In Spain, Household Olive Oil Sales Fall While Overall Consumption Rises

Household olive oil pur­chases in Spain have fallen slightly in the first 10 months of 2022 com­pared to the same period last year, while olive oil con­sump­tion in the world’s largest pro­duc­ing coun­try slightly increased.

The seem­ingly con­tra­dic­tory find­ings demon­strate the extra­or­di­nary eco­nomic sit­u­a­tion in Western Europe caused by the quick suc­ces­sion of the Covid-19 pan­demic fol­lowed by the Russian inva­sion of Ukraine and its macro­eco­nomic con­se­quences.

According to the lat­est data from the Spanish Ministry of Agriculture, Fisheries and Food, olive oil sales to indi­vid­ual house­holds fell 11 per­cent in 12 month period end­ing in August 2022, com­pared to the same period last year.

While the ministry’s data only includes the first eight months of 2022, sep­a­rate research con­ducted in more than 300 super­mar­kets across Spain by Juan Vilar Strategic Consultants and Grupo Almacén, a super­mar­ket chain, also con­cluded that olive oil sales to house­holds have fallen.

The research found that mid­dle-income house­holds had the most sig­nif­i­cant decrease in olive oil con­sump­tion.

Investigating by grade, vir­gin olive oil sales to house­holds in the first 10 months of the year fell by 3.5 per­cent com­pared to the same period in 2021. Sales to house­holds of extra vir­gin olive oils fell by 4.5 per­cent.

Meanwhile, blends of vir­gin and non-vir­gin olive oils, known in Spain as intenso for mix­tures that are more vir­gin than non-vir­gin and suave for the oppo­site, fell by more than 10 per­cent and slightly less than 10 per­cent, respec­tively.

The only excep­tion came for sales of olive oil in con­tain­ers larger than five liters, which expe­ri­enced a 12-per­cent increase in demand as con­sumers who could afford to bought in bulk.

Despite the drop in sales by vol­ume, the min­istry found that sales by value increased by 21 per­cent in the same period as a result of the sig­nif­i­cant rise in prices. According to Spain’s National Institute of Statistics (INE), olive oil prices increased by 15.7 per­cent in the 12 months end­ing in October 2022.

Across the rest of the food indus­try in Spain, new data from INE found that con­sumers reduced their spend­ing on food by 2.8 per­cent, the largest decrease of its kind in nearly a decade.

Juan Vilar, a strate­gic con­sul­tant for the olive oil sec­tor, told Olive Oil Times that reduced house­hold demand for olive oil was likely caused by infla­tion.

According to European Commission data, Spain’s annual infla­tion rate is among the low­est in the E.U. at 6.6 per­cent and has fallen sig­nif­i­cantly since hit­ting dou­ble dig­its over the sum­mer.

In terms of inflation’s effect on olive oil prices, Vilar cited the increased costs of diesel, water for irri­ga­tion and fer­til­izer, each of which has risen by about 20 per­cent. He added that some phy­tosan­i­tary prod­ucts have dou­bled in price.

“Due to the price of inputs, the drop in sup­ply and the geopo­lit­i­cal sit­u­a­tion, we are expe­ri­enc­ing unprece­dented sit­u­a­tions in the field of costs, which is being trans­ferred to prices, and there­fore all of this is man­i­fest­ing a clear drop in demand,” he said.

“A grad­ual fall would return the sit­u­a­tion to an ini­tial point, but you have to take into account the scarcity effect; that is, due to the drought and geopo­lit­i­cal ten­sion, this would not clearly return to its equi­lib­rium point,” he added.

However, Antonio Martínez Sánchez, a spokesman for the Interprofessional Association of Spanish Olive Oil, told Olive Oil Times that olive oil con­sump­tion was ris­ing in Spain.

“The crop year closed in Spain with an esti­mated domes­tic con­sump­tion of 542,900 tons, 4.5 per­cent more than in the pre­vi­ous sea­son,” he said.

Data from the National Association of Industrial Packers and Refiners of Edible Oils (Anierac) backed up the inter­pro­fes­sional.

Primitive Fernández, the asso­ci­a­tion’s direc­tor, said its mem­bers sold 261 mil­lion liters of olive oil in the first 10 months of the year, 1.7 per­cent more than the same period in 2021.

He added that sales of extra vir­gin olive oil were 3.6 per­cent higher in the first 10 months of 2022 than in the same period last year, while vir­gin olive oil sales had increased by 5.4 per­cent.

Martínez sug­gested that this data indi­cates a rebound in domes­tic olive oil sales. Data from the min­istry also pointed to a slight revival, with olive oil pur­chases by house­holds ris­ing by 2.1 per­cent in August 2022 rel­a­tive to July 2022, which reversed a four-month trend of steady declines.

However, Vilar and his research point to a dif­fer­ent rea­son for the diver­gent trends. He found that the re-open­ing of Spain for tourism and the end of pan­demic-related lock­downs resulted in a surge of con­sump­tion from the hos­pi­tal­ity sec­tor.

The com­bi­na­tion of restau­rants, hotels and cater­ing accounted for about 22 per­cent of total olive oil con­sump­tion in Spain before the pan­demic. However, travel restric­tions and domes­tic lock­downs resulted in the share of olive oil con­sump­tion by restau­rants and hos­pi­tal­ity falling to just 6 per­cent in 2021.

Since then, Juan Vilar’s research showed that olive oil con­sump­tion in the hos­pi­tal­ity sec­tor has roared back, increas­ing by 430 per­cent in 2021 and show­ing signs of con­tin­u­ing to rise. The resur­gence of hos­pi­tal­ity has undoubt­edly buoyed over­all Spanish olive oil con­sump­tion.

While past per­for­mance is not indica­tive of future results, con­sumers across Europe are expected to con­tinue feel­ing the pinch of infla­tion through­out the win­ter.

However, whether olive oil sales to house­holds and over­all olive oil con­sump­tion con­tinue to diverge or fall back in line remains to be seen.

• El Economista
• Reuters