European Producers Face Limited Alternatives to U.S. Market

Summary

European olive oil exporters are explor­ing alter­na­tive mar­kets due to poten­tial increased tar­iffs in the U.S., which could put them at a dis­ad­van­tage com­pared to Turkey and Tunisia. Despite efforts to expand into Asia, includ­ing India and China, experts believe that the slow adop­tion of olive oil in Asian cuisines will not be enough to off­set lost U.S. sales, as cul­tural food pref­er­ences remain a sig­nif­i­cant bar­rier to increased con­sump­tion.

European olive oil exporters are explor­ing alter­na­tive mar­kets as offi­cials in the European Union and the United States pre­pare for trade nego­ti­a­tions.

Currently, most goods imported from the European Union, includ­ing table olives and olive oil, are sub­ject to a ten per­cent tar­iff. 

The levy could increase to 20 per­cent on July 8^th if the two sides do not agree to an exten­sion or reach a deal. European olive oil exporters said this would put them at a com­pet­i­tive dis­ad­van­tage com­pared to Turkey and Tunisia. Both coun­tries are expected to con­tinue to have a ten per­cent tar­iff on their exports to the U.S.

According to U.S. Department of Agriculture data, the United States imported $1.5 bil­lion of olive oil from Italy, Spain and Greece in 2023, the last year for which a com­plete data set exists. 

Overall, the U.S. imported $2.2 bil­lion of olive oil that year, includ­ing $428 mil­lion from Turkey and Tunisia.

While European pro­duc­ers have been mak­ing inroads in India, China and other regions of Asia for years, Christopher Clague, an inde­pen­dent trade advi­sor based in Malaysia and asso­ciate fel­low at the International Institute for Strategic Studies, believes short-term oppor­tu­ni­ties are lim­ited.

“Whatever European pro­duc­ers are los­ing because of the U.S. tar­iffs, they’re not going to make up with Asia,” Clague told Olive Oil Times. ​“Despite mar­ket­ing efforts to push olive oil into new mar­kets, the drop in U.S. demand due to tar­iffs is too large to off­set with incre­men­tal gains in Asia.” 

“While Asia presents some poten­tial, olive oil isn’t widely con­sumed here, mak­ing it chal­leng­ing to estab­lish sig­nif­i­cant demand,” he added.

According to World Bank data, India, China, Japan and South Korea com­bined to import $477 mil­lion of olive oil in 2023, less than one-third of the value of Spanish, Italian and Greek exports to the U.S. that year.

Clague high­lighted how Asian cuisines favor other edi­ble fats, includ­ing peanut or soy­bean oil in China and ghee in India. Even Japan, which has a grow­ing olive oil cul­ture, does not have olive oil inte­grated into every­day cook­ing like Western coun­tries.

“Japan’s love for Italian food makes it a stronger mar­ket than most, but even here, its aging pop­u­la­tion increas­ingly prefers tra­di­tional Japanese meals over Western influ­ences,” Clague said. 

“In South Korea, pre­mium olive oils are some­times seen as lux­ury goods, but not as widely adopted sta­ples,” he added. ​“The frag­mented demand across Asia means that olive oil exports may rise mod­estly but will not com­pen­sate for the scale of lost U.S. sales.”

In his adopted home of Malaysia, which imported $8 mil­lion of olive oil in 2023, Clague said con­sump­tion is mainly con­cen­trated in the European immi­grant com­mu­nity.

“If you’re a European olive oil pro­ducer look­ing at Malaysia, I’d sus­pect it’s a los­ing game,” he said. ​“There’s noth­ing here. Locals don’t use olive oil. They use palm oil, sun­flower oil and canola oil.” 

“Malaysia reflects broader trends in Asia regard­ing olive oil con­sump­tion,” he added. ​“The country’s three major eth­nic groups — Malay, Chinese and Indian — have dis­tinct culi­nary tra­di­tions that do not com­monly include olive oil.” 

While Clague said eth­nic Malays are pre­dom­i­nantly Muslim and may incor­po­rate some Middle Eastern cui­sine, includ­ing olive oil, into their diets, this is usu­ally in lim­ited quan­ti­ties.

“While olive oil is sold in super­mar­kets, it is pri­mar­ily for expa­tri­ates rather than local con­sumers,” he said.

Taking a broader per­spec­tive, Clague said the con­di­tions that have caused olive oil con­sump­tion to rise mete­or­i­cally in the U.S. over the past three decades have not taken shape in Asia.

“The U.S. mar­ket is highly estab­lished, and con­sumers there under­stand the health ben­e­fits and culi­nary uses of dif­fer­ent vari­eties of olive oil,” he said. ​“In con­trast, Asia’s adop­tion of olive oil remains slow, lack­ing the same embed­ded cul­tural pref­er­ence for Mediterranean fla­vors.”

“There’s no nat­ural out­let for the excess capac­ity, and [European] pro­duc­ers may indeed scram­ble to find alter­na­tive buy­ers,” Clague added. ​“They could maybe turn to Africa, but con­sumers there largely pre­fer palm and veg­etable oils, while if they were to go for Australia, its small pop­u­la­tion makes it inca­pable of absorb­ing large vol­umes of exports.”

He sug­gested that lower European olive oil export prices may stim­u­late some demand in alter­na­tive mar­kets.

“However, price cuts alone may not be enough to drive sig­nif­i­cant increases in Asian con­sump­tion, as cul­tural food pref­er­ences remain the pri­mary bar­rier,” Clague con­cluded. ​“Even in Japan, where Mediterranean cui­sine is rel­a­tively pop­u­lar, pre­mium olive oil brands tend to com­pete in the lux­ury seg­ment rather than aim­ing for mass-mar­ket sales.”

• Financial Times