Why is Worldwide Consumption of Olive Oil Declining?

Olive oil prices across all classifications are down and recent International Olive Council data shows that imports into major importing countries such as the USA, China and Australia are down. Even in Spain, the world’s largest producer, there are reports of reduced consumption of olive oil, with the exception of extra virgin olive oil which has shown a slight rise. The data provided generally measures the tonnage of olive oil traded, data of value of oil traded is scarce. It may well be that while tonnage is down, value may be up indicating the higher price and volume of extra virgin olive oil sold.

The downward trend in olive oil trade by tonnage can be for a number of reasons.

Perception

The perception of the value and integrity of olive oil among consumers has been affected by the publicity concerning allegedly fraudulent trade in olive oil publicised across all media. Confused, consumers are turning to other vegetable oils for their household needs.

Polyphenols

The trend towards higher polyphenols in extra virgin olive oil, pushed as a measure of quality and shelf-life by some producer associations, is resulting in a product which tastes too bitter and ‘hot’ for most consumers.

Price

The dual trends of increased production of extra virgin olive oil worldwide and the demand for higher prices from producers is setting prices too high for consumers with diminished disposable income.

Production

All the above is leading to an oversupply of olive oil, especially the higher priced extra virgin olive oil. This in time should lead to a reduction in price to consumers and increased consumption. Producers may not be happy with this and need to adjust production costs – perhaps harvesting a little later to increase yield and produce a greater range of less robust extra virgin olive oil for consumer palates.

Olive Industry Needs a Mantra

The olive industry needs a mantra, spiritual, audible, visible and ever present in the thoughts of policy makers, producers and all those involved in the industry.

It should be invoked before any far reaching decision is made and before any campaign plan is developed and launched.

We suggest the following:

‘All olive oil is better than other vegetable oils and extra virgin olive oil is the best olive oil.’

Making this mantra central to our thoughts may bring the recognition that we must put the progress and public perception of olive products before any utterance which will discredit them.

In the past three years the public perception of olive oil has taken a battering from the self-interested campaigns in many producer and consumer regions which have sought to gain market prominence for a particular brand or region by discrediting other brands or regions. This undermining of consumer confidence is surely contributing to the decline in olive oil consumption in most importing countries, and even in some countries which are major producers.

Competition is necessary for progress, but we should never forget that we are not only competing with other olive oil products, but more importantly, we are also competing with other vegetable oils. Comparative trends show that the olive industry is losing the battle and it is time that industry leaders at all levels showed real leadership and pulled the industry together.

It is also incumbent on those of us involved in the olive industry to reinforce the positives, deal effectively with the negatives and never lose sight of the consumer, who is generally disinterested in the technical and competitive machinations of the industry and just wants an affordable, trustworthy, healthy and flavoursome olive oil.

Differentiation of Extra Virgin Olive Oils Essential

The push for longer shelf-life and higher polyphenol levels by quality certifying organisations with their associated standards could be threatening more delicate tasting extra virgin olive oils.

It is notable that in the extra virgin olive oils tasted at recent Savantes programmes there have been fewer oils exhibiting the riper fruit flavours of later harvested olives.

These olive oils are ‘sweeter’ and exhibit more tropical fruit flavours than their robust counterparts which tend to green vegetal peppery flavours. They have a particular culinary use in fish cuisine, pastries, baking and desserts.

While the more robust oils with longer shelf-life – two years and over – may suit the marketers better, producers must be careful that they are not producing a taste in olive oil which many consumers and cuisines don’t like. There is a danger of following the path the engineers of the modified tomatoes took to give the fruit longer shelf-life, sending consumers looking for a tomato which tasted like a tomato.

It is important that the offering of flavours of extra virgin olive oil to the consumers remains diverse and pleases a range of palates.

Olive Oil Exploration - Waiheke Island, New Zealand

Having visited extra virgin olive oil producers and tasted their oils in most regions of New Zealand it was time to visit the groves of Waiheke Island, just a half hour ferry ride from Auckland. The Maori name Waiheke means ‘cascading or descending waters’.

Extra virgin olive oils from this region have received much publicity through winning many awards over recent years.

With some online research and the help of brochures we set off with a stream of day trippers with a sunny day complimenting the cool sea breeze washing over the ferry. As the skyline of Auckland faded and we weaved our way through many islands including the volcanic cone of Rangitoto, we sighted Waiheke with its green rolling hills and rocky coastline. The ferry docked neatly into the terminal at Matiatia Bay and off poured the day trippers, trampers and wine enthusiasts, interspersed with the locals kitted out in the casual New Zealand uniform of cargo pants and jandles.

Competitions to come under scrutiny

In the process of making the ‘Excellence Score’ assigned to extra virgin olive oils equitable, Savantes is researching extra virgin olive oil competitions around the world with a view to including the most rigorous in the calculation of excellence.

The main criteria to be considered in the ranking of competitions will be:

• Entries being accepted from all producing regions
• Independence of the organising enterprise
• Rigour of the entry process including compliance of the extra virgin olive oils with international quality standards
• Experience, breadth and independence of the judging panel
• Processes in place to ensure that the oils bearing award claims and sold to consumers are the same as those that won the awards
• Retention of samples and processes in place to deal with any disputes i.e. Redress when an oil is deemed to be defective

The results of the research will be used to rank the competitions and available to users of the GOOD application.

