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Cobram Estate Olives (ASX: CBO) has officially opened its new $35 million processing mill in regional Victoria, the largest in the southern hemisphere, with the expanded capacity it offers coinciding with a global shortage of extra virgin olive oil.
The mill, located at 270km north-west of Melbourne at Boort near Bendigo, is able to process up to 100,000 tonnes of olives each harvest when at full capacity.
This gives the mill, the result of an upgrade of Cobram’s existing facility, capacity to produce more than 17 million litres of olive oil each year.
While the mill had been operational for the 2023 harvest, the company officially commissioned the facility this week.
Australia’s harvest season runs from April to June, but Cobram expects the 2024 crop yield to be lower than last year in line with the natural two-year cycle of olive trees.
However, the company is leveraging strong returns from olive oil with the sale price per litre expected to be materially higher this year.
“The existing mill has served us well over the past 20 years,” says Cobram Estate’s joint-CEO Leandro Ravetti.
“With the additional crop coming from the maturing profile of the trees at our grove, coupled with long-term third-party agreements, it was time for us to completely rebuild the mill.
“In saying this, we have reutilised the tank farm and the shed of the original mill.”
In line with the increased processing capacity, Cobram last year boosted its total planting of olive trees at Boort by 407 hectares, taking the number of olive trees planted on site to more than 1.24 million across 3,508 hectares.
Ravetti says the area has the soils and environmental conditions to produce high yields of quality oil.
“The grove is fully irrigated with water via irrigation channels fed by the Goulburn system and harvested by 13 harvesters of five different kinds catering for all size and type of trees so we’re well equipped when it’s time to harvest and yield the maximum amount of high-quality fruit,” he says.
“We have been investing in the future supply of high quality Australian extra virgin olive oil through the expansion and redevelopment of our Victorian olive groves, here at Boort and our original home at Boundary Bend, over the past 25 years.
“With the creation of this new facility at Boort, we now have one of the best and most efficient mills in the world, and certainly the largest in the southern hemisphere.”
Cobram Estate, which also has plantation and production operations in the US, reported a 59 per cent increase in revenue to $113.77 million in the first half of FY24.
Although sales growth outpaced an increase in expenses, the company posted a bottom-line loss of $7.63 million, down from an $11.88 million loss a year earlier.
However, underlying profit surged to $8.23 million which compares with EBITDA of about $730,000 a year earlier.
When announcing its half-year results in February, Cobram reported that growing conditions in Australia have held up well with water catchments in the southern Murray-Darling basin sitting at 88 per cent.
Cobram said at the time that the outlook for sales for FY24 were positive both in Australia and the US, with both production areas benefiting from a global shortage of olive oil which has pushed bulk prices to 10-year highs.
Drought in Europe has severely impacted supply in recent years, with the world’s largest olive oil producers of Spain and Italy particularly hit hard.
Cobram Estate, led by Ravetti and Sam Beaton as co-CEOs, was established in 1998 and exports to 17 countries. Excluding private label, the brand is now positioned ninth among olive oil products in US supermarkets by value and second among those sourced from California.
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