The Indian Olive Oil Market Shows Potential, but Comes at a Price

Spain is well-positioned to capitalize on the growing market for olive oil in India. High tariffs on imported olive oils, however, present a major hurdle for Spanish producers.

A tasting event for Spanish olive oils. Photo courtesy of the Interprofessional Olive Oil Association
Apr. 2, 2019
By Daniel Dawson
A tasting event for Spanish olive oils. Photo courtesy of the Interprofessional Olive Oil Association

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A new study from Spain’s Ministry of Industry, Commerce and Tourism (ICEX) has con­cluded there is a lot of poten­tial for olive oil in the Indian gourmet food market.

We are [also] con­vinced that this is a mar­ket with enor­mous poten­tial,” Teresa Pérez, direc­tor of Spain’s Interprofessional Olive Oil Association, told Olive Oil Times. You just have to review the evo­lu­tion of sales to check that the con­sump­tion of olive oils is evolv­ing very pos­i­tively in India.”

The cur­rent prob­lem (in India) is that the gov­ern­ment has raised tar­iffs by 40 per­cent and, log­i­cally, con­sump­tion has suf­fered a lot.- Rafael Pico Lapuente, direc­tor of Asoliva

The asso­ci­a­tion was not directly involved with the ICEX study, but works to pro­mote Spanish olive oil con­sump­tion around the world. ICEX did not respond to a request for com­ment on this story.

Olive oil cur­rently rep­re­sents 0.14 per­cent of the edi­ble oils sold in India and is mainly pur­chased in urban areas of the world’s sec­ond most pop­u­lous coun­try. However, sta­tis­tics from the country’s Ministry of Commerce show that olive oil imports have nearly quadru­pled in the past decade, grow­ing from 2,700 tons in 2009 to 9,300 tons in 2018.

We assume that this is just the begin­ning,” Pérez said.

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According to the ICEX report, a num­ber of fac­tors have come together to make demand for the prod­uct stronger. New healthy eat­ing trends among Indians have led to an increased recog­ni­tion of olive oil as a healthy alter­na­tive to other pop­u­lar cook­ing and veg­etable oils.

The rise of the country’s mid­dle class, espe­cially in urban areas, has also helped to fuel demand for gourmet foods and cook­ing prod­ucts. According to the report, 70 per­cent of India’s demand for olive oil is con­cen­trated around Delhi and Mumbai.

We are talk­ing about a huge coun­try that cur­rently has a mid­dle class made up of some 300 mil­lion peo­ple,” Pérez said. Consumers who, when they reach a cer­tain level of life, give increas­ing impor­tance to a healthy meal.”

She also attrib­uted India’s ris­ing demand for olive oil to travel, which has intro­duced many mid­dle-class Indian con­sumers to Mediterranean cui­sine and olive oil. Increasing lev­els of tourism was also cited by mar­ket ana­lysts in neigh­bor­ing China as one of the rea­sons the appetite for olive oil has grown among its mid­dle class.

Pérez and Rafael Pico Lapuente, the direc­tor of the Spanish Association of the Olive Oil Exporting Industry and Commerce (Asoliva), both agreed that Spain is espe­cially well poised to sup­ply this grow­ing market.

Three of every four liters sold in India are olive oils from Spain,” Pérez said. In total, last year we sold more than 7,000 tons in that immense coun­try. It is clear that we have a very solid posi­tion in that market.”

The data over­whelm­ingly sup­ports Pérez’s assess­ment. According to the Indian Ministry of Commerce, 76 per­cent of Indian olive oil imports came from Spain in 2018.

Spain also has more capac­ity to export to India’s emerg­ing mar­ket than other large olive oil pro­duc­ing coun­tries, accord­ing to Pico Lapuente. This is largely due to Spain’s increas­ing pro­duc­tion over pre­vi­ous cam­paigns cou­pled with poor har­vests in other large olive oil pro­duc­ing coun­tries.

Spain is the undis­puted leader in all mar­kets,” Pico Lapuente told Olive Oil Times. In the case of India, we are also leaders.”

However, ICEX warned that high prices will remain a hur­dle for olive oil pro­duc­ers export­ing to the region. The report found that the vast major­ity of Indians’ spend­ing habits are dic­tated by price, leav­ing olive oil well behind other cheaper cook­ing oils.

Forty per­cent of Indians sur­veyed in the report said that they bought olive oil in 250 mil­li­liter bot­tles, allow­ing them to try out the prod­uct with­out mak­ing a larger finan­cial com­mit­ment. Currently, 250 mil­li­liter bot­tles of olive oil range in price from 230 Indian rupees ($3.33) to 600 rupees ($8.69).

Newly imposed and exist­ing tar­iffs on olive oil imports to the coun­try are mostly respon­si­ble for these high prices and have led to a decrease in the mon­e­tary value of vir­gin olive oil imports into India in recent years. However, the tar­iffs have not impacted the vol­umes of imported olive oil.

Pico Lapuente said these tar­iffs will be the largest hur­dle for olive oil exporters try­ing to enter the market.

India for us was and is an objec­tive coun­try to pro­mote olive oils and increase their con­sump­tion,” Pico Lapuente said. The cur­rent prob­lem is that the gov­ern­ment of India has raised tar­iffs by 40 per­cent and, log­i­cally, con­sump­tion has suf­fered a lot.”

The last climb is inex­plic­a­ble, con­sid­er­ing that India has no pro­duc­tion,” he added.

This is where brand­ing olive oil as a gourmet food prod­uct comes in, accord­ing to Pérez. The Interprofessional Olive Oil Association is already work­ing with other asso­ci­a­tions, includ­ing Asoliva and the Spanish Young Farmers Association (ASAJA), to tar­get adver­tise­ments at spe­cific demographics.

The Interprofessional Olive Oil Association com­bines dig­i­tal, print, tele­vi­sion and film adver­tis­ing, along with other pro­mo­tions to reach as many poten­tial buy­ers as pos­si­ble. This has included plac­ing 20,000 adver­tis­ing spots on Indian tele­vi­sion as well as plac­ing ads in eight large-scale print publications.

With all of this expo­sure to Spanish olive oil, Pérez is con­fi­dent that con­sump­tion can con­tinue to grow in spite of the tariffs.

In view of the mag­ni­tude of the cam­paign, it is easy to under­stand the favor­able evo­lu­tion of that mar­ket,” Pérez said.

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