Why Olive Oil Prices Are Higher in Spain

A combination of retail purchase schedules, consumer habits and tax rates explain why extra virgin olive oil costs more in Spain than in France, Italy or Portugal.
By Máté Pálfi
Oct. 3, 2023 14:07 UTC

Olive oil prices in Spain have surged to unprece­dented lev­els since the mid­dle of 2020.

Despite being the world’s largest pro­ducer by a wide mar­gin – even after a his­tor­i­cally poor har­vest in the 2022/23 crop year – prices are far higher than in other Western European pro­duc­ing coun­tries.

A study pub­lished on September 8th by Spain’s Organization of Consumers and Users (OCU), a non-profit con­sumer price watch­dog, con­firmed that Spanish extra vir­gin olive oil prices at retail remain higher than in France, Italy or Portugal.

See Also:Olive Oil Thefts Rising in Mills and Supermarkets Across Spain

Based on a study of 20 online super­mar­ket chains, the OCU found the aver­age price for white-label extra vir­gin olive oil in Spain to be €8.72 per liter, while the price reached €8.21 in Italy, €7.52 in France and €6.86 in Portugal.

Furthermore, the white-label brands included in the study from Portugal were Spanish extra vir­gin olive oils, mak­ing the find­ing that they cost 27 per­cent less even more sur­pris­ing for the researchers.

The OCU researchers and other experts have pro­vided sev­eral rea­sons why olive oil prices remain higher in Spain than other Western European pro­duc­ers.

One of the main rea­sons is the enor­mous demand for olive oil, which is deeply rooted in Spanish cul­ture and gas­tron­omy.

White-label prod­uct

A white-label prod­uct is a generic or unbranded item man­u­fac­tured by one com­pany but sold to other com­pa­nies who can then rebrand it and sell it as their own. It allows busi­nesses to mar­ket and sell a prod­uct with­out hav­ing to invest in its devel­op­ment or man­u­fac­tur­ing.

In the pre­vi­ous five crop years (from 2017/18 to 2021/22, the last year for which a com­plete data set is avail­able), Spain con­sumed an aver­age of 530,000 tons per annum, mak­ing the coun­try of 48 mil­lion peo­ple the world’s largest con­sumer.

Unlike other fats, olive oil is an irre­place­able ingre­di­ent in Spanish cui­sine, con­tribut­ing to con­sis­tently high demand.

According to Juan Vilar, a strate­gic con­sul­tant for the olive oil sec­tor, con­sumers do not seek alter­na­tives even when prices rise, instead opt­ing to reduce their olive oil con­sump­tion.

This results in a steady stream of demand for olive oil from retail­ers even as sup­ply dimin­ishes, cre­at­ing an imbal­ance that does not exist in other coun­tries.

Another rea­son for the dif­fer­ence in olive oil prices between Spain and other Western European pro­duc­ers is the tim­ing of olive oil pur­chases by large retail­ers.

According to Otilia Romero de Condés, the chief exec­u­tive of the World Olive Oil Exhibition, many retail­ers out­side of Spain made large olive oil pur­chases at the begin­ning of the 2022/23 crop year, when prices were much lower.

In con­trast, retail­ers in Spain make smaller pur­chases through­out the year directly from mills – instead of bro­kers – mean­ing that retail­ers have paid more for the olive oil cur­rently sold in stores.

Spain is a very fast-rotat­ing mar­ket for this prod­uct,” Rafael Pico Lapuente, the exec­u­tive direc­tor of the Spanish Association of Olive Oil Exporters, Industry and Commerce (Asoliva), told El Periódico.

That means that a bot­tle of oil will not be on the shelves for more than 15 days,” he added. In other coun­tries, olive oil is not con­sumed as much. A bot­tle, a brick or a can of this prod­uct can spend more than a year on the shelf.”

However, one of the most sig­nif­i­cant rea­sons for higher prices in Spain, cited by the OCU, is related to tax­a­tion.

In Spain, extra vir­gin olive oil is sub­ject to a 5 per­cent Value Added Tax (VAT), sim­i­lar to sales tax in the United States. Meanwhile, Portugal has elim­i­nated VAT on olive oil, par­tially explain­ing the wide price gulf. In Italy, the VAT on extra vir­gin olive oil is 4 per­cent.

More gen­er­ally, experts expect global olive oil prices to con­tinue to rise as the Mediterranean basin’s unbreak­ing drought has cast a shadow over the 2023/24 crop year, which offi­cially began on October 1st.

Officials in Spain expect pro­duc­tion to remain below 1 mil­lion tons for an unprece­dented sec­ond-straight har­vest.

Depending on how har­vests evolve in other major pro­duc­ing coun­tries, the world may again wind up where demand out­paces sup­ply, mean­ing prices could con­tinue to rise through­out 2024.


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