Australian Olive Oil Market Progress Report

The most recent figures on world trade in olive oil reveal some interesting facts about the Australian market.

While the data for 2009/10 is provisional and those for 2010/11 are estimates, the proportion of Australian olive oil consumed in the local Australian market has changed by just 3% over the last 4 years.

Previous analysis by Olive Business has shown that sales of local extra virgin olive oil have made substantial gains (http://olivebusiness.blogspot.com/2010/01/local-olive-oils-make-market-inroads.html). However, when taken as a percentage of overall olive oil consumption it seems little has changed since the major gains in 2007/8 when the local oils consumed rose from 14% to 23%.

Analysis of the export data also reveals that over the past three years the percentage of local production exported has not increased.


There could be many reasons for this apparent stagnation of market share. For example, we may be seeing a relative decline in olive oil consumption when compared with other vegetable oils as another Olive Business analysis shows. (http://olivebusiness.blogspot.com/2010/06/olive-oil-loses-ground-in-world.html)

It is notable that there is little or no financial or market modelling of olive oil with competing products providing background for decision making on standards and promotional activities. An investment in models would help predict the impact of price fluctuations, exchange rates, reduced imports, changes in labelling and consumer reaction. This modelling should cover all market segments.

The Australian industry would be well advised to critically examine the complex interactions in the marketplace and reconsider the current marketing strategies. Some of the issues to be considered are:

1. Why is there little growth in consumption of olive oil in Australia over the last five years?
2. Why has the proportion of Australian olive oil consumed locally seemingly reached a plateau?
3. Is price a barrier to consumption when compared with other vegetable oils?
4. Has the negative publicity about low quality olive oils had an impact on sales overall?
5. Has the consumption of extra virgin olive oil reached a plateau?
6. Is there the opportunity to make inroads into the lower quality/price segment of the olive oil market?
7. Has current marketing strategy achieved as much as it can and is it time for change?

Labelling Madness

Yes, I am being driven mad by what should be the simplest of exercises – labelling our extra virgin olive oil.

Not so simple with the multitude of reviews, cessations and new rules which are happening with no coordination and little consideration of the producer’s bottom line.

Our olive oil is certified organic, so we have those rules to abide by – submitting our label for approval. AQIS have decided, for reasons best known to themselves, to withdraw the use of their seal so that has to come off our label and we are told that we have to have the IFOAM logo on the label now. Then the OFA are developing a national organic mark which will have to go on the label – they haven’t decided on the symbol yet. Seems like a lot of free advertising on our labels.

Oh yes, AQIS is conducting a review of organic legislation and may be introducing another mandatory regulatory mark for export. Soon there will be so many ‘marks’ on the label there will be little room for anything else.

Wondering what all the acronyms stand for – I am not going to bore you by spelling so many out. So many organisations with a finger in the organic pie.

Now there is the Australian and New Zealand Government’s Food labelling review which is about to report its findings, presumably to be enacted within the year forcing more changes to olive oil labels. These are expected to be more about health claims and nutrition panels – so there goes the back label for redesign.

Then according to the draft of the proposed Australian standards for olive and olive-pomace oils being orchestrated by the AOA and Standards Australia we are going to be expressly forbidden – yes forbidden – to describe our olive as olive oil on the label (12.3.2.2. ……..Any other designations (e.g. Olive Oil,…………) are expressly forbidden).

Seriously – they can’t be serious. Added to that there are more rules about what we can use to describe the taste of the oil, whether it was pressed or extracted, hot or cold, first, second or last etc, etc, etc

For export we will still be required to abide by the International Olive Council (IOC) Trade Standard for Olive Oil and Olive Pomace Oils. They differ from the proposed Australian Standard so here comes another label.

We have to have a label designed now for the coming season to replace the perfectly good one we have (we still have a few thousand left) which has been made obsolete by decisions by anonymous committees in far away places. And with all the rule changes in the pipeline the new label will probably be obsolete before it is printed.

For goodness sake, we are just trying to sell olive oil – organic extra virgin olive oil - and make some money out of it. The latter is increasingly hard to achieve with so much time and resources wasted in abiding by these ever changing rules made by those whose product is rules and more rules.

Is There a Perfect Storm Forming for the Australian Olive Industry?

Many olive groves across Australia planted between 1997 and 2005 will be coming into full production in 2011. The recent drought-breaking rains across most of Australia will enhance this production and 2011 looks to be a bumper year for production of olive oil.

A perfect storm describes an event where a rare combination of circumstances will aggravate a situation drastically. The perfect storm gathering for the olive industry will be from the coincidence of the following circumstances:
1. Potentially the largest volume of olive oil produced in Australia as groves reach mature commercial production.
2. Alternate bearing resulted in 2009 producing a lower yield in some states such as Western Australia so 2010 can be expected to produce larger yields.
3. Good rains throughout growing regions can be expected to enhance yields.
4. The strong Australian dollar making imported olive oil cheaper, the International Olive Council reports an increase of 35% in exports to Australia in 2009/2010.
5. Waning consumer confidence is being reflected in declining retail sales across all retail goods in Australia.
6. The strong Australian dollar making exports to USA and Europe less competitive
7. Near record carryover stocks from the 2009/2010 season in Spain, where almost 50% of the world’s olive oil is produced.
8. The International Olive Council predicts a good campaign in Spain for the forthcoming harvest with near record yields and slightly higher production than the previous season worldwide.

