We can debate whether promotion should be dealt with before price – or vice versa. You have to get people to your store or stall by promoting it, and the price range will tell you which market your promotion should be aimed at.

We’ll deal with price first because it concerns producers most, and research shows that it is the most important consideration when consumers are buying. Setting the right price is critical - it has to be at a price point that will sell the volumes that have to be moved.

The sell price is cost price plus the gross margin. For the producer the cost price is the cost of production, for the retailer the cost price is the wholesale price – producer’s costs plus their margin. The gross margin added can vary from as low as 40% for retailers that go for high turnover to as high as 100% for shops that maximise gross margin.

As new producing, but long time olive consuming countries, we already have a history of price setting for olive products – the price of imported oils and table olives. These have been established in a niche market within the vegetable oil and pickle categories of foods – any unrealistic increase in price will result in consumers switching to other oils such as canola and sunflower – or pickles such as gherkins.

Retailers setting the price point of olive oil must compete with other vegetable oils, as well as imported olive oils, then work back from this to an affordable wholesale price that gives a profitable margin. Likewise with table olives. In an ideal world this wholesale price will coincide with what the producer needs to make a decent margin – but the world is rarely ideal.

Recently the price of imported extra virgin olive has been rising because there is an apparent worldwide shortage. The average price for imported extra virgin olive oil for the 2004/2005 financial year is $5.07/litre, up over 8% on the average of $4.69 for the same period of the 2003/2004 financial year.

Good quality new season Australian extra virgin olive oil in bulk can now be bought for between $5.00 and $5.50 a litre. This is about $2.50 to fill a 500ml bottle, add $3.00 per bottle for the packaging and distribution, and 100% retail margin – we get $11.00 per bottle on the olive boutique shelf. Great value for consumers and making it tough to move the $29.95 price point extra virgin olive oils. 

If no one knows about your shop or stand, you might as well close-up and go home. Promotion is essential and can take many forms. There is the costly newspaper advertising and associated editorial that must be sustained if it is to be effective.

Many boutiques have been very successful attracting attention through holding olive oil tastings and table olive courses. These are promoted through newsletters, websites and mainstream print media diary notes.

Developing relationships with the foodservice industry, and the food media is essential. There is always give and take and the relationships must be nurtured and maintained – the days when ad hoc press releases result in good coverage are long gone.