The Bertolli Company
Executive summary
This report is devoted to the supply chain management of the Bertolli olive oil. I have chosen this company because it meets the requirements of the task: “international retail company involved in online selling to customers”. The purpose of the report is to acquaint readers with Bertolli brand and its history, to introduce the olive oil supply chain and its peculiarities, to underline strengths and weaknesses of Bertolli brand and find out its competitive advantages. In the report, different methods of analysis were used: descriptive, comparative, socio-historical, statistical and future orientation. This report can have large application. It can be used in business schools and universities for preparing lectures or for preparation for exams; it can become a part of an article in economic magazines and newspapers; also, it may attract those who are interested in economics and business.
In this report, I have made next findings:
Supply chain management is a very important for any company;
Olive oil supply chain has its own peculiarities;
Global supply chain management is facing with intensive changings.
Main recommendations for Bertolli future development are:
• To penetrate into new developing markets: “to focus on the foreign market, on the US and Canada, and on emerging markets such as China, Malaysia and Colombia” (Llorente, 2013).
• To develop and implement long-term export strategy.
• “To cooperate with other companies in collective promotion and advertising activities in foreign market ” (Nikliss, etc. 2014).
Executive Summary 1
Introduction 3
Overview of the company 4
Supply chain management 6
Future supply chain 8
Sustainability 11
Conclusion 12
References 14
1 Introduction
This report is devoted to the supply chain management of the Bertolli olive oil brand. I have chosen this company because it meets the requirements of the task: “international retail company involved in online selling to customers”. The purpose of the report is to acquaint readers with the Bertolli brand and its history, to introduce the olive oil supply chain and its peculiarities, to underline strengths and weaknesses of the Bertolli brand and to find out its competitive advantages. It is necessary to mention, that in the repost there will be used two names: Bertolli and Deoleo. I would like to clarify, that Bertolli is the name of the brand while Deoleo is the name of the company that produces this brand. As a result, Bertolli and Deoleo, in this paper, are synonyms and have the same meaning. The report consists of six parts: introduction, overview of the Bertolli Company, supply chain management, future supply chain, sustainability and conclusion. In the report, there are two figures to provide visual interpretation of the information. For completing this report, I have used 16 sources. Among them are: official websites of the companies, books, articles in newspapers and periodicals, reports of financial results.
2 Overview of the Bertolli Company
Nowadays, Bertolli is one of the leading brands of olive oil in the world. The history of the company began in 1865 in Tuskany, Italy when “Francesco and Caterina Bertolli opened a trading shop underneath the family home, where they sold olive oil” (Official website of the Bertolli company). Family business was developing very fast thanks to the high quality of the olive oil they sold. Next phase in the brand development was connected with the emigration wave to the USA. Many Italians moved to the USA in order to find better life. Such Italians Americans missed the traditions of their country and the olive oil consuming was among them. In order to satisfy needs of its compatriots, Bertolli began to export olive oil to the USA. This step served as a good impetus for the development of the company. Only 10 years later after its foundation, Bertolli turned into the company with large international activities. The example that illustrates this fact is that, “by 1890, its business had spread to New York, Philadelphia and Chicago, and a few years later it reached San Francisco” (Deoleo official website). In the USA Bertolli was named “the olive oil brand of the Italians”. This fact tells a lot about company’s success on the American continent. Keys to such success lie in:
High quality of products;
Fidelity to traditions;
Sensitivity to changing customers’ preferences;
Unique advertisement.
Bertolli always paid a lot of attention to advertisement. For example, “one of the brand’s most important investments was its 1962 production of “Carosello”, one of the first advertising spaces on Italian television” (Deoleo official website). This advertisement became a symbol of the Italian lifestyle and its main heroes, Olivella and Maria Rosa, were beloved by the whole nation. Thanks to careful attention to advertisement, Bertolli gained love in Italy and abroad.
