Across Western Europe, consumers have paid, on average, 19.8 percent more for olive oil over the course of the first 11 months of 2015, according to a recent study of consumer goods sales by retail analyst IRI. The price jump has cost consumers an estimated 231 million euros.
These rising supermarket prices are likely the result of a rough couple of production years for the European olive oil industry. According to the International Olive Council, Europe’s 2014/2015 season saw low production across the board, dropping from 2,482.6 metric tons in 2013/2014 to 1,433.5 metric tons in 2014/2015.
The current 2015/2016 season hasn’t provided the necessary recovery, either. Between bacterial disease in Italy, which has affected some one million trees, and less-than-optimal weather in Spain, European production has just been average.
Take Spain, the world’s largest olive oil producer, which was expected to produce 1.2 million metric tons during the 2015/2016 season, according to an official government forecast. Having already completed the majority of the harvest (given warmer temperatures and lack of rain), Spanish production has only reached 867,700 million metric tons. Meanwhile, doubt lingers around the potential of the harvest to come.
Spain’s prices at origin have reflected this uncertainty. During 2015, they reached as high as over €4 a kilo in August, dropping down gradually throughout the course of the harvest (below €3) only to start climbing again in December and into the new year — and they haven’t stopped since. Currently, the farmgate price sits at roughly €3.50 euros per kilo.
IRI affirmed that retail price increases have been most notable in Spain, Italy and Greece — countries where olive oil is one of the most purchased food items given its dominance in local gastronomy.
Price increases have taken a toll on sales. According to IRI, the 2015 sales declines have been most pronounced in Greece and Spain, which saw drops of 18 percent and 16.2 percent, respectively, as compared to 2014.
Explains Anne Lefranc, IRI’s European Marketing Director, “Olive oil which is a staple product for Southern Europe countries seems to have become a ‘premium’ item at least for the heavy consumer countries.”
Her recommendation for retailers and manufacturers going forward: “[They] need to review their price, promotion, assortment strategy so that they are clear on what impact price rises will have on total category and basket sales.”