, who have the world’s biggest mall at their fingertips online. These consumers increasingly look to brands to offer not just product, but shopper education, and content akin to what would be found in recipe editorial brands like Kitchn and AllRecipes, the report said. “Digital competence is a point of competitive differentiation for these brands. Creatively engineered messaging reaches consumers on a variety of devices and in many online environments.”
And as 90% of consumers indicate that videos influence their purchase decisions, “brands must master video content development and delivery,” the report found.
The meal kit factor
Consumers’ busy lifestyles are driving Colavita’s meal kit business, as providing pre-portioned ingredients from HelloFresh eases the workweek dinner challenge. “You are leaving the office and you say, ‘What do I have to cook tonight?’ Colavita said. “They solve a problem that’s a nightmare for most people.”
Colavita connected with the founders of HelloFresh after discovering that it was the then-fledgling startup that had been ordering hundreds of tiny bottles of Colavita vinegar every month for its meal kits. The companies forged a partnership in 2012, and Colavita invested in its IPO in 2017.
Blue Apron, which put meal kits on the map and was once the biggest player in the space, came calling, wanting to partner with the brand. But out of “loyalty and good business behavior,” Colavita said, the company declined and stuck with HelloFresh, which turned out to be another happy accident. The now struggling Blue Apron is posting profit losses amid a shrinking customer base, while Colavita’s HelloFresh meal kit sales are projected to double this year.
As it evolves from the “Colavita-only company” it was when Giovanni Colavita joined as CEO in 2008, to becoming a multibrand platform for all Italian food, it’s keeping an eye trained on millennials, Colavita said. “This consumer is the future consumer.”
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