Grupo Sovena S.A.

Rua Doutor António Loureiro Borges, No. 2, Edifício Arquiparque 2
Algés, 1495-131
Portugal
Telephone: (+351 21) 412 93 00
Fax: (+351 21) 412 93 47
Web site: http://www.sovenagroup.com

Private Company
Founded:
1956
Employees: 1,300 (est.)
Sales: EUR 1.5 billion ($1.8 billion) (2017)
NAICS: 311225 Fats and Oils Refining and Blending

Headquartered in Algés, Portugal, Grupo Sovena S.A., or Sovena Group, is the world's leading integrated producer of olive oil. The company operates through four primary divisions: Agriculture, Consumer Goods, Oilseeds, and Biodiesel. Through its Agriculture division, Sovena grows olives in Portugal, Spain, and Morocco and operates oil mills in these three countries as well as in Chile. The Consumer Goods division oversees Sovena's worldwide distribution and sales of more than 200,000 tons of olive oil each year. Exports account for 80 percent of Sovena's sales and reach more than 70 countries through sales offices in Portugal, Brazil, China, Morocco, Spain, Tunisia, and the United States.

The company takes an approach it calls “glocal,” marketing its oils on a global scale through a collection of local brands. These include the Portuguese leaders Oliveira da Serra and Fula; Andorinha, one of the bestselling Brazilian brands; the company's international brand, Olivari, sold in the United States, Russia, China, and other markets; and Fontoliva, an international discount-priced brand. Other local brands include Frigi, Vêgê, and Clarim in Portugal, and Tri-Fri and Gem in the United States. The company also produces oil-based soaps, notably for Angola and other markets. Besides its branded sales, the company is also the world's leading private-label supplier of olive oil to supermarket retailers. The Oilseeds division is a major supplier of oilseeds to biodiesel producers, and through its Biodiesel division, Sovena produces biodiesel as well. Sovena is 100 percent owned by the holding company Nutrinveste SGPS, SA, one of the successors to the former Portuguese conglomerate Companhia União Fabril (CUF). In 2018 Jorge de Mello, part of the founding family behind CUF and Nutrinveste, took over as Sovena Group's CEO.

INDUSTRIALIST ORIGINS IN THE 19TH CENTURY

Sovena's origins lay in Companhia União Fabril, founded in 1898 by Alfredo da Silva through the merger of two existing companies, União Fabril and Companhia Aliança Fabril. Under da Silva's leadership, CUF grew into Portugal's largest and most diversified conglomerate in the early decades of the 20th century. At one point CUF, which included more than 10 industrial and financial subsidiaries, represented 5 percent of Portugal's total gross domestic product. From the start, agricultural products formed a major part of CUF's operations.

COMPANY PERSPECTIVES

Inspired by the idea of bringing a healthier diet to the whole world.

During the 1920s CUF branched out into banking, acquiring a stake in Casa Bancária José Henriques Totta. CUF was also behind the creation of Tabaqueira, which grew into Portugal's largest tobacco company, founded in 1920. CUF entered the shipbuilding industry in the 1930s, launching the Rocha do Conde de Óbidos shipyards in Lisbon. This activity later expanded as Lisnave, which later grew into one of the world's leading shipyard managers. Ship repair and shipbuilding grew in importance during the Second World War. CUF also added its own shipping business, operating a fleet through Companhia Geral.

CUF continued to grow after da Silva's death in 1942. The company entered the health care sector with the construction of the CUF Infante Santo Hospital in 1945. CUF expanded its shipping operations into the fuel transport sector as well, founding Soponata in 1947.

CUF also expanded its agribusiness operations, including entering the field of edible oil manufacturing. In 1956 the conglomerate teamed up with two other companies, Macedo e Coelho and Sociedade Nacional de Sabões, to found Sovena, taking advantage of Portugal's status as one of the world's leading olive producers. Sovena launched production of olive oil and oil-based soaps soon afterward and subsequently grew to become one of the largest olive oil makers in Portugal. In the 1960s da Silva's grandsons Jorge de Mello and José Manuel de Mello assumed leadership of CUF.

The path toward the future Sovena Group took a turn in 1974, when Portugal's Carnation Revolution deposed the authoritarian dictatorship that had ruled the country for more than 40 years. Following the revolution, CUF was taken over, broken up, and nationalized in 1975. Jorge de Mello and José Manuel de Mello were initially jailed, then allowed to flee Portugal. As part of the nationalization process, CUF's former agribusiness holdings, including Sovena, were regrouped into a state-owned company called Nutrinveste.

STARTING OVER

Jorge de Mello remained in exile for eight years, including a stay in Brazil, where he established several agriculture-related interests. Upon his return to Portugal in 1982, he set about reconstructing parts of the former CUF empire. Edible oils became one of the first of de Mello's new operations, starting with the purchase of Sociedade Alco, Algodoeira Comercial e Industrial, from the Portuguese government. The acquisition included Alco's oil extracting, refining, and packaging operations. In 1985 de Mello acquired the olive oil producer Fábrica Torrejana de Azeites, based in Terras Novas.

