`Deal Could Stop Use of Olive Oil as Loss Leader - Olive Oil Times

Deal Could Stop Use of Olive Oil as Loss Leader

Mar. 4, 2013
Julie Butler

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Minister of Agriculture, Food and Environment, Miguel Arias Cañete meets with exec­u­tives Cooperative Agro-food, the Spanish Federation of Industrial Manufacturers Olive Oil (Infaoliva), the National Association Industrial Packers and Edible Oil Refiners (ANIERAC) and the Spanish Association of Industry and Commerce Olive Oil Exporter (Asoliva) on February 21 in Madrid.

Use of olive oil as a loss leader for Spain’s super­mar­kets might be snuffed out under talks between the country’s gov­ern­ment, retail­ers and olive oil sec­tor.

On February 12, agree­ment was reached on pro­tect­ing Spanish milk from heavy dis­counts designed to lure in shop­pers but which were crip­pling the dairy indus­try.

Now it has been revealed there is hope of a sim­i­lar deal for the sim­i­larly strug­gling olive oil sec­tor.

Spain’s Agriculture Minister Miguel Arias Cañete dis­cussed the move with rep­re­sen­ta­tives of olive oil coop­er­a­tives, man­u­fac­tur­ers, bot­tlers and refin­ers at a meet­ing in Madrid on February 21.

According to EFEAgro, Fernando Burgaz, man­ag­ing direc­tor of the food indus­try unit of the Spanish Ministry of Agriculture, Food and the Environment (MAGRAMA), said after the meet­ing that the min­istry had been work­ing for some months with both the retail indus­try and Spain’s Interprofesional del Aceite de Oliva, which rep­re­sents Spain’s olive oil sec­tor, to estab­lish a new frame­work of coop­er­a­tion.”

Such an agree­ment would be designed to improve qual­ity con­trol, pro­mo­tional activ­i­ties and con­sumer infor­ma­tion,” he said.

We have some draft word­ings and we’re wait­ing for both par­ties to give their okay or feed­back in order to reach agree­ment on a final doc­u­ment,” Burgaz said.

Olive oil and milk have been among the main loss leader prod­ucts in Spain in recent years.

But as part of the Sustainable Dairy Agreement,” major milk pro­cess­ing and deliv­ery com­pa­nies have pledged respon­si­ble trade and avoid­ance of activ­i­ties that would under­mine milk’s value in con­sumers’ eyes.

Agricultural unions say they have yet to see much improve­ment in milk mar­ket­ing and pric­ing in super­mar­kets, how­ever.

Meanwhile, about six in ten Spaniards buy their olive oil in super­mar­ket chains and at least half the time choose a store brand.

The retail giants have the upper hand in bar­gain­ing because there is just a hand­ful of them but more than 1,000 olive oil pro­ducer enter­prises.

Ex-mill olive oil prices are now about €1 above this time last year — a rise which most attribute to drought dec­i­mat­ing pro­duc­tion this sea­son. But for sev­eral years they were at lev­els that farm­ers claimed were below pro­duc­tion costs, a prob­lem they blamed partly on the big retail­ers’ pric­ing clout and use of olive oil as a loss leader.


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