Per Capita consumption of Olive Oil in US continues to Rise

Data presented at the recent Savantes programme in New York shows that per capita consumption of olive oil in the USA continues to rise steadily.

The consumption per person is approaching I litre per person.

United Kingdom Olive Oil Consumption is Flat

Data presented to Savantes in London in early March shows that consumption of olive oil in the United Kingdom has been around 1 litre per person for the last five years.

There was a slight rise to 1.2 litres in 2011 which can probably be attributed to lower prices.

Olive Oil Production Continues Decline Against Other Vegetable Oils

Updated data from the USDA shows that the percentage of olive oil produced continues to decline as a proportion of total vegetable oil worldwide. In six years since 2007 the percentage has dropped from 2.4% to 2.0%.

Olive Oil Production Exceeds Consumption

The depressed state of the world trade in olive oil can be partially explained by the simple dynamics of supply and demand. According to the statistics published by the International Olive Council, supply of extra virgin olive oil exceeds demand. This has led to low prices and storage of olive oil in Spain in an attempt reverse the supply/demand situation. However, the stored extra virgin olive oil will deteriorate and its release into the market will increase the availability of lower grade olive oil selling at lower prices and competing with extra virgin olive oil.

Small Gains in Local Oil Consumption in Australia

Analysis of International Olive Council data shows that the percentage of locally produced olive oils sold in Australia has risen approximately 4% over the past 5 years. Consumption of local oils remains at a low level of 27%, despite major publicity campaigns encouraging consumers to buy local and persistent unqualified attacks on the quality of all imported olive oils.

Per Capita Consumption of Olive Oil Increases in the USA

Per capita consumption of olive oil in the USA continues to rise (USDA, World Bank and IOC data). Over the five years from 2007 to 2011 consumption has increased from 0.82 litres per person to 0.88 litres. Most of the olive oil is imported making the US the largest importer outside the European Union. Local production, mainly from California, produces approximately 2% of consumer requirements.

Wholesale Olive Oil Prices Lowest in Years

According to the International Monetary Fund, wholesale extra virgin olive oil prices in Europe have halved since 2005 and are back to 2002 levels. The price drop is caused by bumper harvests in Spain and reduced consumption in Europe. In an attempt to stop the price slide EU producers have been assisted in storing the surplus olive oil.

Time to Test Olive Oils against Other Vegetable Oils

One must question the logic of the continuous assault on imported olive oils that is taking place in Australia, New Zealand and the United States. While the main reason promulgated for this New World campaign is to increase the quality of olive oil supplied to consumers, many see it as a thinly disguised attempt to increase the sales of locally produced extra virgin olive oils. 

With the global access to local news and commentary, the danger of this approach is that the global brand of olive oil is permanently damaged and it will take more than a few new producing countries to repair the damage. The sales of olive oil are very price sensitive as we are seeing in Greece and Italy.

It is time we as an industry encouraged the comparison of the positive attributes olive oil – refined and extra virgin – with other vegetable oils, and in doing so, boost the global olive oil brand rather than tainting it.

Olive oil imports into Australia back up again.

Imports of olive oil into Australia in January 2012 increased by almost 1200 tonnes
compared with the same month in 2011. This follows substantial dips in imports in November and December.

Overall imports into Australia dropped by 10% in the four months to January 2012. Canada showed an 18% decrease in imports and the USA a 10% increase over the same period.
(Source IOC)

World Olive Oil Prices Down, Crop Estimates Up / Australian Import Prices Rise

World Olive Oil Prices Down, Crop Estimates Up

In its latest market commentary the International Olive Council reports that olive oil prices are continuing to fall.

Compared with the same time last year the prices for extra virgin olive oil were 14% lower in Spain, 22% lower in Italy and 30% lower in Greece.

At current exchange rates the Jaen (Spain) price of €2.19/kg for extra virgin olive oil in November converts to AU$4.56/kg or AU$4.15/litre.

The prices for refined olive oil were also lower by 16% in Spain and 11% in Italy. The Jaen ex-refinery price is €2.19/kg, the same as the extra virgin price.

Estimates for the 2008/2009 suggest that 2.866 million tonnes of olive oil will be produced, 202,000 tonnes more than last year.

Australian Import Prices Rise

According to the Australian Bureau of Statistics data, packaged virgin olive oil import prices increased by 9% from November 2007 to November 2008 to AU$5.54kg or $5.04/litre. Bulk prices rose by 33% to 5.87/kg ($5.34/litre).

Packaged refined olive oils rose 21% to $5.61/kg ($5.11/litre), with bulk refined oils rising by 20% to $4.91/kg (4.47/litre).

This substantial rise in prices cannot be attributed to currency exchange rates as the value of the Australian dollar in comparison to the Euro in November 2007 was the same as November 2008 at 0.60 Euro to the dollar.

Simon Field
Olive Business
8/1/2009