What exactly is “premium”?

Before we get to the crux of this blog, first a story. I was on holiday in a lovely part of Southern Italy. I went on a tour of an old Olive Oil farm and visited the ancient on-site olive press. Their set-up was brilliant and had been in use since Roman times. I took a close look at olive trees that had been around more than 2,000 years – I think one was nearly 2,500 years old… Before my holiday I had absolutely no idea that olive trees could live for so long! The sun was shining and insects buzzed around, with the Mediterranean twinkling in the distance.

I was shown around the farm by one of the fifth generation of the owning family. Of course, the tour ended in a tasting session. All I can say is wow! That olive oil tasted good! From 2,000-year-old trees, why wouldn’t it? I was tasting the same oil Roman emperors did.

When it comes to buying the olive oil (as one does on these excursions); did I think it was expensive? Not at all – although it was probably four times the cost of the last oil I bought at Sainsbury. Despite the price, I felt it was a bargain, and I have been enjoying it ever since. It’s by far the best oil I have ever used. I tell visitors the story so they enjoy it too.

Being a shopper marketer at heart I asked him how they achieved their sales, and how business was looking nowadays. He told me that most of their volume came from selling to a cooperative, to then be blended with lots of other farms output and sold on the open “bulk” market. Margins were low and he struggled to get his own labelled, packaged, product listed anywhere – most of his profit came from sales at the farm door. I was shocked.

I asked him one question: where on the bottle label do you say that it comes from 2,000-year-old trees? He looked at me strangely – “all the olive oil around here is the same” he said, with a shrug.

To my point about “Premium”. Value can only be assessed with a combination of emotional attributes and rational information. For me, that oil was excellent value, but he is unable to sell it in stores because he isn’t able to attach this premium story at the point of purchase. Interesting eh? Anyone fancy going into the olive oil business? And what lessons can we take into our own industry?