Spanish Olive Oil Sector Works to Develop Exports to China

Summary

Spanish olive oil pro­duc­ers are focus­ing on expand­ing into the Chinese mar­ket due to increas­ing demand dri­ven by a grow­ing mid­dle class inter­ested in healthy eat­ing. While there are chal­lenges such as the per­cep­tion of olive oil as a spe­cialty gift rather than a kitchen sta­ple, Spanish pro­duc­ers have a pric­ing advan­tage over Chinese pro­duc­ers and are cap­i­tal­iz­ing on the grow­ing con­sumer inter­est in olive oil in China.

Olive oil pro­duc­ers in Spain are work­ing to develop new inter­na­tional mar­kets, espe­cially in China, as his­tor­i­cally high prices have changed con­sumer habits in the European Union.

“China will be a strate­gic mar­ket for Spanish prod­ucts,” said Jaime Lillo, the exec­u­tive direc­tor of the International Olive Council (IOC).

He added that China’s grow­ing ​“demand for olive oil has a lot to do with the rise in salaries among the Chinese pop­u­la­tion and the increas­ing num­ber of peo­ple who are inter­ested in eat­ing healthy and who can afford olive oil that is more expen­sive than alter­na­tive oils.”

According to a report from Knight Frank, a real estate con­sul­tancy, China’s ultra-wealthy pop­u­la­tion is expected to increase by 47 per­cent by 2028.

“This growth reflects China’s bur­geon­ing mid­dle class, advance­ments in tech­nol­ogy and the expan­sion of indus­tries that cre­ate sig­nif­i­cant new wealth,” the report noted.

Spanish pro­duc­ers and exporters have long iden­ti­fied China’s ris­ing mid­dle class as a high-poten­tial mar­ket.

According to IOC data, Chinese olive oil con­sump­tion has increased from 12,000 tons in the 2008/09 crop year to 42,500 tons in 2022/23. Over the same period, Spanish trade data show that vir­gin and extra vir­gin olive oil exports to China rose from 3,638 tons to 27,172 tons

Daxue Consulting, spe­cial­iz­ing in con­sumer trends in China, attrib­uted increas­ing con­sump­tion to more of the Chinese mid­dle class trav­el­ing to the Mediterranean and devel­op­ing a taste for olive oil.

Indeed, the Interprofessional Association of Spanish Olive Oil, a trade group, has sought to cap­i­tal­ize on the grow­ing appetite, recently host­ing two events in Beijing.

The first was geared at the media and influ­encers and included tast­ing var­i­ous Spanish extra vir­gin olive oils, a cook­ing demon­stra­tion and a talk about olive oil’s health ben­e­fits.

The inter­pro­fes­sional also held a tast­ing event for dis­trib­u­tors and importers in Beijing, intend­ing to estab­lish a close rela­tion­ship with the coun­try’s retail pro­mot­ers.

However, Antonio Carrasco, the gen­eral man­ager of Goya en España, warned that exporters must under­stand the Chinese mar­ket’s idio­syn­crasies to take full advan­tage.

In a 2023 inter­view, Carrasco said that Chinese con­sumers still see olive oil as a spe­cialty food and novel gift rather than a kitchen sta­ple.

He fur­ther noted that 80 per­cent of olive oil sales in the world’s sec­ond-largest econ­omy are for gifts in Goya’s expe­ri­ence. Companies must have well-devel­oped sup­ply chains in China to cap­i­tal­ize on these dynam­ics.

“You have to have a dis­tri­b­u­tion to reach that gift mar­ket,” Carrasco said. ​“But, growth is very dif­fi­cult and very slow from the point of view of con­sump­tion and health. It is a growth in gifts at a cer­tain time, such as the Chinese New Year.”

Meanwhile, Olive Times founder Jane Gong, an award-win­ning olive oil pro­ducer in Gansu, said that although the olive oil mar­ket is grow­ing, Chinese cus­tomers do not tend to dis­tin­guish between extra vir­gin olive oil and the other grades.

“In the E.U., peo­ple make the dis­tinc­tion between extra vir­gin olive oil, vir­gin olive oil and non-vir­gin olive oil, but in China, it’s all olive oil,” she said.

Gong added that a fur­ther chal­lenge fac­ing olive oil sell­ers in the Chinese mar­ket is the lim­ited use of olive oil in food prepa­ra­tion. While many con­sumers cook with olive oil, she said using it in sal­ads, ice cream and mari­nades is still rel­a­tively rare.

Despite the company’s Whispering Flowers brand, an Ezhi‑8 mono­va­ri­etal, earn­ing a Silver Award for the third con­sec­u­tive year at the 2024 NYIOOC World Olive Oil Competition, Gong believes that imports are likely to remain more com­pet­i­tive due to the high pro­duc­tion costs in China. ​“The economies of scale are smaller, so prices are higher,” she said.

As a result, Spanish and other E.U. olive oil pro­duc­ers have a sig­nif­i­cant pric­ing advan­tage when enter­ing the Chinese mar­ket.

“In China, more than 90 per­cent of imports come from the E.U.,” Gong said. ​“There has been a 10 to 15 per­cent increase from last year.”

Citing data from Taobao, an online shop­ping plat­form, she added that busi­ness-to-busi­ness sales have grown sig­nif­i­cantly along with busi­ness-to-con­sumer sales.

“Furthermore, these con­sumers look for well-known and exclu­sive brands as they sug­gest cred­i­bil­ity and high qual­ity,” Gong said. ​“However, a sub­stan­tial lack of knowl­edge about olive prod­ucts still exists.”

“The Chinese also pre­fer for­eign olive oil, which now costs more than last year,” she added. ​“This deters some cus­tomers. This year, more trees have been planted in Gansu, but the mar­ket is not inter­ested because they want E.U. olive oil.”

Gong pointed out that younger con­sumers in large cities are one of the main seg­ments of the pop­u­la­tion dri­ving olive oil con­sump­tion in China. ​“In smaller cities, cus­tomers pre­fer peanut, soy­bean, and veg­etable oil,” she added.

According to the IOC, the main regions of demand in China are the Beijing, Shanghai, and Guangzhou metro areas, home to nearly 100 mil­lion peo­ple.

However, ris­ing youth unem­ploy­ment, up by 15 per­cent com­pared to last year, will likely present short-term chal­lenges to Spanish exporters, as will chang­ing eat­ing habits.

“Olive oil imports may encounter dif­fi­cul­ties as more and more peo­ple are buy­ing take­away and not cook­ing any­more,” Gong said. ​“This is not because take­away is cheaper, but because it is more con­ve­nient.”