Fernando Herrera

Fernando Herrera
Good morning, Curtis. Thanks for having me.

Fernando Herrera
Yes, we couldn’t be more excited. The team overseas was ecstatic so we’re pretty proud.

Fernando Herrera
Quite frankly we weren’t. We knew we had a very special blend of olive oils when it came to the first harvest on Carapelli and Bertolli. We were pretty meticulous on finding these extremely special blends that were blended by our master blenders. Quite frankly it wasn’t, we were pretty proud that we knew we were putting, like we typically do the best foot forward.

Fernando Herrera
Yes, there’s been some negative press out there. We take quality pretty seriously. In fact, I don’t know if you’re familiar with Pierluigi (Pierluigi Tosato) and Pierluigi is our CEO. He’s the one who personally makes all of the buying decisions now to ensure that we have the best quality. For us, the surprise hopefully it’s not too much when it relates to Bertolli because we feel that the only way that the olive oil industry can improve and continue to thrive is in the context of quality. If we have good quality for the consumer, it actually has this kind of great domino effect. The consumer experiences a great product. The growers then are compelled to grow amazing olive oil. If they’re growing great olives, that means that they’re making more money. It actually helps everybody across the chain. One thing for me is I come from a coffee background. I’m pretty familiar with the single ingredient product. The best way we were able to grow the category was always around quality and a commitment to quality. For us, it’s something that we’re not walking away from. It’s actually part of our kind of daily routine.

Fernando Herrera
Yes.

Fernando Herrera
These are special blends. The reason why they’re special blends is because we’re pretty much limited to mother nature. While we’re going around the world picking the best for Bertolli and Carbonell and Carapelli there is this small lot that Pierluigi was able to find. While we would love to have Bertolli, Carapelli and these limited editions broad, we’re limited to what mother nature can give us. We want to make sure that we at least bottled it and give access. We still will be able to provide access to these bottles. What we’re doing is looking at some specialty retailers. Right now I’m not at liberty to share that information. Once we do, which will be very soon we will let our consumers know on where to find these.

Fernando Herrera
We’re going to be doing a small run. It would be in the thousands of bottles. Specialty retailers are the best fit. A, they have the reach for the core consumer for this product. B, it’s a good fit for them as well. It’s a product that fits their premium assortment.

Fernando Herrera
Absolutely. That’s consistent with what we do with Bertolli and with Carbonell and with Carapelli. For instance, one thing we like to say here in the office is that there are olive oils and then there’s Bertolli olive oil. Just the same process and the same care that we use for Bertolli, Carbonell and Carapelli is what was used for these first harvests. In fact, it comes from the same master blender, the same facility. The difference is just the olive oil and it’s just a function of the limited supply that mother nature can give us.

Fernando Herrera
We’ve had this shift within here at Deoleo and this is, by the way, a special day for me here in talking to you, Curtis. Thanks for giving me the time because it’s my two month anniversary here with Deoleo actually today as a matter of fact. Part of the shift of new management is to focus on quality. Pierluigi who is our global CEO has an extreme edict that goes all the way throughout the entire organization that is committed to high quality. For me to be perfectly honest with you, having been here just two months this is kind of normal, this award-winning product because of what I’ve observed of how we procure and actually bottle our product. It is a mandate, an edict and it’s part of our ethos quite frankly that Deoleo it stands for quality because ultimately it helps the entire olive oil world from the consumer all the way down to the grower.

Fernando Herrera
We had this shift for goodness, I would say at least for the last several years. Definitely, Pierluigi has taken it upon himself to procure all of the olive oils. His approach is to meet with the growers, understand the growers and then create the relationships. Not only are we talking to the growers but we’re also talking to what we call the knowers. Pierluigi is making all of these, he’s personally making these decisions since he’s come to the helm of Deoleo which I believe was from the middle of last year.

