Source: Oleoscope (Russia)
Olive oil has always been the most important product in Spanish gastronomy, but since 2022 its consumption has been declining due to rising prices. In the last 3 years, the cost of this product has risen by 177%. Residents have reacted to this fact with a significant drop in consumption – FinancialTime reports
Last year, Spanish households consumed 376.5 thousand liters of olive oil, which is 43.5 thousand liters less than in 2022. Experts emphasize that the 10.4% drop in consumption in one year is the largest drop in consumption of this product since statistics began.
Ignacio Silva, CEO of Deoleo, the world’s largest seller of olive oil by sales, said that thrifty consumers are changing their habits to cope with the effects of the drought that has ruined harvests.
“We have clearly reached a price that is a problem for Spanish and Italian consumers. Six to eight months ago, we noticed that people consume less or switch to vegetable oils when we exceed the limit of 8 euros per liter,” he said.
Droughts and heatwaves, exacerbated by climate change, have reduced olive oil production in Spain, the world’s largest producer, as well as in other major producing countries such as Italy and Greece, leading to a global shortage.
According to Juan Vilar, a Spanish consultant to olive oil producers and retailers, only 2.4 million tons have been produced worldwide in the last two seasons, far below the usual annual demand of 3.2 million tons. “This is the first time in history that we have had two bad seasons in a row,” he said.
The export bans imposed by some countries have also created additional pressure. In an attempt to curb galloping inflation, Turkey imposed an export ban on bulk olive oil and olive oil in barrels in August last year, which has since been partially lifted. Syria and Morocco also restricted their exports in October, further reducing global supply and driving up prices.
Earlier this year, the EU statistics office reported price rises across the EU, with buyers in Portugal, Greece and Spain facing price increases of more than 60 percent compared to the previous year. Italians faced an increase of 45 percent.
In Spain, which produces more olive oil than any other country, consumers bought 22% less in the first 20 weeks of this year compared to 2023, according to industry data. Sales volumes have fallen by 30 percent compared to 2022, when prices began to rise.
According to Deoleo, sales volumes in the USA are also declining, but not as much as in the Mediterranean region. “New consumers are entering the category every day in the U.S.,” Silva said. “The growth in penetration may be slowing down, but it’s still happening because there are still a lot of opportunities.
The US, which sources most of its olive oil from Spain and Italy, is now importing less, but at a higher price. Last year, the world’s second-largest consumer bought nearly 350,000 tons worth $2.19 billion, compared with 410,000 tons worth $1.86 billion in 2022, according to the International Trade Centre – an indication that some buyers are also put off by higher prices.
In Spain, where olive oil is the backbone of the agricultural economy in the south, worried farmers are hoping that spring rains and less severe summer temperatures will lead to a better harvest between October and January.
Silva said: “One problem is the price, which reduces volumes, but the other is availability… Olive oil is simply not available. There is no oil in the factories today.”
Spain’s olive oil production has fallen by more than half. After peaking at 1.49 million tons in 2021-2022, production fell to 666,000 tons in 2022-2023 due to drought and heatwaves, before recovering slightly to 851,000 tons in 2023-2024, according to the Ministry of Agriculture.
Italy, the second largest producer, harvested less than 240,000 tons in 2023, a decrease of 25% compared to the previous year. Greece, in turn, produced only 120,000 tons of olives this year, less than half of the previous harvest.
Expana analyst Kyle Holland believes that the weather is to blame: “It was too hot, too dry and too long”.
Deoleo, which has no olive groves of its own, has tried to make up for the supply shortfall by importing olive oil from Argentina and Chile. As wholesale prices have risen, the company has been able to maintain its profit margin by gradually passing on 90 percent of the price increase to consumers, Silva said. In 2023, the company recorded a net profit of 30 million euros on a turnover of 838 million euros.
Spaniards, who four years ago were paying less than 5 euros for a liter of virgin oil, were astonished to see prices for premium brands rise to 14 euros.
In Italy, a recent survey by the Piepoli Institute found that almost a third of buyers are cutting back on their olive oil consumption as prices have risen to €9 a bottle. Analysts also warn that younger Italians and Spaniards are cooking less at home, which could affect demand.
Silva said that Spaniards and Italians are turning to cheaper alternatives such as corn and sunflower oil for “hot” use, i.e. frying.
However, the Deoleo CEO is optimistic about the future of Spain and Italy, which are the most mature markets, accounting for 41 percent of sales. He predicted that habits will change temporarily rather than structurally once yields improve. “Prices will fall over the course of the year,” he said.