Nowadays, Bertolli sells not only olive oil but as well pasta sauces, vinegars and spreads. “All Bertolli foods bring together the authentic flavors of the Italian tradition and the time-tested values of the Mediterranean diet and lifestyle” (Official website of the Bertolli Company). The company exported its products in more than 45 countries all over the world. Among them are Australia, China, Japan, India, Brazil, South Africa and many others, “where olive oil is not traditionally consumed but they are taking an increasing share in the world consumption of olive oil” (Niklis, 2014).
At the beginning of the 20th century, Bertolli was bought by Uniliver – a multinational consumer goods company. In 2008, Bertolli olive oil business became the part of the Deoleo Group. “Group Deoleo (former SOS Corporation) is a worldwide leader in the commercialization of bottled olive oil with a 22% market share” (Gonzalez, 2007). Deoleo “purchased the oil license and began to commercialize Bertolli oil, vinegar and olives” (Deoleo official website). This cooperation brought many benefits to the Bertolli brand.
On May 22, 2014 Uniliver “agreed to sell its North American pasta sauce business under the Ragu and Bertolli brands to the Mizkan Group of Japan” (Farrell , 2014).
3 Supply chain management
The important part of any business is a supply chain management. A well-established logistics and transporting provide prosperous development to a company. Supply chain strategy plays an important part in this direction. The strategy of Bertolli brand can be characterized in next way:
Industry framework- world popularization of olive oil consumption.
Unique value proposal – penetrating on new markets in Asia, improving leading position in North America.
Managerial focus – careful attention to people and environment.
Internal processes – well-established cooperation between regional units and production centers.
As a result, the supply chain strategy used by the Bertolli Company refers to multiple supply chain because it “has synchronous capabilities: agile, flexible, efficient, fast and custom-configured” (Perez, 2013). Let us provide the example of olive oil supply chain.
Figure 1. The olive oil supply chain, (EMAF project).
Figure 1 illustrates the olive oil supply chain. According to this figure, the olive oil supply chain has six main phases:
1. Agriculture phase – the period of olives cultivation.
2. Production phase – the period when olive oil is produced and bottled.
3. By-product management phase – unique and “very important phase in the olive oil supply chain because of high phytotoxicity of olive mill waste and their harmful impact on land” (EMAF Project).
4. Logistic phase – the period when olive oil is transported and distributed.
5. Consumption phase – where olive oil finds its consumer.
6. Waste management phase – when bottles and boxes from olive oil are recycled
All of these phases are interconnected and have equal importance to the whole process of the olive oil distribution.
Supply chain management is one of the most important part of managerial work for a company with international activities. Deoleo pays a lot of attention to its management. In order to keep up with the times, supply chain management will need new capabilities. According to Future Supply Chain report, “new types of supply chain managers will look not only at efficiency, but will also understand the potential of innovation and collaboration” (Future supply chain 2016). Deoleo understands the importance of high quality management and, in this case, it provides special training program to all its employees as well as for high management.
As was mentioned above, new supply chain managers are to concentrate on innovations and technologies. As any other phenomena, the management of the olive oil supply chain is influenced by the development of technology. In order to become more competitive, producers are to monitor markets and customers’ tastes. Advanced technologies provide such possibilities. Moreover, technology helps to guarantee safety and quality of products. “Bar codes, Radio Frequency Identifications (RFIDs) and mobile phones are some examples, as well as robot applications for the management of processing and control, handling and transport of olive oil” (Niklis, 2014). An accentual part of supply chain management is information systems. “The implementation of the supply chain information systems provides an increase both in their competitiveness and profits” (Marinkas, 2013). For example, the system that Bertolli used is called Web-Based Supply Chain Management System. Its main advantage is that it “allows all the participants in the supply chain to get all necessary the information” (Hanks, 2010).
4 Future supply chain
According to Future Supply Chain 2016 report, innovations and new technology will be the most important aspects that will influence global supply chains. Deoleo is ready to lead these trends. The main aspect on which Deoleo is concentrated is the aspiration to innovations. The fact that Deoleo releases on the market principally new products underlines this statement. Such products include:
• Spray olive oil;
• “An oil that helps to reduce fat that fried food absorb on 20% thanks to a special adding combination of antioxidants” (Deoleo official website);
• “The first oil developed specially for baking desserts” (Deoleo official website).
