In this post, a group of students of the Master in International Business UC3M have developed an analysis on the international strategy of oil companies. In particular of Acesur, Borges and Deoleo groups.
International Strategy of Oil Companies
Grupo Acesur has been active for more than 150 years producing, packaging and marketing of olive oil, since 1840, as well as a long tradition in vegetable oils sector. This accumulated experience reinforces Acesur as a leading group within the national olive oil sector in Spain, also exporting its products to more than 90 countries worldwide.
One of the main concerns of Grupo Acesur is its internationalization as a strategy. In this sense, it has a very high volume of exports, as well as several facilities and a factory in strategic international markets, such as the New York in the United States, Shanghai in China, Aleppo in Syria and also Prague in the Czech Republic, among others.
In all of these markets, Grupo Acesur produces and sells more than 20 different brands, which are united by the common denominator of quality and guarantee of these products. Many of these products have emerged in response to the new opportunities of the sector and in an attempt to adapt to the demands of increasingly dynamic and competitive markets. Furthermore, the culture of using olive oil is seen as a synonym for quality of life. Acesur supplies olive oil to five continents and spreads the knowledge of the healthy properties and flavors of olive oil. Acesur’s commitment to excellence is reflected by the most distinguished certificates of quality.
Moreover, it is present virtually in the national distribution of all the large chains. In addition, the company has a strong presence and international projection which has led its products to over 90 countries. It is a leading company in consolidated markets and it is also opening new ones in recent years in more than 40 countries. Grupo Acesur knows how to adapt itself to the needs of different markets. It offers an exclusive and personalized service to its customers, while always respecting the image and identity of its consolidated brands.
The United States is one of the group’s fundamental bets, because it absorbs half of the exports outside the Mediterranean area, with a demand that is around 350,000 tons each year. Asia is another strand for Acesur, one of the pioneers in betting on the Chinese market, which currently accounts for 10% of the share of Spanish olive oil packaged in the country. In his view, China has been an “explosion” market; that is to say, it has gone from importing just a few containers of olive oil a few years ago to have strong annual growths, to reach the 40,000 tons today.
Borges International Group
Borges is a family company with more than 120 years of experience, and a great dedication to the management of agricultural estates, industrial processing, packaging and marketing of olive oil and seeds, dried fruits, nuts, vinegar, pasta and snacks. In 1957, they started exporting under the B2B model of olive oil and in 1964 they began to pack their own oils under the Borges brand.
Since then, the company has not stopped strengthening its internationalization strategy, to the point of using two different strategies: in countries such as Brazil, India, Russia, China, France and the rest of the Eurozone has opted for an international strategy, where most of the operations and decisions are taken from its headquarters, do not add value in the supply chain leaving alone to the subsidiary commercial decisions. Part of some of the decisions to establish commercial relations in these localities are due to the few entry barriers, low risk in macroeconomic aspects –mainly in the Eurozone–, great market potential, easy transportation and communications. It should be noted that in all cases it was decided to carry out exports of the finished product, being in those localities the owner of brands and commercial offices, except in France where they decide for a joint venture.
The other model used for internationalization is global strategy: this strategy is used in countries like Tunisia, Italy, and the United States. In the cases of Italy and Tunisia, they have olive oil manufacturing plants, where most of them replicate the same production process as in all of their plants, leveraging in an economy of scale in order to maximize the production ratio. In the US, the company has a bottling plant and a logistics center where it distributes not only to this country, but also to Canada, where the industrial process follow the same patterns as in Europe. Decisions to set up in these countries are due to the quality of the raw material –Tunisia first producer of organic olive oil–, minimization the economic or political risks and the easy movement of products. Last but not least, it is important to keep in mind that all the trademarks are owned by Borges, as well as its facilities.
Deoleo is a food industry group that was founded in 1990 in Spain. In 2001, the company began to take its first steps in the olive oil sector with the purchase of the company Koipe S.A., one of the leader companies in the Spanish olive oil market, with important brands such as Carbonell and Koipesol. Currently Deoleo is one of the biggest Spanish groups as it produces and distributes olive oil in more than 100 countries. Most valuable markets are in Europe, especially Italy and Spain, but also in the United States, China, Brazil and India.
In 2003, Deoleo started a strong internationalization process in order to expand sales, reduce risk in home market, and reach new markets. From then on until 2008, several Italian brands were purchased, including Sasso, Carapelli, Friol and Bertolli. This purchase was completely necessary to be able to expand in the Southern Europe and North American markets. The United States has lately become the main asset for the brand, representing the 21% of the group’s turnover.
In order to continue with the internationalization process, Deoleo followed an international strategy and export directly to other counties. Almost all important activities are coordinated from its headquarters in Spain, but it is important to mention that the company has two differentiated parts: Spanish and Italian brands. Regarding the Spanish ones, its production as well as packing are done in Spain so as to satisfy the national demand, part of the American market, and finally export raw material to Italy. Regarding its Italian brand, part of its production is done in Italy to satisfy the Italian market, and also to export to the United States and other regions.
To conclude, it is important to mention that currently Deoleo is strongly focused on internalization strategy to reach new markets such as the United States and expand sales.
At this point, our aim is to provide a brief summary in order to clarify the different internationalization strategies followed by the firms chosen. After the analysis of the firms Deoleo, Acesur and Borges, we can conclude that they follow different strategies, but still are very important brands with a high volume of exports.
Firstly, Grupo Acesur is present in every continent, and in 90 countries, being a leader in 40 of them. Its main markets are the United States and China, being a pioneer in the Asian market, where it has a good performance. It follows a global strategy focused on the high volume of exports, and it is part of the domestic distribution chains of the United States, Aleppo and Prague
Furthermore, regarding Borges International Group, its most important markets are Brazil, India, Russia, China, France, the Eurozone, considered as one group, as well as Tunisia, Italy and the United States, considered as another different group, each group following a different strategy. The first group, composed by Brazil, India, Russia, China, and the Eurozone, follows an international strategy featured by the exports of finished products to each of these countries. Moreover, its decisions are taken in its headquarters in Spain, without adding value to the supply chain. The second group, formed by Tunisia, Italy and the United States has, nonetheless, a global strategy, that is, they use their own production, and use economies of scale for more profit. Furthermore, they own all the plants and logistics, imitating the industrial process they follow in Europe.
Last but not least, Deoleo is present in more than 100 countries, being Europe –concretely Spain and Italy–, the United States, China, Brazil and India its more important markets. Deoleo operates from its headquarters in Spain, following an international strategy based on exporting directly its products, and also based on acquiring Italian brands, such as Sasso, Carapelli, Bertolli and Friol. This acquisition favored the expansion to Southern Europe and North America, its main international market, having the United States 21% of the total turnover of the brand.
Thus, each of these corporations, despite using different strategies, have great exports and are among the top olive oil brands worldwide, due to the high quality of their products and also because the benefits of olive oil are unique.
Si quieres conocer más sobre este sector puedes consultar nuestro If you want to know more about this industry, you can read our post about olive oil industry