Gross sales of olive oil have plunged in its Mediterranean heartland as Spaniards and Italians are compelled to shun their most beloved culinary ingredient following steep value rises.
Ignacio Silva, chief govt of Deoleo, the world’s greatest olive oil vendor by income, mentioned cost-conscious customers have been altering their habits to deal with the impression of droughts which have wrecked harvests.
“We’ve clearly touched a value that may be a downside for Spanish and Italian customers,” he informed the Monetary Occasions, alluding to falling gross sales of Deoleo manufacturers together with Bertolli and Carbonell.
“We started seeing six to eight months in the past that while you cross the €8 per litre barrier individuals devour much less, or flip to seed oils.”
Droughts and heatwaves exacerbated by local weather change have knocked olive oil output in Spain, the world’s largest producer, in addition to different main producing international locations reminiscent of Italy and Greece, creating a world shortfall.
For the previous two seasons, solely 2.4mn tonnes have been produced globally, far in need of the standard annual demand of three.2mn tonnes, in line with Juan Vilar, a Spain-based marketing consultant to olive oil producers and retailers. “It’s the first time in historical past that we had two unhealthy seasons one after one other,” he mentioned.
Export bans launched by some international locations have created additional strain. In a bid to tame runaway inflation final August, Turkey imposed an export ban — now partially lifted — on bulk and barrelled olive oil. In October Syria and Morocco additionally restricted exports, additional squeezing world provides and driving up costs.
The scarcity of “liquid gold” has pushed up shopper costs. Earlier this yr, the EU statistics workplace reported will increase in all of the international locations within the bloc, with consumers in Portugal, Greece and Spain going through year-on-year value rises of greater than 60 per cent. Italians in the meantime noticed an increase of 45 per cent.
In Spain, which produces extra olive oil than wherever else and cherishes its tang, customers bought 22 per cent much less within the first 20 weeks of this yr than in 2023, in line with business information. Volumes have been down 30 per cent from 2022, the yr costs started to surge.
Explaining how habits had modified, Silva picked up a bottle of the Carapelli model at Deoleo’s Madrid headquarters and mimed how individuals used to lather a plate of salad in additional virgin olive oil for 3 or extra seconds.
“However when the olive oil is pricey, you do it like this,” he mentioned, performing out a drizzle that lasted barely a second. “You’re extra cautious . . . So a bottle that used to final you per week, now it lasts two weeks.”
Deoleo is discovering extra resilience within the US, a largely untapped market the place volumes have dipped however not as sharply as within the Mediterranean. “New customers are getting into the class daily within the US,” Silva mentioned. “That improve in penetration could also be slowing down, nevertheless it’s nonetheless taking place as a result of there’s nonetheless lots of alternative.”
The US, which will get most of its olive oil from Spain and Italy, is importing much less however for the next value. Final yr the world’s second-biggest shopper imported virtually 350,000 tonnes for $2.19bn, in contrast with 410,000 tonnes for $1.86bn in 2022, in line with information from the Worldwide Commerce Centre — suggesting that some consumers are being deterred by value will increase.
Deoleo is pitching olive oil’s well being advantages within the US, citing research that present it reduces the danger of coronary heart illness and improves digestion. However Silva mentioned it needed to overcome some misconceptions, persuading Individuals that it may be used for cooking and is supposed to have a powerful style. “An olive oil that’s tangy is sweet,” he mentioned.
In Spain, the place olive oil is a pillar of the agricultural financial system within the south, anxious farmers are hoping that spring rains and fewer brutal summer time temperatures will result in an improved harvest from October to January.
Silva mentioned: “One problem is value, which is bringing down volumes, however the different is availability . . . There’s simply no olive oil. There’s no oil within the mills at the moment.”
At its worst, Spain’s olive oil manufacturing was down by greater than half. From a excessive of 1.49bn tonnes in 2021-22, drought and heatwaves slashed it to 666mn tonnes in 2022-23 earlier than a modest restoration to 851mn tonnes in 2023-24, in line with agriculture ministry information.
Italy, the second-largest producer, harvested lower than 240,000 metric tonnes in 2023, a 25 per cent drop from the earlier yr. Greece, in the meantime, produced solely 120,000 metric tonnes of olives this yr, lower than half the earlier crop.
The climate was in charge, mentioned Kyle Holland, an analyst at Expana: “Too sizzling, too dry, for too lengthy.”
Deoleo, which doesn’t personal any olive groves of its personal, has sought to fill the hole in provides by importing olive oil from Argentina and Chile. It has not escaped wholesale value rises however Silva mentioned it had maintained revenue margins by progressively passing on 90 per cent of the rise to customers. In 2023, it recorded a web revenue of €30mn on gross sales of €838mn.
Spaniards accustomed to paying lower than €5 for a litre of additional virgin oil solely 4 years in the past have been aghast to see costs climb as excessive as €14 for premium manufacturers.
In Italy, a current ballot by the Piepoli Institute discovered that almost a 3rd of customers had in the reduction of on additional olive oil as costs have risen to €9 a bottle. Analysts additionally warn that youthful Italians and Spaniards are cooking much less at residence, which may weigh on demand.
For “sizzling” use, that means frying, Spaniards and Italians have been turning to low-budget options reminiscent of corn and sunflower oil, Silva mentioned.
However the Deoleo chief govt struck an optimistic tone in regards to the future in Spain and Italy, its most mature markets, which account for 41 per cent of gross sales.
He predicted that the adjustments in habits would show to be momentary slightly than structural as soon as harvest output improved. “Costs are going to return down inside a yr,” he mentioned.