Inflation Cuts Premium Food Sales in U.S., but Not EVOO

A recent survey found six in 10 Americans are buying less premium or luxury food. However, importers and producers reported no drop in olive oil sales.
Sep. 30, 2022
Daniel Dawson

Recent News

The price of gro­ceries in the United States rose by 13.1 per­cent in the past 12 months, accord­ing to the lat­est data from the Bureau of Labor Statistics, the largest increase of its kind since 1979.

This tan­gi­ble price increase for all types of food prod­ucts, rang­ing from fruit and veg­eta­bles (9.3 per­cent) to dairy (14.9 per­cent), has altered gro­cery shop­ping habits in the U.S.

The olive oil cat­e­gory at retail is gain­ing unit share from other cook­ing oils and fats because there hasn’t been as much price infla­tion.- Jeffrey Campbell, exec­u­tive vice pres­i­dent of sales, California Olive Ranch

A report from Attest, a research firm, sur­veyed 2,000 nation­ally rep­re­sen­ta­tive work­ing-age Americans” and found aver­age weekly gro­cery spend­ing had increased by 14.5 per­cent com­pared to six months ago.

To cope with ris­ing prices, Attest found that six in 10 are buy­ing less pre­mium or lux­ury food. They also saw a 24.9 per­cent decline in meat-free or flex­i­tar­ian diets, with one in two con­sumers switch­ing to cheaper brands.

See Also:Rising Olive Oil Prices Do Not Slow Consumption in Europe

While Attest did not col­lect any data about olive oil con­sump­tion trends, its find­ings echo pat­terns iden­ti­fied in the United States Department of Agriculture’s most recent oilseeds world mar­ket report.

USDA data indi­cates that olive oil con­sump­tion in the U.S. fell from 395,000 tons the in the 2020/21 mar­ket­ing year (which runs from August to July) to 381,000 tons by the end of 2021/22.

Advertisement

However, not all grades of olive oil fared equally, with importers and U.S. pro­duc­ers report­ing no decline in sales of extra vir­gin olive oil.

“[It’s] tough times for sure,” Joseph R. Profaci, the exec­u­tive direc­tor of the North American Olive Oil Association (NAOOA), a trade group, told Olive Oil Times. But the sit­u­a­tion for olive oil is not so dire.”

The total U.S. retail pourable oil mar­ket (olive oil plus corn, canola, soy­bean, etc.) is down 4.5 per­cent in vol­ume, but the olive oil cat­e­gory itself is only down 1.7 per­cent in vol­ume,” he added, cit­ing 52-week data up to August 13.

Furthermore, there is no evi­dence that extra vir­gin olive oil sales have fallen at all. In fact, in the extra vir­gin cat­e­gory for pack­age sizes between 10 and 19 ounces, the spe­cialty sec­tor (priced at over $0.75 per ounce) has been steadily grow­ing over the last five years,” Profaci said.

For the cur­rent year to date, vol­ume in the spe­cialty sec­tor is up again rel­a­tive to the rest of that por­tion of the extra vir­gin olive oil cat­e­gory,” he added.

While there has been no spe­cific research as to why other pre­mium food sales have fallen while extra vir­gin olive oil has steadily increased its upward trend, Profaci believes the health ben­e­fits and unique fla­vor pro­file of extra vir­gin olive oil have pre­vented cus­tomers from sac­ri­fic­ing it for alter­na­tives.

There really is no accept­able sub­sti­tute for those who are pas­sion­ate about cook­ing with olive oil,” he said.

Nick Potter, Costco’s assis­tant buyer for olive oil and other prod­ucts, has observed a sim­i­lar trend at the world’s fifth largest retailer.

For Costco, we’ve been for­tu­nate. Olive Oil sales have been doing well,” he told Olive Oil Times. Our sales have increased in the past year.”

Despite some mod­est price hikes, Potter said Costco mem­bers had not seemed to mind. This may be due to sim­i­lar price increases for other edi­ble oils, such as canola or sun­flower.

Along with retail­ers and importers, pro­duc­ers in the U.S. have also expe­ri­enced a sim­i­lar trend of steady or increas­ing sales, despite infla­tion.

We have not expe­ri­enced a down­ward trend in our sales,” Jeffrey Campbell, the exec­u­tive vice pres­i­dent of sales at California Olive Ranch, the largest U.S. olive oil pro­ducer, told Olive Oil Times. In fact, we are see­ing an accel­er­a­tion in our units and dol­lars over the last quar­ter.”

While Campbell con­firmed that COR had raised its prices in the past 12 months to accom­mo­date for infla­tion,” he added that this had not impacted sales.

Conversely, he agreed with Potter that infla­tion in the canola and sun­flower oil sec­tors made olive oil a more appeal­ing option for some con­sumers.

The olive oil cat­e­gory at retail is gain­ing unit share from other cook­ing oils and fats because there has­n’t been as much price infla­tion,” he said.

Campbell also believes that increas­ing con­sumer aware­ness of olive oil’s health ben­e­fits has made shop­pers less likely to sub­sti­tute it for other cook­ing oils.

California Olive Ranch was not alone in observ­ing this trend among U.S. pro­duc­ers. Marisa Bloch, the gen­eral man­ager of Pasolivo, in cen­tral California, said the com­pany had increased prices a lit­tle bit due to infla­tion but has not seen a decrease in sales.

We are for­tu­nate to have a very loyal cus­tomer base,” Bloch told Olive Oil Times. She added that edu­cat­ing con­sumers about the health ben­e­fits of extra vir­gin olive oil is key to increas­ing con­sump­tion in the U.S.

Many of our cus­tomers have seen the effects of the health ben­e­fits from our oils, such as low­er­ing their cho­les­terol, so they con­tinue to pur­chase as this is one food they def­i­nitely don’t want to give up,” Bloch said.

While California is respon­si­ble for vir­tu­ally all U.S. olive oil pro­duc­tion, farm­ers and millers in other states con­firmed the same trend: con­sumers may be cut­ting back on other lux­ury food items, but extra vir­gin olive oil seems to be the excep­tion.

Pioneering Oregonian olive oil pro­ducer Paul Durant said that his com­pany had to raise prices slightly last year to off­set input cost pres­sure from infla­tion, but his cus­tomers con­tinue buy­ing olive oil.

We are for­tu­nate in that more than 65 per­cent of our sales are direct-to-con­sumer,” he told Olive Oil Times. We also self-dis­trib­ute our oils, so we are very close to our retail part­ners. We have made a major push for demos to their cus­tomer base, which has def­i­nitely trans­lated into strong sales on their behalf and ours.”

Instead, Durant said the results of the 2022 olive har­vest will have more of an impact on pric­ing than infla­tion.

The real key for us this year will be the yield,” he con­cluded. Last year was rough. If I can get my unit costs down on the yield side, it will give me a lot of relief from other pric­ing pres­sures.”



Advertisement

Related Articles

Feedback / Suggestions