An olive oil production company is a business that produces and sells different types of olive oil. Olive oil is an essential oil and essential oils are often used for aromatherapy, a form of substitute medicine in which the healing effects are credited to their aromatic compounds.
Aromatherapy may be useful to induce relaxation, but there is no indication that essential oils can effectively treat any condition. Available data shows that the global olive oil market size was USD 13.03 billion in 2019 and it is projected to reach USD 16.64 billion by 2027, exhibiting a CAGR of 3.2% during the forecast period (2020-2027).
It is important to note that the EU is the largest producer of olive oil at the global level, accounting for 69% of the world’s production. In the EU, there are nine producing Member States: Spain, Italy, Greece, Portugal, France, Slovenia, Croatia, Cyprus, and Malta.
Steps on How to Start an Olive Oil Production Business
Table of Content
Conduct Market Research
Conducting market research before starting any business is key to the success of the business hence you must not open an olive oil production business without conducting market research. This is because market research provides critical information about your market and your business landscape.
It can tell you how your business is perceived by the customers and clients you want to reach. It can also help you determine who and where your customers are, and which customers are most likely to purchase olive oil from you. In essence, thorough market research will help you understand how your target customers think to adapt to their needs to turn them into regular customers and brand advocates.
a. Who is the Target Market for Olive Oil Production Business?
- Pharmaceutical companies
- Alternative medicine practitioners that use essential oil for Aromatherapy
- Perfume production companies
- Cosmetics, soaps, and other product production companies
- Food and drinks production companies
- Incense and household cleaning products production companies
- Small scale businesses that make use of olive oil as part of their raw material.
b. Is Olive Oil Production Business a Profitable Business?
Yes, the olive oil production business is very profitable. In 2020/21, the global production volume of olive oil amounted to approximately 3.2 million metric tons.
c. Are There Existing Niches in the Industry?
No, there are no existing niches when it comes to the olive oil production business because the olive oil production business is a niche idea in the essential oil production industry.
d. Who are the Major Competitors?
- Don Gioacchino
- Bertolli Extra Light
- Kirkland Signature Organic Extra Virgin Olive Oil
- California Olive Ranch Extra Virgin Olive Oil
- Filippo Berio
- La Tourangelle Organic Extra Virgin
- Texas Arbequina Extra Virgin
- Whole Foods Market Extra Virgin Olive Oil of Morocco
- Lucini Everyday Extra Virgin
- Bragg Organic
- Nunez de Prado
- O-Live & Co. Everyday Extra Virgin Olive Oil
- Tenuta Di Capezzana Extra Virgin Olive Oil
- Colavita Premium Selection
- De Cecco Extra Virgin
- Monini Nocellara Extra-Virgin Olive Oil
- Kouzini Ultra Premium Greek Raw Unfiltered Extra Virgin Olive Oil
- Pompeian Robust
- Bertolli Rich Taste
- Olave Premium Blend.
e. Are There County or State Regulations or Zoning Laws for Olive Oil Production Business?
Yes, there are county and state regulations and zoning laws for olive oil production businesses in the United States. Please note that the Food and Drug Administration (FDA) sets the federal Food Code but it doesn’t oversee individual olive oil production businesses. Instead, the various states use the Food Code as the basis for their own food codes.
They may adopt its rules, interpret them differently or set their own rules. Currently, the USDA regulates grades of olive oil in the U.S. and describes the quality of each based on flavor, odor, oleic acid content, and other variables. Please note that in the United States, you are required to follow your own state’s food service code. Visit the FDA website for a list of food service codes by state.
f. Is There a Franchise for Olive Oil Production Business?
Yes, there are franchise opportunities for the olive oil business. Here are some of them;
- We Olive®
- The Oilerie®
- Miami Olive Oil
- Oil & Vinegar
g. What Do You Need to Start an Olive Oil Production Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Production facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Equipment and Machines
- Supplies (Olive oil farm)
- Startup Capital
Memorable Olive Oil Business Names
- Up Town® Olive Oil Production Company, Inc.
- Don Barros™ Olive Oil Production Company, Inc.
- Pure Gold® Olive Oil Production Co
- Green Life® Olive Oil Production Company, Inc.
- Little Droplets® Olive Oil Production Company, Inc.
- Lara Brown™ Olive Oil Production, Inc.
- Pinker Lane ™ Olive Oil Production Company, LLC
- Jane Hollow© Olive Oil Production, Inc.
