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.

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.

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.

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.
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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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