Pompeian, a century-old Baltimore-based olive oil brand, aims to meet growing demand from U.S. consumers through a partnership with a Spanish cooperative made up of 75,000 family farmers that will ensure a steady supply of raw material from one of the world's largest olive oil-producing nations.
Pompeian Group blends and bottles olive oil, wine vinegar and cooking wines in a historic Highlandtown plant that's undergone some $15 million in upgrades over the past five years.
The family-owned company will exchange shares and transfer assets with a subsidiary of DCOOP Group of Spain, which bills itself as the world's largest olive oil cooperative and olive grower. Financial terms of the deal with DCOOP's subsidiary, Mercaoleo, were not disclosed.
The agreement to merge the companies' raw materials and production and bottling plants is expected to help increase quality, safety and traceability of olive oil products, Pompeian officials say. The cooperative will likely supply 50 to 70 percent of Pompeian's olive oil, helping to even out a typically erratic market.
"DCOOP is the world's largest supplier of olive oil," said Pompeian CEO David Bensadoun, a member of the Devico family that bought into the company in 2008 and acquired it outright in 2010. "We can ensure the right sourcing, the right quality and the right quantity."
The Pompeian brand saw sales jump 25 percent to $212 million last year, with products sold in every major U.S. retailer. It produced 38.5 million bottles last year, importing 8 million gallons of olive oil through the port of Baltimore, from countries such as Argentina, Chile, Greece, Morocco and Spain.
This year, the Pompeian Group expects to reach total sales of $405 million, including the Pompeian brand, private label, bulk trading and sales under Sunset Olive Oil.
Upgrades to the 200,000-square-foot factory and distribution center on Pulaski Highway have included modernizing and automating production lines, adding robotic equipment and creating the Pompeian Olive Oil Center, a space to host meetings or community tours that dates to 1912 and showcases the history of olive oil and the Pompeian brand with artifacts such as a 300-year-old olive press.
Pompeian also devotes a section of the plant to making its own plastic bottles, churning out 1,200 to 1,400 containers an hour, a move the company said has boosted efficiency.
Pompeian, which employs 83 people full time, is starting work on a state-of-the-art laboratory at the plant and working with city officials in hopes of expanding into an adjacent city park, where it proposes building an additional warehouse and replacing park space.
The expansion at the plant, which opened on the current Pulaski Highway site in 1912 in the company's sixth year, comes at a time when olive oil consumption — particularly extra-virgin olive oil — is growing, as U.S. consumers look for more healthful eating and cooking ideas.
Bensadoun said consumption of extra-virgin olive oil has grown fivefold over the last two decades and Pompeian's extra-virgin olive oil is the top seller in the U.S.
"The olive oil category is growing in the U.S., but we're focused on the extra-virgin olive oil, and it opens a lot more opportunities and business," said Mouna Aissaoui, Pompeian's chief operating officer.
Global consumption of olive oil has been spurred by greater demand in developing countries such as India, China and Brazil, as well as by growing awareness of health benefits among consumers, according to research last year by Transparency Market Research. Besides cooking, olive oil, made by grinding olives and extracting the oil, it is used to make soaps, pharmaceuticals and cosmetics.
While demand is growing, production is limited to only a few countries in the Mediterranean such as Spain and Italy.
The company recently launched new products to cater to the tastes of the U.S. consumer, such as extra-virgin olive oil in robust and smooth varieties, and flavored olive oil cooking sprays.
Under the agreement, to be finalized Tuesday, the cooperative will be Pompeian's sole supplier of olive oil in Spain and offer access to its facilities, including Mercaoleo's packaging facility next to olive groves in Spain.
For DCOOP, the partnership offers an entry into the U.S. market, the largest and fastest-growing olive oil market. With revenues of 900 million euros this year, DCOOP Group produces more than 250,000 metric tons of olive oil per year from 50 million trees. The cooperative partners with companies, not individuals, such as cooperatives owned by farmers and stockbreeders in southern Spain. The co-op also produces goat milk and wheat.
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Antonio Luque, DCOOP Group CEO, said Monday that the cooperative wants to have a greater presence in the U.S. market.
"The way to do that is to partner with Pompeian," he said.
As the company prepared to mark its new alliance with DCOOP, production went on as usual Monday in the plant. In the basement, some 1 million gallons of oil that had been shipped in containers from the port filled huge tanks. The oil would be sent in color-coded pipes to a filtration room and then to additional tanks for blending before heading down automated bottling lines.
Pompeian Group also runs a manufacturing plant in Montebello, Calif., and an olive grove in Santa Barbara, Calif.
The company became the first brand of extra-virgin olive oil to carry the USDA Quality Monitored seal, a voluntary program in which the factory must open itself for unannounced inspections. Bensadoun said that's part of management's philosophy of operating with transparency, both in production, relationships with the community and as an employer looking to attract workers.
He said he was surprised when he first came to the company that "very few people knew that Pompeian was from Baltimore. ... It's important for us to reconnect with the city of Baltimore."