The products of the Bertolli Company meet all the latest requirements to healthy products. While consuming Bertolli products, people not only make their meals healthier but also have a possibility to become a part of the Italian traditions and to join the Mediterranean lifestyle.
Future Supply Chain 2016 report underlines the importance of sourcing continuum activities. Joint ventures, strategic alliances and single contracts of cooperation are becoming a real trend in the world business because of its mutual benefits for all the participants. Deoleo – Bertolli olive oil – widely uses these possibilities. For example, in October 2012, Deoleo signed an agreement of the alliance with another olive oil producer – Hojiblanca. According to this agreement, a “9,63% of Deoleo’s equity was acquiesced by Hojiblanca” (Gonzales, 2007). As a result, Deoloe’s stoke rose a 7%, while Hojiblanca got the opportunity “to get into the largest olive oil marketing group in the world” (Gonzales, 2007). Moreover, Bertolli used advanced technology to produce olive oil. It uses “Continuous centrifugation with a two-phase system” (EMAF project). This technology “allows to separate olive oil from olive paste without addition of water and this led to remove the problem of vegetable water” (EMAF project). Two-phase centrifugation production technology is more effective and cost saving with comparison of three-phase centrifugation.
Moreover, it is necessary to take into consideration previous experience in order to find out mistakes and to develop strategy to prevent them in the future. In this case, planning is a good solution. Objectives of sales and capacity planning for a company are “to establish a company’s wide plan for allocating resources and to develop an economic strategy for meeting demand” (Russel, Taylor, 2014). Efficient planning starts with careful analysis of previous times. In order to develop efficient strategy for 2016, it is necessary to analyze results of 2015.
Figure 2. Contribution to sales by region, Deoleo results (2s 2015).
On the figure 2, there can be seen contribution to Bertolli olive oil sales by regions. After analyzing this figure, it becomes obvious that the main market for Bertolli olive oil is Northern America where contribution to sales rose from 20% in 2014 to 22,7% in 2015. It is a world trend that “olive oil market gains volume loses value in Spain, Italy, while club stores lead retail growth in US” (Butler, 2012). Southern Europe shows decrease in contribution to olive oil sales from 36,6% in 2014 to 34,5% in 2015. Careful analysis of these data resulted in a well-designed strategy for the company. Results of 2016 are predicted to be positive.
As a result, future supply chain of Bertolli olive oil is to be concentrated on previous experience, qualified supply chain management, new trends:
Innovations and new technologies;
Collaboration with other companies;
Gaining sustainability.
5 Sustainability
As to any other company, one of the most important part of the Bertolli Company strategy is gaining the sustainability. According to Business dictionary, the sustainability is “a continued development or growth, without significant deterioration of the environment and depletion of natural resources on which human well-being depends” (Business dictionary). Deoleo is an example of a social responsible corporation which main goal is not only gaining profits but also improving people’s life.
Deoleo is a “green” company because it takes care of the environment. The olive oil production is considered to be dirty because of the great amount of mill waste. In this case, Deoleo invests large sums of money annually to prevent the pollution. One of the possible ways is to use olive mill waste in agriculture. European Union together with large agricultures and olive oil producers are developing ways to minimize harm that olive mill waste can bring to the environment. According to their collaborations, scientist concluded that “Olive Mill Wastes can be considered as soil amendments” (Doula, 2012).
Moreover, Deoleo takes part in many promotional activities. For example, the company developed two social campaigns to popularize the olive oil consumption: “Mediterranean diet” and “Mediterranean lifestyle”. The main idea is to share the information about benefits of olive oil for health and different ways to use it in cooking and not only. In addition, Deoleo follows the Environmental Policy, in order to maintain the environment friendly production. Main steps to archive this are:
“Integration the environmental variable in the processes and products of the organization.
Generate value of the by-products and waste, implementing initiatives for the production of products with high added value, getting a reduction in waste production.
Establish systems that allow control of the environmental impacts, are producing in our facilities, processes and products.
Reduce energy and natural resource consumption.
Align to our suppliers and contractors with our environmental policy.
