`With Rising Olive Oil Prices, Concerns of Falling Consumption - Olive Oil Times

With Rising Olive Oil Prices, Concerns of Falling Consumption

By Julie Butler
Oct. 8, 2012 14:35 UTC

The retail prices of pop­u­lar Spanish olive oil brands Carbonell and Koipe have shot up this month by as much as one euro ($1.30) in some cases, as con­sumers start to feel the effects of the recent hike in whole­sale prices.

Food giant Deoleo — which could soon become the world’s top olive oil pro­ducer if a rumored merger with Hojiblanca goes ahead — appears to be the first to pass on the rise and anx­ious eyes are now on con­sumers to see how they react.

Prices up by more than a third

The cost of a one liter bot­tle of Deoleo’s Carbonell brand refined olive oil is now nearly €4 in var­i­ous stores in Barcelona. At the El Corte Inglés super­mar­ket it sells for €3.99 — up more than a third on its €2.95 price at the end of last month — and, iron­i­cally, more than the higher qual­ity Carbonell vir­gin olive oil, still at €3.05.

Koipe refined olive oil — also from the Deoleo sta­ble — is up one euro to €3.85. A liter of pop­u­lar sun­flower oil Koipesol, mean­while, is less than €2.

Other brands to fol­low

The rises are not yet bit­ing in all stores, all brands or in all olive oil grades, but the flow-on is con­sid­ered inevitable and immi­nent.

In May, pro­ducer prices in Spain were at their low­est since 2009, with EVOO down to €1.77/kg. But with harsh weather expected to halve olive oil out­put this har­vest, they have risen strongly since July and today’s EVOO bulk price from Spain’s pric­ing infor­ma­tion sys­tem POOLred is the equiv­a­lent of nearly €2.60/kg.

Concerns Spanish olive oil con­sump­tion will fall

Many Spaniards asso­ciate Carbonell with the slo­gan en casa de toda la vida” (“we’ve always used it at home”). But as Spanish olive oil pro­ducer Rafael Muela told Olive Oil Times, the issue now is just how loyal con­sumers will be.

Muela, co-owner and senior mar­ket­ing vice-pres­i­dent of Córdoba-based Mueloliva, pre­dicts that all retail prices for olive oil will go up in Spain within a few weeks.

The big ques­tion is whether in a time of major finan­cial cri­sis and unem­ploy­ment Spanish con­sumers will be will­ing to pay about 35 per­cent more for a basic item in their shop­ping bas­ket.”

There was a sim­i­lar sit­u­a­tion here about seven years ago when the shelf price of extra vir­gin increased to almost €6/L. There was no finan­cial cri­sis then and domes­tic olive oil con­sump­tion fell ten per­cent.”

Exports also at risk

International olive oil dis­trib­u­tors are also con­cerned about these high prices because they think that at this level con­sump­tion in Asia and South America is going to decrease so I think we’ll have a prob­lem there in the future, maybe” Muela said.

Due to fac­tors such as ship­ping times and exist­ing ware­house stocks, he expects it will take about 3 – 4 months before retail prices also rise in the United States or United Kingdom.

Muela, who was him­self spend­ing today try­ing to decide on new prices, said his main worry now was how export mar­kets would react to rises.

If we penal­ize inter­na­tional sales it will be tough to increase them.”

Deoleo-Hojiblanca merger tipped

Meanwhile, Spanish news por­tal elEconomista.es reports that Hojiblanca, Spain’s biggest olive oil coop­er­a­tive, is in talks to buy 30 per­cent of Deoleo, which is said to be seek­ing new investors for its next period of growth.

If the deal goes through, and it seems like it will, Deoleo will grow and become the top oil pro­ducer in the world, sur­pass­ing titans in the ever-strong Italian oil indus­try,” it reports.

The pos­si­ble merger is seen by some in Spain’s olive oil sec­tor as likely to enhance Spain’s export push but oth­ers say the con­cen­tra­tion in the extra vir­gin seg­ment would be anti-com­pet­i­tive.


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