Given all these trends the Australian olive oil industry could be in for stormy times. The most affected are likely to be the larger enterprises which trade at world parity prices. Smaller boutique producers should be less affected as their markets are mainly local, however some downward pressure on prices and more competitive selling conditions can be expected.

Streetwise on Olive Oil Judging

Ask anyone in the street the unqualified question, ‘Do you think a person should be a judge in a competition in which they have entered a product which they produced or have an interest in?’, the answer will invariably be no.

So why in many Australian olive oil competitions are there judges who are in this position?

The answers to this question most frequently given include ‘the best judges are chosen’ or ‘in a new and small industry there are not enough competent judges available’. Surely in the Australian olive industry, now about 15 years old, there are enough producers and users to fill a judging panel. And if there are not, the problem could be easily solved by the policy of not allowing judges to enter their own oils – they could still judge and there would be no disquiet about vested interests.

The fact that there is disquiet is confirmed by the recent article by presiding judge of the Australian National Extra Virgin Olive Oil Show published in the Olive Oil Times. The majority of the article is devoted to defending the use of judges associated with entries and describing the mechanism to minimise their influence on the result.

The article states that in the final judging for best on show the score sheets from judges with oils in the final selection are destroyed, thereby negating any influence they have on the final result.

In the 2009 Australian National Show, of the 26 judges who judged in the competition, 11 had entries in which they have an apparent interest. In the 5 extra virgin olive oil classes, two classes were won by oils which were associated with judges. Three judges had an association with the overall winner of the competition.

This means that at least 3 judging sheets were destroyed in the final judgement for best on show. If no judges’ sheets had to be destroyed because of interests in oils being judged, the result may well have been different – three independent judges would have had their scores included. The only conclusion can be that the destruction of judging sheets does have an influence on the final result.

It is in the best interest of the Australian Olive Industry to remove the perception of vested interests in olive oil competitions by adopting the policy that judges are not invited to judge if they enter an olive oil with which they have an association. Then it is their decision as to whether entering an oil or judging is more important.

UC Davis Olive Center Report on Olive Oil Quality May be the Subject of Intense Scrutiny

The recent report published by the UC Davis Olive Center on the quality of imported and local olive oils on sale in California in the USA may come under intense scrutiny.

Much of the scrutiny could occur during the court proceedings associated with a proposed class action brought by a collection of Californian food service individuals and enterprises against the suppliers and retailers selling the allegedly non-compliant olive oil.

The integrity of the process of collecting the oils for testing, sample retention, testing procedures and reporting could be put under the microscope by the defendant’s lawyers.

The Report questions the quality of extra virgin olive oils sold at some of the world’s biggest retailers, supplied by some of the world’s largest olive oil conglomerates.

Apart from the millions of dollars in compensation likely to be claimed, at stake is the reputation of well known brands and millions of dollars of wholesale and retail income. The USA imports substantially more olive oil than any country outside the European Union. It can be expected that the multi-nationals involved will defend the brands vigorously. Money to do this is unlikely to be a limitation.

On the other hand, the apparent Australian involvement in the Report, both by the use of standards promulgated by the Australian Olive Association (AOA) which are not part of the International Olive Council (IOC) Trade Standard for Olive Oil and Olive-Pomace Oil, and the Australian Oils Research Laboratory in conducting the testing, may be required to defend their actions. This could cost substantial legal fees, and even if a source of funding is available to do this, it will be major distraction to the AOA for the duration of the court action – which may be years.

The AOA is acknowledged on the first page of the Report ‘We value the leadership of Dr Richard Cantrill, technical director of the American Oil Chemists’ Society (AOCS); the advice of the AOCS Expert Panel on Olive Oil (particularly Bruce Golino, member of the board of directors of the California Olive Oil Council and Paul Miller, President of the Australian Olive Association)…….’. The AOA is mentioned 5 times in the report - it is unlikely that the association did not have prior knowledge of these references.

This begs the question as to why the AOA, which claims to be the peak body of the Australian olive industry, took the decision to implicate the industry by apparently giving overt support to testing in another country?

There are many other questions which should be asked: did the AOA have a mandate from its members to support testing in the USA; if not, who is going to pay for any costs resulting from the legal action; why confirmatory testing was not undertaken by a second IOC accredited laboratory in Europe; and why testing methods (DAGs and PPP) which have not been accepted by the IOC as reliable were used?

And one final question – what has the Australian olive industry gained from the whole exercise?