Fernando Herrera
Yes. I mean and part of it really honestly is around our passion for olive oil. We probably and again this is off of two months of being here, maybe we were a little shy. Now with the encouragement of Pierluigi we have these great blends. It’s something that we will continue to do. It’s not going to be a one off for us. It’s going to be sort of par for the course.

Fernando Herrera
Clearly, what would be best is that what the consumer is expecting to buy and what they’re buying and what they actually receive are all consistent. For us, on Bertolli and Carbonell and Carapelli, what you’ll notice is that we take the EV extremely seriously. From the first drip to the last the consumer’s experiencing EV. What we’ve done ourselves personally is to ensure that we’re able to protect the olive oil throughout the entire process. For instance, on Carapelli you’ll see it’s an extremely dark bottle, that’s intentional. First of all and you were mentioning by the way that bottle, isn’t it nice?

Fernando Herrera
It’s beautiful. It’s really, really nice. There’s a lot of fun facts regarding that bottle that I could share with you later if you’d like. Number one is you can see that there’s an extremely dark bottle on Carapelli that is intentional to protect. By the way, that bottle is available, that style of bottle is available in traditional grocery. That bottle is intentionally dark to protect the olive oil inside. We could’ve gone lighter but because of the consumption patterns in the US, since they’re not as frequent as that of Europe we knew that we needed to go darker which is more expensive in order to protect the EV. Same thing with Bertolli, Bertolli’s green tint is intentional to save the integrity of the product. We do that because we know what’s going in there. Once the special input which is the olive oil is in there we want to make certain that it is protected throughout the entire process. For us, we are fanatics about quality. We’re going to stick to EV and do whatever it takes to protect it to be EV from the first pour to the last.

Fernando Herrera
Correct, for instance, let me give you another analogy, it’s like coffee. There’s a perception in coffee that canned coffee is not good. For the most part quite frankly that’s probably true however as a protective barrier it’s actually the best in order to maintain the quality of the cup. UV light to oil is like oxygen to coffee. The minute that stuff gets in, it starts the staling process. Obviously the more we expose it to that the staling process continues. For us, I always say for me now is the green bottle and the dark bottle is like the can to coffee.

Fernando Herrera
Correct and that’s what we’d like is to increase that consumption pattern.

Fernando Herrera
Absolutely yeah.

Fernando Herrera
Let’s actually couple that in terms of even what’s Bertolli or Deoleo’s role in adding value sort of worldwide and I would say even worldwide, let’s say specifically here in North America. Since we’re the largest we take that role extremely seriously. There are a lot of small brands like you were saying Curtis, those small brands don’t have as much scale and ability to communicate to consumers but we can and we do that. We will do that. We’re going to be launching a campaign called ‘The Recipe is Simple,’ and that’s going to be coming out in the fourth quarter this year and then continue on for the subsequent years.

It’s going to be all around what you were talking about adding value. The way we believe that we can add value to the category is by communicating to consumers the benefits of olive oil in all it’s different uses. Right now we’ve got a lot of great tail winds for olive oil. We’ve got a health trend. We’ve got it’s not as substitutable. There’s a lot of great tail winds and trends that help us as a category. What we need to do is there’s still train and educate consumers around all the different uses.

Right now our goal and our mantra is how do we move it from just being a kind of tier two ingredient to being the main ingredient for an amazing dish. The recipe is simple for us is all around saying that using olive oil is not complicated. It’s a great ingredient and it is your tier one premier ingredient. Educating consumers is first. Fortunately, there’s a lot of great perceptions around olive oil, it’s health benefits. There’s still some ambiguity around how do I use this. That’s what we take as our job, what we’ll be doing in the fourth quarter this year all the way straight through to the next coming years.

