Asia

China Wants More Olive Oil and Italy Is the One Providing It, for Now

The Chinese appetite for olive oil has led to an increase in exports from Italy, but competition from Tunisia and the domestic market could see this trend reverse.

Shanghai , China
Feb. 15, 2018
By Daniel Dawson
Shanghai , China

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Italian olive oil exports to China increased by €40 mil­lion in 2017, accord­ing to the National Institute of Italian Statistics.

Spain has tra­di­tion­ally been the largest exporter to China, but the tides may be chang­ing, accord­ing to indus­try ana­lysts. As incomes in the world’s most pop­u­lous coun­try grow, so does the appetite for travel and olive oil. This increas­ing middle class has opened the doors for other oil exporters, such as Italy.

Sales of Italian prod­ucts to China increased by 18 per­cent. Among them, olive oil exports have the biggest growth of 41 per­cent.- Eda Erbeyli, Daxue Consulting

“It is a devel­op­ing market that is expe­ri­enc­ing impres­sive annual growth and will become increas­ingly cen­tral [to the olive oil trade],” said David Granieri, pres­i­dent of Italy’s largest asso­ci­a­tion of olive oil pro­duc­ers, Unaprol.

“This is why it is essen­tial to pro­mote the cul­ture of con­scious con­sump­tion of high-qual­ity extra virgin olive oil and develop appro­pri­ate mar­ket­ing strate­gies to enhance the sym­bolic prod­uct of the Mediterranean diet.”

The increase of Chinese tourists vis­it­ing Italy has helped intro­duce many of China’s bur­geon­ing middle class to olive oil. According to Eda Erbeyli of Daxue Consulting, a com­pany that ana­lyzes trends in the Chinese market, 1.4 mil­lion Chinese tourists vis­ited Italy last year. The European Union has also had its eye on the Chinese market for some time now and coop­er­a­tion between the two is on the rise.

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“The President of the European Commission Jean-Claude Junker and the Chinese Prime Minister Li Keqiang have decided that 2018 will be the EU-China tourism year, in order to improve tourism and eco­nomic coop­er­a­tion between China and the EU,” she said. “This rise of tourism in Italy helps tourists dis­cover a vari­ety of Italian prod­ucts, such as olive oil.”

Italian min­is­ters Maurizio Martina and Dario Franceschini have also announced 2018 will be the “year of Italian food in the world” with the inten­tion of pro­mot­ing Italian cul­ture and food abroad. China is one of the mar­kets on which they are pri­mar­ily focus­ing and this is part of what has spurred the more than 40-per­cent growth of Italian olive oil exports.

Various eco­nomic fac­tors have also led to the increase, accord­ing to Erbeyli. In 2016, China low­ered tar­iffs on Italian olive oil that were long con­sid­ered pro­hib­i­tive for entry to the market. The decreas­ing cost of import­ing also coin­cided with cuts to pro­duc­tion costs in Italy. All of the sudden, it made increas­ing sense for Chinese con­sumers and Italian exporters to do busi­ness together.

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“Italy is con­sid­ered as a ‘most-favored nation’ and its olive oil has a 10 per­cent tax rate [down from 30 per­cent prior to 2016].” Erbeyli said. “Then in January 2018, the pro­duc­tion costs [for Italian com­pa­nies] decreased by 2.9 per­cent com­pared to the same period one year ago. Lower pro­duc­tion costs improved the com­pet­i­tive­ness of exporters.”

In spite of increas­ing pro­duc­tion across the EU, olive oil exports from the trad­ing bloc to China are not pre­dicted to increase next year. Italy will be the only EU coun­try that expe­ri­ences an increase in exports to China.

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“Italian food exports to China rose dra­mat­i­cally in 2017: the sales of Italian prod­ucts to China increased by 18 per­cent,” Erbeyli said. “Among them, olive oil exports have the biggest growth of 41 per­cent.”

Spain still dom­i­nates the Chinese olive oil market, making up 80 per­cent of olive oil exports, but is fore­casted to see its market share decrease. Drought in the heart of Spain’s olive grow­ing regions has been blamed for recent pro­duc­tion dips in the world’s lead­ing olive oil regions.

“Spain still dom­i­nates, by far, the olive oil market,” Erbeyli said. “However, Chinese imports of Spanish olive oil remained rel­a­tively stable in 2016/17 and may decrease for the 2017/18 crop-year.”

Olive oil imports are expected to con­tinue to grow in China as well. However, com­pe­ti­tion for Italian oil increas­ingly will come from out­side of the EU.

“Tunisia is plan­ning to export 200,000 tons of olive oil for the cur­rent crop year: it is expected that their global expor­ta­tions will increase from 85,000 to 180,000 tons,” Erbeyli said. “There is a rising inter­est in the olive oil from Tunisia in China.”

China’s small domes­tic olive oil market is also grow­ing and local farm­ers expect they will be able to com­pete with the tra­di­tional olive oil exporters in the next two decades. Olive trees are already being planted in Sichuan province, which is located in south-cen­tral China and has a sim­i­lar cli­mate to that of the Mediterranean basin.
See more: The Man Behind China’s Unlikely Gold at NYIOOC
Robert Woo is an olive oil taster and mar­ket­ing exec­u­tive for the Olive Oil China Exhibition, an annual olive oil con­test held in Beijing. He said as the Chinese appetite for olive oil grows so does the desire for a dis­tinctly Chinese prod­uct.

“Regarding the grow­ing olive oil demand in China, the trend is going up,” he said. “We think the Chinese olive indus­try will affect the import of olive oil from the EU in 10 to 15 years because the area of olive plant­ing is still only 175,000 acres and many trees are very young.”

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