- Simply Natural© Olive Oil Production, Inc.
- Eco Leave® Olive Oil Production Company. Inc.
- Boris Uriel & Family® Olive Oil Production Company, Inc.
- Oil Kingdom™ Olive Oil Production Company, LLC
- Virgin Oil™ Olive Oil Production Company, Inc.
- Oil Field® Olive Oil Production Company, LLC
- Lincoln Borrow & Sons® Olive Oil Production Company, Inc.
- Texas County® Olive Oil Production Company, Inc.
- Canfield Jemez © Olive Oil Production Company, Inc.
- Capac Cape™ Olive Oil Production Company, LLC
- Oil Nation™ Olive Oil Production Company, Inc.
- Colene Brownson® Olive Oil Production Company, Inc.
Register Your Business
a. What Type of Business Structure is Best for Olive Oil Production Business?
When it comes to starting an olive oil production business, you have several options when it comes to the business structure, but the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits. Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open an Olive Oil Production Business?
- General Business License
- Health and Safety Permit
- Food and Drinks Handlers’ License
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open an Olive Oil Production Business?
You don’t need any certifications to open an olive oil production business.
e. What Documents are Needed to Open an Olive Oil Production Business?
- Business and Liability Insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting your own olive oil production business, you will need to file for intellectual property protection or trademark to protect your formula and brand.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start an Olive Oil Production Business?
The cost required to open an olive oil production business may vary significantly. For example, you can start a homemade olive oil production business with less than $5,000 and at the same time, you can start a standard olive oil production business with a robust distribution network and with several employees on your payroll with over $1 million.
b. What are the Costs Involved in Starting an olive oil production business
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $4,300.
- Marketing, Branding and Promotions – $3,000.
- Business Consultant Fee – $2,500.
- Insurance – $5,400.
- Rent/Lease – $175,000.
- Other start-up expenses like phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $30,000
- Start-up Inventory – $100,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Production Machines and Equipment – $200,000
- Distribution Trucks – $$45,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000.
c. What Factors Determine the Cost of Opening an Olive Oil Production Business?
- The size of the olive oil production business
- The choice of location
- The required licenses and permits
- The type of facility
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the olive oil production business
- The cost for furnishing and equipping the olive oil production facility
- The cost of insurance
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the olive oil production business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
No, it is not compulsory to build a new facility for your olive oil production business, but if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of an Olive Oil Production Business?
- Raw material supplies (inventory expenses)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees.
f. What is the Average Salary of your Staff?
- Chief Executive Officer – $75,000
- Production Manager – $45,000 Per Year
- Quality Control and Quality Assurance Manager – $42,000 Per Year
- Human Resource Manager – $40,000 Per Year
- Accountant – $35,630,000 Per Year
- Machine Operators – $28,000 Per Year
- Distributors – $26,000 Per Year
g. How Do You Get Funding to Start an Olive Oil Production Business
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Shavonne Smith® Olive Oil Production Company, Inc. is a licensed olive oil extraction and packaging company that will be located in between an industrial area and a farming community in Montgomery – Alabama. We have been able to secure a long-term lease for a facility in a strategic location with an option of a long-term renewal on terms and conditions that are favorable to us. The facility has government approval for the kind of business we want to run and it is easily accessible.
b. Products and Service
Different flavors and types of olive oil (extra virgin oil, virgin oil, refined oil, pure olive oil, and olive pomace oil).
c. Mission Statement
Our mission is to build a world-class olive oil extraction and packaging company that will favorably compete with leaders in the industry. We want to build an olive oil extraction and packaging business whose brands will someday become a household name not only in the United States of America but also in Canada.
Our vision is to launch a standard olive oil extraction and packaging company whose products will be not only be sold in Montgomery, Alabama but also throughout the United States of America and in other parts of the world.
d. Goals and Objectives
The goals and objectives of an olive oil production business are to produce different types of olive oil for consumers, the food industry, the cosmetic industry, the pharmaceutical industry, the alternative medicine industry, and essential oil retailers.
e. Organizational Structure
- Chief Executive Officer
- Production Manager
- Quality Control and Quality Assurance Manager
- Human Resource Manager
- Machine Operators
a. SWOT Analysis
- Ideal location for an olive oil production business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Access to ingredients and supplies.
- A reliable, clean, healthy, and efficient method of extracting and packaging olive oil.