Fernando Herrera
Yes. This will be the biggest investment that Deoleo has ever made in consumer outreach. We will be investing heavily across all of the brands most likely most of it will be in Bertolli. It will be all around building the category, growing the category in general and making sure that we educate our consumers. Fortunately, they’re open to the education. There’s not a lot of barriers. They want to hear we just need to give them something to hear and to hear and to listen to. For instance, how can we live beyond the salad, how can we live beyond the little drips. How do we move it to a pour? We have to give them a reason to believe and then also a reason how. There’s enough pie out there for all of us. We just, we’re going to get our fair share as we hope everybody else does. There’s no point in taking the category down. We had that with coffee as well. Yes, we may not make a lot of money sometimes but so long as the quality of the product is out there, we feel like long term we’re going to be fine if not more than fine.

Fernando Herrera
Yeah.

Fernando Herrera
Yes, we will be wherever our consumers are. Wherever they’re consuming media we’re going to be in those relevant places. To your point, if we think about what’s the opportunity here in the United States, the challenge while there are many we’d like to look at them as opportunities. For instance, if you think about the US is, that number that you were talking about earlier places us as number three in the world. Wow, that’s pretty good. When you look at how much we consume versus in Spain, we’re number three. We can consume one, Spain consumes 11 bottles per person per year. Now is that going to happen overnight, absolutely not. If we think about the differences in behavior between Spain and us, Spain uses it for multiple things. Therefore, we’re going to take a lot of those learnings as being a global company of what are those uses that would be relevant here in the US. We’ll be activating that across all the touch points, digital, of course, traditional print, all the relevant media for our consumers.

Fernando Herrera
Absolutely. Even with not having a Mediterranean diet like you were referring to, we’re still number three in the world. If we think about all of the great benefits and the fact that olive oil has a great perception in consumer’s hearts and minds, we could not have a better time and place and platform to continue to communicate and to start that communication even more so. They’re open to the conversation. What we need to do and we take very seriously is our responsibility to communicate to consumers the benefits of olive oil and all the reasons why you can use it just beyond the salad.

Fernando Herrera
We will do some bragging, I’m not going to lie. We’re pretty proud of these products. We will leverage it in our communication. At the same time what we’re going to do is balance it with talking about our traditional Bertolli and our traditional Carapelli and our traditional Carbonell because that’s going to be the one that’s most available for our consumers. We will definitely be talking about these awards. We couldn’t be prouder but then at the same time communicating how consumers can actually use olive oil and then find it in the grocery store with Bertolli.

Fernando Herrera
Exactly. What you do see unfortunately is very price driven. Fortunately, versus any other oil in the category olive oil is the one that’s least sensitive to price. That’s a good thing. The least sensitivity to price means that there’s more loyalty but it is very price driven still, definitely not like Europe but it’s a little more price driven then obviously we’d like. At the same time, no one’s been really talking. We’ve done a little bit of talking quite frankly but not enough, especially given our size. We will change that. If we are going to drive category growth we can’t be doing the same thing over and over again and expecting a different result. We have to step change and we will and we will take the leadership position and really just drive it hard. Again, it’s all about the quality because if the consumers enjoying a great olive oil then the grower’s going to grow a great olive, that grower makes more money because he or she can charge more and everybody benefits. Let’s just say we don’t play in quality that’s just not up to par.

Fernando Herrera
From a prospects perspective let’s just say quite frankly I wouldn’t have taken the position if I didn’t think it was a long term viable one, quite frankly. Then number two we’ve made some strategic decisions. Basically, it’s a lot of internal mumbo jumbo or some internal kind of in the weeds stuff which it relates to restructuring charges. All those restructuring charges we’ve got them now off the books. The reason why we did that is that we want to set up the company for the future. Now that we’ve got all those, those charges are related around process improvement. We’ve got process improvement, systems improvement, quality improvements. Now we’ve got our house in order even more so than we did before and then now it’s let’s just keep going. I couldn’t be more excited to be here, to be honest with you I think the trajectory of the organization is great. We’re in a category that is growing. It’s a category where consumers are passionate about. For me, like I’ve told my team we should have a lot of fun. The challenge is there but if it was easy everybody would be doing.

Fernando Herrera
Thanks for taking the time, Curtis.