Gourmet Factory is hoping a big investment in its future will pay off.
The Hauppauge wholesaler of oils and Mediterranean foods invested nearly a year and more than $200,000 to obtain a voluntary USDA quality monitoring seal designed to assure consumers its olive oil is authentic.
Gourmet Factory took the costly step after making a $2 million payment to settle a class-action lawsuit charging the company with deceptive labeling. The April 2013 lawsuit filed in U.S. District Court in Manhattan alleged that consumers were overcharged for oils labeled “100 percent pure olive oil” when the product actually contained olive pomace, which is chemically processed from olive pits, skins and pulp.
A separate federal lawsuit, filed in February 2013 also in Manhattan, by the North American Olive Oil Association trade group, charged the company with deceptive advertising for marketing the product as 100 percent pure although it contained pomace. The company reached a settlement in which it did not admit wrongdoing. Terms were not disclosed.
And in June 2014, Gourmet Factory filed for Chapter 11 bankruptcy to determine liability related to the class-action lawsuit, settle with creditors and minimize legal bills. In December 2014, a bankruptcy judge approved its reorganization plan.
Now, with the USDA seal in place, Gourmet Factory chief executive Themis Kangadis says the company is ready to move forward to build on the legacy pioneered by his father and mother, Aristidis and Andromahi Kangadis.
“We wanted to differentiate ourselves from our competitors” with the seal, Kangadis said. “We wanted to be leaders in transparency and honesty.”
The lawsuits stemmed from “strictly a labeling issue,” he said; the seal “kind of silences the critics.”
Gourmet Factory’s origins date to 1969, when Kangadis’ Greek immigrant parents opened a grocery market in Astoria, Queens. They soon started importing food products and olive oil, and eventually formed Gourmet Factory
The company packs more than 100 products, mostly olive, soybean, canola and corn oils, that it sells to supermarkets and restaurants. It sells oils under various brand names, including Capatriti, Porto, Olio Villa, Kivotos, Lakonia, Sevilla Mia and Pureola. Gourmet Factory does about $50 million in annual sales and employs about 65 people.
“To me, olive oil is like a fine wine,” said Kangadis, 50, of Port Washington, who took over the company from his father 10 years ago. “I am very passionate about what I do.”
At the 74,000-square-foot packing plant, oil is delivered in 6,000-gallon containers and packaged in tin, glass or plastic containers ranging from 16 ounces to 128 ounces for retail sales, to industrial 35-pound containers and totes that hold 2,000 pounds of oil. The company imports olive oil from nine countries and processes more than a million pounds of oil a week.
Gourmet Factory obtained the quality seal last year from the U.S. Department of Agriculture’s Quality Monitoring Program for both its Capatriti brand extra virgin and pure olive oils, as well as its Lakonia extra virgin olive oil and Kivotos Greek extra virgin olive oil. Containers will bear a round black and white seal that says USDA Quality Monitored.
Companies choose to enroll in the user-fee service program, described by the USDA as a “rigorous review and evaluation process.” Other participants include Pompeian Inc. in Baltimore, Maryland, and Sunset Olive Oil LLC in Montebello, California.
Under the program, the USDA conducts unannounced monthly plant visits to review operating procedures, record keeping and labeling. The USDA gathers samples for chemical testing at a USDA lab to verify the quality, purity and age of the olive oil, according to the USDA’s Agricultural Marketing Service, which oversees the program. Samples also are sent to a flavor panel made up of 12 taste experts. The company will pay fees for ongoing visits and testing to maintain the seal.
“The verification makes consumers question the product next to them that doesn’t have the seal,” said Darren Seifer, food and beverage industry analyst for the NPD Group, a Port Washington market research company. “It is fair for the consumers to ask, ‘What is wrong with the other products that don’t have that certification?’ It kind of bullies other companies to get the certification.”
But Nancy Harmon Jenkins, a Mediterranean-diet expert based in Maine and author of “Virgin Territory: Exploring the World of Olive Oil,” is skeptical that the USDA has any real policing power over olive oil.
“The USDA has a lot more critical food safety issues to deal with than olive oil,” Jenkins said.
The olive oil industry has struggled with consumer perception that many olive oils are not authentic, after a highly publicized 2010 study by the University of California–Davis Olive Center found that 69 percent of imported olive oil samples from supermarkets and 10 percent of California oils labeled “extra virgin olive oil” failed to meet international standards.
Olive oil is considered “extra virgin” when it has been produced by simply pressing olives and meets a test for low acidity. “Pure” olive oil, which can be extracted using heat or chemicals, is refined and usually mixed with a small amount of extra virgin olive oil, according to the USDA.
Some olive oil suppliers add other less expensive oils like canola oil or sunflower oil, USDA officials said. They may even add soybean oil, a very cheap commodity that doesn’t have flavor. The USDA said a chemical analysis will detect these other oils.
U.S. consumers use 90 million gallons of olive oil annually — the largest market outside of the European Community, according to the American Olive Oil Producers Association in Clovis, California.
Now, Gourmet Factory is planning to spend about $250,000 to build its own in-house lab to test its olive oil for quality control. The company, which sources its olive oil from Argentina, Chile, Egypt, Greece, Italy, Lebanon, Spain, Tunisia and Turkey, is also looking to buy a farm in California.
“I don’t believe that you can make an extra virgin olive oil if you are importing olive oil from all over the place,” said Jenkins, who owns an olive tree farm in Tuscany, Italy, where about 100 liters of extra virgin olive oil are produced a year for her family.
After earning the USDA seal, Capatriti Olive Oil launched a new slogan, “Honest Olive Oil,” and hired celebrity chef Roblé Ali, owner of the Brooklyn restaurant Streets, to showcase Capatriti’s extra virgin olive oil in recipe videos on social media.
“The USDA is saying this product is 100 percent real,” Ali said. “It is insurance that you are getting what you pay for . . . You want to make sure you are getting the best possible ingredient when you are cooking. You are putting this stuff into your body. It needs to be legit.”
At a glance
Company: Gourmet Factory, Hauppauge
What it does: Wholesaler of oils and Mediterranean foods
CEO: Themis Kangadis
Annual sales: $50 million
Oil processed: More than 1 million pounds a week