Inflation Cuts Premium Food Sales in U.S., but Not Extra Virgin Olive Oil

Summary

The price of gro­ceries in the United States has increased by 13.1 per­cent in the past year, lead­ing to changes in con­sumer shop­ping habits. While pre­mium and lux­ury food pur­chases have decreased, sales of extra vir­gin olive oil have remained steady or increased due to its health ben­e­fits and unique fla­vor pro­file, despite mod­est price hikes.

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.

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.

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.

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.”

• Attest
• U.S. Bureau of Labor Statistics
• USDA