Graza
- Olive oil prices are at record highs due to extreme environmental conditions.
- But olive oil startup Graza says it only marginally raised its prices.
- Graza cofounder Andrew Benin explains how — and why it's been difficult for the company.
This as-told-to essay is based on a conversation with Andrew Benin, the cofounder of olive oil startup Graza. The following has been edited for length and clarity.
Putting out a high-quality olive oil is difficult for a young brand, but it's even harder now as prices hit record highs.
Before I launched Graza in early 2022, we purchased nearly 50,000 liters of olive oil from Italy for about $3.10 a kilo. Fast forward to this month — when we made our most recent purchase — prices had shot up to $9.30 a kilo.
Olive oil prices have jumped over the past couple of years due to extreme environmental conditions in the world's top olive oil-producing regions — Spain, Italy, and Greece. Prolonged droughts and deficiencies in irrigated land have led to agricultural disruptions that have hampered production.
During this time, though, we've only passed on costs to retailers to increase the on-shelf price of "Sizzle," our extra virgin olive oil made for cooking, and "Drizzle," our finishing oil, by about $1 each.
We're trying not to pass on more costs because when you're a fast-growing brand like Graza, the last thing you want to do is paralyze demand by pricing yourself out.
We didn't want to call attention to the adultery in the industry — but we have to.
There's a lot of competition among suppliers to keep costs down right now.
Some suppliers have resorted to compromising on quality to maintain their margins. If you know a bit about olive oil production, you'll know that extra virgin olive oil is extremely inefficient to produce — that's one of the reasons it's more expensive.
Lampante, raw olive oil not intended for human consumption, is about $8.2 per kilo. Virgin is $8.70 per kilo. And extra virgin is $9.30 per kilo. There are some big-time suppliers right now that are creating extra virgin products with oils that are not extra virgin because they're desperate to survive.
The problem is that there's no biochemical marker for customers to know that the olive oil has been adulterated. And while Graza's platform wasn't intended to talk about the adultery in the industry, now that we're seeing it with our own eyes, it's hard not to call attention to it. Law enforcement agencies have seized tens of thousands of gallons of olive oil and arrested suspects worldwide for fraud in the past several months.
Keeping costs down right now is the biggest challenge we've ever faced
We had to change our operations and make some tough decisions to continue delivering high-quality EVOO to our customers without increasing prices.
We've implemented a hiring freeze. We're spending just 5% of our gross revenue on marketing, down from around 12.5%. We're keeping our budget tight, not taking risks, and thinking long-term. Still, to have enough inventory of Drizzle, our finishing oil, to sell all year round, we must buy 100% of the supplies outright. Then we may go for months without returns on that investment. So, not passing the cost on has been the biggest challenge we have ever faced at Graza.
We're in 10,000 retail stores, including Walmart and Target, so it's as easy as a snap of the finger to capitalize on our brand equity. But we're not — we're maintaining quality by putting our money where our mouth is.