While Jorge de Mello took charge of rebuilding the family's agribusiness interests, his brother José, who had also returned from exile, pursued his own interests in the financial sector, founding Banco Mello in 1988. Later expanding into insurance, Grupo José de Mello emerged as one of Portugal's leading financial companies in the early 21st century.

The movement toward the Sovena Group gained momentum in the 1990s, especially after Jorge de Mello hired António Simões in 1991 to help develop its agribusiness operations. Simões set to work building up the group's edible oils operations, acquiring the former CUF partnership Sovena as well as Lusol, a company that specialized in olive oil extraction and soap production. Both acquisitions were completed in 1991.

In 1993 Jorge de Mello's group teamed up with another former CUF business, Tabaqueira, to take over Nutrinveste as part of the privatization program launched by the Portuguese government in the early 1990s. Nutrinveste's operations at the time included the production of edible oils and fats, as well as fruit juices, beverages, and canned vegetables under the Compal brand and cookies and other baked goods and cereals under the Triunfo brand.

TURN-OF-THE-CENTURY INTERNATIONALIZATION

Nutrinveste also became the holding company for de Mello's edible olive oil businesses. These were regrouped under Sovena. Nutrinveste continued making new acquisitions, including taking over the struggling Tagol in 1999. Based in Lisbon, Tagol specialized in the extraction and refining of sunflower and soybean oil. The acquisition, completed in partnership with Bunge, was significant in that it gave Sovena access to the Lisbon deepwater port as Sovena began developing its export operations into the turn of the century. By 2001 Sovena's sales had risen to EUR 197 million, making it the largest of Nutrinveste's holdings.

KEY DATES
1956:
Sovena is founded as a joint venture by Com panhia União Fabril (CUF) and two other companies.
1975:
CUF is taken over by the Portuguese government, and the company's heads, brothers Jorge de Mello and José Manuel de Mello, go into political exile.
1991:
Having returned from exile, Jorge de Mello acquires Sovena from the Portuguese government.
2005:
Sovena acquires East Coast Olive Oil, the leading olive oil distributor in the United States.
2018:
De Mello's son, also named Jorge de Mello, takes over as CEO of Sovena.

In 2004 Sovena acquired the assets of Simão & Companhia, the Portuguese company that owned the Andorinha olive oil brand. That brand had been created in 1927 specifically to supply the export market, and it ultimately focused most of its sales on the Brazilian market. By the turn of the century, Brazil represented 95 percent of the Andorinha brand's sales. Meanwhile, the recognition of the health benefits of olive oil over other types of fats had led to a surge in demand for olive oil in the Brazilian market. Competing brands rushed to meet that demand, and by the time Sovena acquired it, the Andorinha brand was facing competition from some 150 rivals. As a result, despite the brand's ranking as the fourth largest in Brazil, its market share remained quite small, at just 2.5 percent.

As part of Sovena, the Andorinha brand made some initial progress, raising its market share to 8.6 percent by 2006. That year Sovena brought in the marketing group Pearlfisher to revitalize the brand. The redesigned logo, packaging, and marketing program helped Andorinha make quick gains, raising its share past 10 percent by 2007. In 2008, as the brand's sales volume grew from 1 million liters to 3 million liters, Andorinha earned recognition as Brazil's fastest-growing olive oil brand.

U.S. ENTRY

By that time Sovena had also made headway into another major market. In 2005 the company bought 80 percent of East Coast Olive Oil, a company established in Utica, New York, in 1991 as an olive oil importer and distributor to the North American market. East Coast Olive Oil set up its own packaging plant for its imported oils and grew into the leading olive oil packager in the United States. By the time of its acquisition, however, the company had reached its limits, lacking the room to expand its packaging plant and lacking the finances to move elsewhere. With Sovena's investment, East Coast Olive Oil moved to a new state-of-the-art bottling facility in Rome, New York, in 2007. The new plant also featured an on-site quality control laboratory, the only one of its kind in the United States. The company was renamed Sovena USA in 2008. Sovena acquired full control of its U.S. subsidiary in 2009.

Sovena continued to invest elsewhere in its operations. In 2005, for example, the company established a Spanish subsidiary, Tagol Ibérica de Aceites, to procure sunflower seeds for Tagol's oil production in Portugal. Sovena also acquired 80 percent of Exoliva, a company that prepared and packaged olives for the export market. Exoliva's primary markets included Russia, Ukraine, and the Middle East. Sovena took full control of Exoliva in 2008.

Sovena also set its sights on the North African markets, specifically Tunisia, establishing subsidiary Sovena Mena (Sovena Middle East and North Africa) as a joint venture with a local partner in 2007. The joint venture then acquired an existing packaging facility, which had been established in 2001 to export olive oil to the United States but shut down after the September 11, 2001, terrorist attacks. After acquiring the facility, Sovena Mena restarted its operations and began supplying olive oil to Tunisia and other North African markets, as well as to its Sovena USA subsidiary.

