Europe

Soaring Generic Olive Oil Sales Worry Producers

Sep. 22, 2010
By Sarah Schwager

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By Sarah Schwager
Olive Oil Times Contributor | Reporting from Buenos Aires

The sale of generic and pri­vate label olive oil prod­ucts in Spain has risen dra­mat­i­cally prompt­ing a drop in invest­ment on high qual­ity prod­ucts, accord­ing to the country’s National Association of Edible Oil Manufacturers, Packers and Refiners (Anierac).

Anierac President Pedro Rubio has told food and agri­cul­ture infor­ma­tion agency Efeagro that generic edible oil brands are man­ag­ing a rate of sales that is “truly spec­tac­u­lar, stun­ning and unprece­dented” in Europe, with the generic brands now con­trol­ling up to 60 – 80% of the market share.  Rubio has con­nected the
rise of generic prod­ucts to the finan­cial crisis which saw prices dive as large
retail­ers endeav­ored to attract cus­tomers.

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Pedro Rubio

Early last year fears sur­faced that the battle between generic and man­u­fac­tur­ers’ brands of olive oil could harm the entire sector.  Reports were that in some cat­e­gories, such as refined olive oil, retail­ers’ own brands were achiev­ing a dis­tri­b­u­tion of 78% while the generic ver­sions of the highly-regarded extra virgin olive oil man­aged between 45% and 50% of market share.

At the time, Rubio stressed that generic brands should not exceed 50% of the market share and dia­logue between man­u­fac­tur­ers and dis­trib­u­tors was cru­cial for the sur­vival of the indus­try.

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Rubio says generic brands and man­u­fac­tur­ers’ brands need to co-exist on an equal level in terms of market share, which is not hap­pen­ing now.  He says any­thing above a 50% market share is “dra­matic” as this imbal­ance pre­vents pro­duc­ers as well as indus­tri­al­ists, traders and exporters from achiev­ing ade­quate profit mar­gins.

The increase in sales of generic brand olive oil is sur­pris­ing as olive oil has gen­er­ally been con­sid­ered as one of the few prod­ucts, like wine, that can’t be replaced by a cheaper ‘no name’ prod­uct and retain its qual­ity and flavor.

However, as economies have slumped across the globe in recent years, it seems con­sumers have been will­ing to skimp on any prod­uct that will save a few dol­lars, jus­ti­fi­ably so. This is evi­denced in the boom of cheaper oils such as sun­flower oil, corn oil, soy­bean oil and canola oil, par­tic­u­larly in coun­tries with strug­gling economies, such as Argentina.

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Spain has expe­ri­enced a 2.38% fall in olive oil sales in the domes­tic market this season, but Rubio says this drop has been bal­anced out by suc­cess in global exports, which has seen the Spanish olive oil market grow in leaps and bounds.

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He believes within the domes­tic market, how­ever, some cru­cial changes are needed and so has advo­cated for the pro­mo­tion of niche mar­kets and high value-added brands, to enhance EVOO and look for new inter­na­tional buyers.

Still, Rubio says in recent years there has been a shift from “intense” (lower grade) olive oils (-21.36% so far this season) to virgin (+16.18%) or extra virgin (+2.59%) olive oils.  He attrib­utes this trend to buyers valu­ing the higher qual­ity of virgin olive oil and the minus­cule dif­fer­ence in prices of the dif­fer­ent oil grades.

However, the Anierac President said he deeply regrets that there appears to be no hope of revival for olive pomace oil with a drop of 8.8% to 11.17 mil­lion liters this season after the “unjust” ban and recall of the prod­uct a few years ago that stripped the prod­uct from the shelves.

The Spanish Government banned olive pomace oil in July 2001 after find­ing high levels of poly­cyclic aro­matic hydro­car­bons – envi­ron­men­tal pol­lu­tants that include chem­i­cals that can poten­tially cause cancer.

Since then, pomace oil has received a string of bad pub­lic­ity, mostly related to the risk of car­cino­genic and muta­genic com­po­nents form­ing in the del­i­cate high heat extrac­tion process and because of its infe­rior flavor com­pared to other grades of olive oil.