Get a greater degree of awareness and environmental awareness among employees and stakeholders.
Develop processes and products with low co2 emissions” (Deoleo official website).
6 Conclusion
If I were a manager of the Bertolli brand, I would recommend next steps to improve company’s activity:
• To penetrate into new developing markets: “to focus on the foreign market, on the US and Canada, and on emerging markets such as China, Malaysia and Colombia” (Llorente, 2013).
• To develop and implement long-term export strategy.
• “To cooperate with other companies in collective promotion and advertising activities in foreign market ” (Nikliss, etc. 2014).
Long history;
Competent management;
Well-developed international supply chain.
All of these competitive advantages will contribute further development of the brand and winning customer loyalty.
References
Bertolli official website. About Bertolli: History. Retrieved from http://www.bertolli.com/about_1.html
Business Dictionary. Sustainability. Retrieved from http://www.businessdictionary.com/definition/sustainability.html
Butler, J. (March, 2012). Back in Black, Deoleo Plans Expansion. Olive Oil Times. Retrieved from http://www.oliveoiltimes.com/olive-oil-business/deoleo-expansion/25261
Deoleo results 2s 2015. Retrieved from http://deoleo.com/?wpfb_dl=603&lang=en
Deoleo official website. Our brands. Bertolli. Retrieved from http://www.deoleo.eu/
Doula, M., Tinevella, F., Moreno Ortego, L.L. etc. (2012). Good practices for the Agronomic Use of Olive Mill Wastes. PROSODOL, Greece and the European Commission. Retrieved from http://ec.europa.eu/environment/life/project/Projects/index.cfm?fuseaction=home.showFile&rep=file&fil=PRODOSOL_GoodPractices.pdf
EMAF Project. Improving sustainability and competitiveness of the Italian agri-food chain with innovative environmental management tools. Retrieved from http://ww2.unime.it/emaf/index.php?option=com_content&view=article&id=54&Itemid=42&lang=en
Farrell, S. (May 22, 2014). Ragu and Bertolli brands offloaded in $2.15bn deal with Japanese food group. The Guardian. Retrieved from http://www.theguardian.com/business/2014/may/22/ragu-bertolli-deal-japanese-food-group-mizkan-unilever
Future Supply Chain 2016. (May 2008). Global Commerce Initiative, Capgemini. Retrieved from http://supplychainmagazine.fr/TOUTE-INFO/ETUDES/GCI_Capgemini-SC2016.pdf
Gonzalez, J.,C. (2007). The alliance between Deoleo and Hojiblanca. La Dericcioen Strategica de la Empresa. Teoria y Aplicaciones. TomsonReuters –Civitas,2007, 4th edition.
Hanks, G. (2010). Example of a Supply Chain Management System of a Company. Demand Media. Retrieved from http://smallbusiness.chron.com/example-supply-chain-management-system-company-69953.html
Llorente, K. (May, 2013). Hojiblanca oils the wheels of Deoleo. WikiSpanish food. Retrieved from http://www.wikispanishfood.com/v_portal/informacion/informacionver.asp?cod=24805&te=2580&idage=26615
Marinkas, D.A. (2013). Information system for the supply chain management. University Babes-Bolyai, Cluj Napoca. Retrieved from http://www.amfiteatrueconomic.ase.ro/arhiva/pdf/no24/articol_fulltext_pag236.pdf
Nikliss, D., Bourakis, G., Thabet, B., Manthoulis, G. (2014). Trade and logistics: the case of the olive oil sector. Mideterra, chapter 11. Retrieved rom http://ciheam.org/images/CIHEAM/PDFs/Publications/Mediterra/2014EN/mediterra_chap11_uk.pdf
Perez, H.D. (2013). Supply chain strategies: Which one hits the mark? Supply Chain Quarterly. Retrieved from http://www.supplychainquarterly.com/topics/Strategy/20130306-supply-chain-strategies-which-one-hits-the-mark/
Russel, S.B., Taylor, B., W. (2014). Operations and Supply Chain Management, 8th Edition. John Willey & Sons Inc.