- Financial constraints may restrict the publicity and branding of the business
- A new business that will be competing with well-established olive oil production companies in the city.
- Inability to retain our highly experienced employees longer than we want during the teething stage of the business.
- A rise in the number of food-related businesses, pharmaceutical companies, cosmetics companies, alternative medicine facilities that make use of olive oil within our market space
- Online market, new services, new technology, and of course the opening of new markets.
- The arrival of a new olive oil production business within our market space
- Steady wage expenses and increasing prices of gas amid the low demand during the pandemic will reduce industry profitability.
- Economic uncertainty
- Liability problems
- The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Olive Oil Production Businesses Make Money?
Olive oil production businesses make money by selling different types of olive oils (extra virgin oil, virgin oil, refined oil, pure olive oil, and olive pomace oil).
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Introduce your olive oil production business by sending introductory letters alongside your brochure to manufacturing companies that make use of olive oil, households, alternative medicine practitioners, essential oil merchants, and other stakeholders throughout the city where your olive oil production business is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business to give your business an online presence
- Directly market your products.
- Engage in roadshows in targeted communities from time to time to promote your olive oil production business
- Join local olive oil production business associations for industry trends and tips
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals).
a. How Much Should You Charge for your Product?
The price for olive oil depends on the brand and size, but while many options on the shelves fall between the $15 and $30 range, “trendy” olive oils like Brightland and Fat Gold cost more, at $37 and $44.75, respectively.
b. How Much Profit Do Olive Oil Production Business Owners Make a Year?
It depends, but available reports show that on average a small to medium-sized olive oil production business can earn anywhere from $55,000 to over $150,000 in a year in personal income.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the olive oil production business
- The types of related products produced
- The location the olive oil production business is covering
- The management style of the olive oil production business
- The business approach of the olive oil production business
- The advertising and marketing strategies adopted by the olive oil production business.
- The number of years the olive oil production business is in business
d. What is the Profit Margin of an Olive Oil Production Business?
Experts recommend adding a 40 percent profit margin to olive oils. But it is important to state that the average olive oil production company sells their olive oils with a profit margin of 15 to 20 percent.
e. What is the Sales Forecast?
Below is the sales forecast for an olive oil production business. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $350,000
- Second Fiscal Year: $450,000
- Third Fiscal Year: $750,000
Set Up your Shop/Office
a. How Do You Choose a Perfect Location for Olive Oil Production Business?
- The demography of the location especially as it relates to the food industry, the cosmetic industry, pharmaceutical industry, alternative medicine industry, and essential oil retailers businesses
- The demand for olive oils in the location
- The purchasing power of residents of the location
- Accessibility of the location
- The number of olive oil production companies, and retail outlets that sell olive oil in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open an Olive Oil Production Business?
- Cedar Rapids, Iowa
- Oklahoma City, Oklahoma
- Chagrin Falls, Ohio
- Idaho Falls, Idaho
- Overland Park, Kansas
- Dallas, Texas
- Brooklyn Park, Minnesota
- Jefferson City, Missouri
- Huntsville, Alabama
- Fort Smith, Arkansas
c. What Equipment is Needed to Operate an Olive Oil Production Business?
- Oil Extractors
- Packaging and Labeling Machines
When it comes to hiring employees for a standard olive oil production business, you should make plans to hire a competent chief executive officer, production manager, quality control and quality assurance manager, human resource manager, accountant, machine operators, and distributors.
Launch the Business Proper
In recent times, no olive oil production business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can choose to go for a grand opening party.
The bottom line is that with a proper launching of the olive oil production business, you will be able to inform people in your city that your olive oil production business is open for business.
a. What Makes an Olive Oil Production Business Successful?
- Choose a good location and production facility to launch the business
- Make sure you produce different types of olive oil (give your customers options)
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your olive oil production business
- Leverage on all available online and offline platforms to promote your olive oil production business
b. What Happens During a Typical Day at an Olive Oil Production Business?
- The production facility is open for the day’s work
- Supplies and ingredients are ordered
- Workers go to work to start producing olive oil
- Deliveries of orders are made
- Stocks are taken and reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build an Olive Oil Production Business?
- Excellent essential oil extraction and production skills
- Excellent customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Work experience at an essential oil extraction production company
- Experience in managing people
- Experience in business administration
- Experience in the essential oil extraction industry.