All Olive Oil is Better, Extra Virgin is the Best

As producers of extra virgin olive oil, it seems a convenient part of our marketing strategy to denigrate refined olive oils which are sold as ‘extra light’, or when blended with extra virgin olive oil as ‘pure’ olive oil.

Consumers who buy these refined products are already using olive oil so ‘upgrading’ their purchasing behaviour to buying extra virgin makes sense.

Refining plays an important part in any olive industry as it removes lampante olive oil from the market. Lampante olive oil is the classification for oils which have high free fatty acid or peroxide levels or have organoleptic faults such as rancidity. Apart from soap making or sale for biofuels there are few practical ways of stopping this oil from being sold as extra virgin.

There are also consumers who do not like the strong flavours of extra virgin olive oil and are looking for a flavourless vegetable oil. Many of these are in the foodservice and manufacturing industries which require consistent and flavourless oil.

With the push to sell olive oil into the countries where much of the cooking takes place at high temperatures, for example in a wok, the higher smoke point of refined olive oil (242°C ) over that of extra virgin olive oil (190°C to 210°C, depending on quality) is another selling point.

It is important to note that during refining most (around 88%) of the anti-oxidants (insaponifiable fraction) are removed from extra virgin olive oil along with the free fatty acids. However, the fat or oil (saponifiable fraction) is relatively unchanged. Therefore refined olive oil still has many of the health benefits attributed to monounsaturated fats and sterols.

During the deodorising and bleaching phases of refining, which often take place at high temperatures, there may the formation of a low level of trans fats which are absent in the unrefined olive oil. This transformation takes place in refining processes used for all vegetable oils commonly available in supermarkets..

So maintaining its high ratio of monounsaturated fatty acids makes refined olive oil better than the other mainstream vegetable oils, many of which are solvent extracted and all of which are refined.

As an industry it should be our objective to persuade consumers to shift from other vegetable oils to olive oil. This would then give us an increased number of converts to upgrade to extra virgin olive oil.

Much of the present publicity denigrating refined olive oils will have the opposite effect – make customers lose confidence in the quality of all olive oils, extra virgin or refined. They will then switch to the cheaper vegetable oils such as canola/rapeseed oil which also has a high level of monounsaturated fatty acids – but still lower than refined olive oil

AOA 'Australian Extra Virgin Olive Oil' Brand Fails First Test

The annual survey of Australian supermarket oils by the consumer magazine Choice is the first comprehensive independent test of the quality of Australian olive oils carrying the Australian Olive Association’s (AOA) ‘Australian Extra Virgin Olive Oil’ certification and brandmark’.

The survey had both good and bad news for the Australian olive industry. The good news was that of the top ten olive oils ranked on taste, nine were Australian. The bad news was that four Australian olive oil brands failed to meet the International Olive Council Trade Standard, and three of these were certified by the AOA as ‘Australian Extra Virgin’ and carried the AOA brandmark.

Over the last two years there have been numerous surveys of supermarket oils carried out at the instigation of the AOA as part of their campaign to persuade Australian consumers to buy locally produced extra virgin olive oil. These surveys have generally denigrated imported brands and lauded the local product – without publishing the full results of the testing.

Choice selected 28 brands of olive oil labelled ‘extra virgin’ and commissioned taste and chemical testing in accordance with the internationally recognised International Olive Oil Council’s ‘Trade Standard for Olive Oil and Olive-Pomace Oil’. The tests are designed to determine the quality and purity of the oil.

Twelve of the olive oils tested were Australian and for the first time the full results of the testing have been published. The first eight oils on the ‘taste’ ranking were Australian showing that in general the local oils were fresher. Of these, five carried the Australian Extra Virgin Brand.

The AOA claims on its website ; ‘The Association has recently introduced a Code of Practice which will guarantee the authenticity and quality of certified products and distinguish them from imported products. To be certified, products must be Australian and have undergone organoleptic (taste) and chemical testings’.

The report in Choice (www.Choice.com.au) claims that ‘to be certified (under the AOA brand) products must be Australian and meet internationally accepted specifications as determined by organoleptic (sensory) and chemical testing’.

This is not correct, the AOA certification requires no testing for purity which would detect adulteration or contamination and the organoleptic testing requirement does not meet the IOC panel testing criteria.

Because of this, unfortunately for the AOA Brand, three (37.5%) of the oils certified Australian Extra Virgin failed to meet the IOC testing regime on which the survey was based. On the taste test, one of the AOA certified oils was described as tired and another with fermentation present.

Consumers can justifiably expect 100% compliance for AOA certified brands, given the AOA guarantee.

Subsequently Standards Australia has announced that it has established a committee to develop a new Australian Standard for all classifications of olive oil.

The committee membership includes representatives from both Australia and New Zealand covering retailers, importers, growers, government and consumers.

The standards developed by the committee will not be mandatory unless mandated by government.

Let’s hope that the committee develops olive oil standards that are based on the IOC International Trade Standard and treat all olive oils equitably, whether locally produced or imported. These standards should then mandated and enforced by the relevant government departments in Australia and New Zealand.