Over the next few years Sovena added to its Tunisian interests. In 2008 Sovena Mena launched a sourcing subsidiary, Phoenicia Olive Oils Company, which established a storage facility in Sfax, Tunisia. The following year Sovena acquired Tiba Foods and its bottling facility in Tunis. As part of the Sovena Group, the Tunis facility expanded to include four production lines, for glass, tin, and PET (polyethylene terephthalate) bottles, as well as a high-speed line featuring integrated PET blow-molding capacity.

OLIVE OIL PLANTATION LEADER

Sovena marked another significant milestone in 2006 with the launch of its Agricultural division and the creation of a Moroccan joint venture, Soprolives, with local partner Société Maroc Emirats Arabes Unis de Développement (SOMED), formed as a partnership among several Moroccan companies with backing from the United Arab Emirates. Through Soprolives, Sovena took its first steps into olive growing by setting up olive plantations in Morocco.

Sovena's drive to become an integrated olive oil producer reached a new level in 2007 with the creation of Elaia, a 50-50 joint venture with Atitlán, a venture capital company that specialized in agricultural and food-related investments. Through Elaia, Sovena launched an intensive acquisition program to expand its olive estate. This included the EUR 91 million purchase of the SOS Group's “Land Project” in 2010, adding some 5,400 hectares of land that had been specifically cultivated to plant olive groves. Through the middle of the next decade, Sovena continued to invest in its olive-growing operations, launching the Alqueva Project in Portugal to expand its olive plantation. The company also expanded its holdings into Spain, another major olive-growing market. By 2018 Sovena held the world's largest olive plantation operation, with more than 14,600 hectares under cultivation in Portugal, Spain, and Morocco.

Sovena's integration effort took the company into new downstream directions as well. In 2006 it teamed up with Bunge to launch Biocolza, a company that specialized in the milling and processing of rapeseed (colza) for use in the production of biodiesel. The following year Sovena teamed up with Diester, creating a second biodiesel venture, Agrodiesel, based in the Tagol extraction and refining plant. Diester bought out Sovena's stake in the joint venture in 2008, however.

Olive oil nonetheless remained Sovena's primary business. The company adopted a “glocal” approach to its international and export businesses, which involved developing a portfolio of local brands as the company expanded its exports to a global level. As part of this initiative, Sovena launched two international brands: Fontoliva, a low-price brand, and Olivara, a premium brand sold in the United States, Russia, China, and other markets.

NEW GENERATION

Sovena also developed a strong business as a supplier to third-party and private labels, including many of the world's major supermarket retailers. In the United States the company grew to account for 50 percent of the U.S. private-label olive oil business. This business received a boost in 2011 after the company's laboratory became the first private laboratory in the United States to receive chemical testing certification from the International Olive Council (IOC). As such, Sovena USA's facility was one of only 50 IOC-certified chemical testing laboratories in the world.

Meanwhile, Sovena's flagship brand, Oliveira da Serra, was receiving international recognition. In 2008 the IOC named it one of the world's finest extra virgin olive oil brands. The following year the brand won the prestigious International High Quality Trophy at the annual Monde Selection. Sovena continued to rack up awards. In 2015, for example, the company won 6 of the 21 awards given out at the IOC's Mario Solinas Quality Award competition.

Throughout its development, Sovena had remained part of Nutrinveste. By 2011 Sovena was Nutrinveste's sole holding, following the sales of its other operations, including Compal in 2004 and Triunfo in 2006. Upon Jorge de Mello's death in 2013, the company ownership passed to his children, including his son Jorge de Mello, who had joined Sovena in 2006 and had served as vice president alongside Simões. Following Simões's retirement in 2018, the younger Jorge de Mello took over as Sovena's CEO. At the same time, in a sign of the company's continued commitment to growth, Sovena acquired full control of Agribética. Grupo Sovena had established itself as the world's leading olive oil specialist in the 21st century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Agrodiesel SA; Biocolza SA (60%); Elaia SA (50%); Exoliva SA; Soprolives (50%); Sovena Consumer Goods USA Inc.; Sovena España SA; Sovena MENA SA (Tunisia); Sovena Oilseeds España SA; Sovena Oilseeds Portugal SA; Sovena Portugal Consumer Goods SA.

PRINCIPAL DIVISIONS

Agriculture; Biodiesel; Consumer Goods; Oilseeds.

PRINCIPAL COMPETITORS

Archer Daniels Midland Company; Cargill, Incorporated; CJ Corporation; Glencore plc; IOI Edible Oils Sdn Bhd; The Nisshin OilliO Group Ltd.; Olvebra Industrial S/A; Tanta Oil and Soap Company; Unilever N.V.; Wilmar International Limited.

FURTHER READING

“Grupo Sovena: A história da química que levou o azeite ao mundo.” Empresas Familiares, November 23, 2015.

Machado, Alexandra. “Neto do Fundador da Nutrinveste assume liderança da Sovena.” Jornal de Negocios, April 2, 2018.

Slusser, Courtney. “EU Rules in Favor of Sovena in Trademark Battle.” Olive Oil Times, January 12, 2017.

“Sovena Group a Big Winner in Olive Oil Competition.” Store Brands, July 8, 2015. Accessed August 29, 2018. https://storebrands.com/sovena-group-big-winner-olive-oil-competition .