Greek specialty foods hot commodity for economy

• Athenians are leaving urban world behind in favor of an agrarian lifestyle

CHIOS, Greece — Four years ago, Evangelos Xydas decided to leave his job at a hotel to open a small specialty food company on an orchard on the Greek island of Chios.

He knew he was taking something of a risk given that Greece was entering an economic downturn and debt crunch that would make it the epicenter of the current European financial crisis. But the hotel offered work only in the summers and was vulnerable to the ups and downs of the tourism industry.

"This is year-round work," he said, leaning against a lemon tree in a courtyard in the village of Kambos.

Today his company Citrus produces 120 products, including delicacies such as almond delights and smoked feta. And some in Greece believe entrepreneurs like him can help save the Greek economy in ways bailouts and austerity programs cannot by selling to the world what only Greece can offer — the Aegean diet.

That means focusing on specialties that have been part of the Greek culture for millenniums, including olive oil, citrus products and mastica, an evergreen resin used to make strong drink and other products.

Inspired by the global success of Greek yogurt brands such as Fage, Athenians are leaving urban life, where opportunities are getting scarce, and moving to rural towns and island villages to start an agrarian lifestyle as farmers, factory workers and food entrepreneurs.

Some believe Greeks haven't aggressively pursued an unmet global demand for their food and drink. Derided by northern Europeans for an alleged lack of ambition and work ethic, Greek Mediterranean culture is prized in the minds of many as simple, healthy and pleasant.

Food and agriculture are two of five Greek industries consulting firm McKinsey & Co. highlights as having greatest potential for future growth.

The firm predicts food manufacturing and agriculture in Greece could go from $27 billion in revenue and 710,000 jobs in 2010 to $42 billion and 970,000 jobs by 2020.

That has potential to make a big impact in a small country of 11 million people, more than 25% of them unemployed (a rate that is double among the younger labor force age group of 15 to 24-year-olds). Xydas employs 12 people, up from four in 2008.

"We didn't grow but we didn't see revenues go down — so we feel good about it," he says, giving a tour of the kitchens where workers are rolling out massive sheets of dough to make almond cookies. "We think our future will follow Greece's future."

Xydas had to drop prices 20% in 2012. And the kitchen is operating at 70% capacity. But he says he plans to expand capacity so he can export to other countries.

This orchard, like others in estates in Kambos, was planted by Genovese settlers from Italy in the 14th century. Oranges from Kambos were once sold as exotic delicacies, wrapped in gold-embossed paper and exported to Europe.

But Chios' merchants withered with the invention of the telegraph, which improved communication between the United States and Europe and led to an influx of citrus products from America to Europe.

Chios' oranges became commodities rather than luxury goods, and many of the roughly 200 citrus estates became hobby groves. Xydas and others are trying to revive the industry.

Chios Fruits was begun in 2009 by Chios Citrus Cultivators, an association of growers who bought a juice factory from a shipping family and modernized it to make premium juices marketed as coming from the one and only Kambos orchards.

Ariousios, a winery, opened near the Amani village in Chios in 2008 with modern wine-making facilities and tasting rooms. Four years later it is producing 150 tons of wine per year and plans to expand its production to 300 tons per year.

Farmers and industry associations for dairy, yogurt and olives, are jumping on the trend as well.

Greeks here also see a big chance to market mastica, the sap from the Pistacia lentiscus. The small evergreen grows almost exclusively on the southern coast of Chios, and its resin has been used for centuries in foods, soaps, chewing gum, medicines and liquor.

Ancient Greeks are said to have chewed a gum derived from the tree's bark, and the Chios Mastiha Growers Association is working to find markets for the product worldwide.

Ilias Nik. Smyrnioudis, a production manager for the association, said more Greeks are moving back from Athens to cultivate the mastic trees of Chios, and that mastic production has been steadily increasing 15% a year and is up to 150 tons annually.

The association aims to expand exports in the Middle East for its gum. It's funding medical research that purports to show that mastica is good for the digestion and dental health. And it's expanding product lines in mastic soaps, sweeteners, cosmetics, pharmaceuticals and as an ingredient in foods and liquors.

MastihaShop boutiques have opened in New York, France, Saudi Arabia and Cyprus, and others are being considered for Dubai and London.

The store, in which the association is part-owner, "is designed to make mastica known around the world," Smyrnioudis said.

McKinsey says world markets are primed for the foods of Greece, so it may just be a case of improving capacity as well as better marketing and distribution to grow an economy that has been in recession for years and hampered by growing public sector employment over private.

"Local conditions (weather, soil) contribute to the production of very flavorsome products of high demand in international markets," says Peggy Velliotou, a partner at KPMG in Athens.

Greek food companies such as Vivartia, dairy company Fage S.A., and mineral water company Souroti say they are forecasting strong growth. Greek Yogurt in particular is growing much faster than other yogurt brands, so much so that some say their brand is being subjected to competition from knockoffs. Fage has sued U.S.-Turkish rival Chobani to bar it from using the "Greek Yogurt" label in its marketing.

Seeing the trend, food entrepreneurs in Greece are developing wine, beans, pea lentils, chickpeas, even snails.

"Small entrepreneurs, farmers, and co-ops are and will be a key part in the recovery and growth of this industry," Velliotou says.

Gregory Antoniadis, president of the Greek Olive Oil Packers Association, said olive farming in Greece generates $1.3 billion of income in rural areas and has an effect on 350,000 farming households. But one problem is that nearly 150,000 tons of the highest-quality extra-virgin Greek olive oil is exported annually to Italy and Spain where it is remarketed as Spanish or Italian olive oil.

"Greece is the third-largest olive oil producer worldwide and exports 60% of its output to Italy in bulk, yet in doing so allows Italy to capture an extra 50% premium on the price of the final packaged product," the McKinsey authors noted.

Antoniadis' olive organization is stepping up marketing in the Americas, North Europe, Russia and China to take a greater share of the high-quality olive oil market. He says they have seen annual growth of about 15%. The group doubled its exports in the past seven years and aims to double them again in the next five years.

"We have quality in excess but a gap in marketing," he says. The key he says is not expanding production but hiring marketers to brand more of the product as "Greek Olive Oil" rather than selling it to Spain and Italy.

"As a society, we did not capitalize on the benefits of entrepreneurship and globalization — quite a few of us relied on the state or European Union support and lost touch with what was happening in the markets," Antoniadis said.

The painful economic situation may help Greeks "restructure our economy, regain competitiveness and re-establish our entrepreneurial mindset," he said.

"We shouldn't forget that this nation has based its economic existence and prosperity along the centuries by being good traders, sailors and visionary entrepreneurs."