Consumer insights in diverse olive oil markets were shared by trade experts at the Terra Creta international olive oil conference held in Crete last month.
From the United States to Brazil and Europe, a consistent message was that quality is crucial, even where consumers have yet to realize it.
Global overview: six key trends
Liz Tagami, president of Tagami International, spoke of six major trends, the first two in the United States
She said one is increasing outrage over olive oil fraud and demand for truth-in-labeling. The second is the U.S. industry’s reaction with new tests, such as DAGs and PPPs, and quality standards, as seen by the recent activity with the proposed U.S. marketing order.
Two big marketing trends are traceability and economy. Demand for the former is shown by a more than threefold increase this decade in the number of farmers’ markets – where consumers can look producers in the eye . On economy, Tagami said consumers are favoring larger package sizes. “We’re seeing a lot of 1 liter bottles on promotion, and bag-in-box olive oils, for example, can bring a 30 percent savings.”
With olive oil consumption in the U.S. set to more than double by 2020, “that’s going to be a lot more lucrative than going to some small countries and getting them interested at all” she said. But half that growth will be driven by those under thirty today.
These ‘millennials’ are the first of two super trends and they’re big brand adverse. “We’ve got three years to work out how to appeal to them.”
Then there’s the exploding olive oil markets of Asia. The market in China has grown 70 percent a year for the last decade, imports into India are accelerating, and Japan – where consumers are extremely brand loyal and more likely to try olive oil neat than on bread – is already a top global importer, Tagami said.
Praful Mehta, president of the U.S.-based Unity Brands Group, stressed there are thousands of olive oils sold in the U.S. so producers must have a point of differentiation.
“It’s not about having a world quality olive oil, it is about how you market and sell it.”
He told of forecasts that in three years the most influential product claims today – ‘all-natural’, ‘local’ and ‘organic’ – will be replaced by ‘ethical’, ‘sustainable’ and ‘eco-friendly.’
And, he said, CESR – Corporate Environmental and Social Responsibility – is a rapidly emerging market phenomenon.
In the U.S., taste is the main reason people buy, followed by recommendation from family or friends, impulse, then quality. Doing demos with the right product is probably the best bet a company can make, he said.
U.S.: opportunities in specialty market and cross merchandising
John Gibson, president of U.S.-based Minoan Imports, talked about challenges including the stigma linking fats to bad health; consumer confusion due to misleading terms such as ‘pure’, ‘extra’ ‘light’ and ‘classic’; and price distortion from adulterated oils.
The market is so complicated because fake products are competing at a fraction of the cost, he said. “It’s not enough to put a quality product on the shelf and expect it to sell on price alone.”
Producers should investigate the specialty market, such as gift sets for holidays, and cross merchandising, he said. Research shows people are more likely to buy products with a charity link, for instance.
Brazil: consumers clueing up on quality
Consumers in Brazil – world fifth in population and one of its top four olive oil markets – have generally been cost-conscious, according to Tropical Brasil Import & Export CEO Apostolos Kalfas.
But as they travel more and gain in sophistication, their awareness of olive oil’s health benefits and the importance of quality is growing, he said.
Olive oil imports into Brazil grew 20 percent to 65,000 tons in 2011 and are forecast to reach 100,000 tons by 2015. Portugal is the main supplier, followed by Spain, Italy and Greece.
Speaking in his native Greek, Kalfas stressed the scale of the country – “we have cities the size of Greece” – and its challenges, one of which is adulteration and has in the past seen soy, palm and even engine oil passed off as olive oil.
Belgium: need to teach consumers how to use olive oil
Belgium has an olive oil consumption rate of 1.7L per person and sales growth of 6.5 percent in value a year. About 6.5 million liters have been sold – the vast majority extra virgin – with a sales value of €33 million ($43m), for the year to date.
But Dirk Thoelen, buyer for SPAR/ALVO in Belgium, said a big effort was needed to show people how to use olive oil.
There should be more point of sale tasting and education, such as ‘cooking with olive oil’ classes in the community, and recommended uses printed on labels.
“Belgians are starting to learn how to cook with olive oil, the next step is to use it on salads.”
“But the consumer doesn’t know which olive oil to buy.” Thus they look for the cheapest price. One in five olive oils sold is on promotion, he said.
Private label (store brand) products account for nearly 71 percent of olive oil retail in Belgium, a market otherwise dominated by Carapelli.
Awareness of its health benefits is stoking demand but it’s a mistake to think many people know much about olive oil, Thoelen said.
“People talk about acidity and polyphenols and maybe in certain markets it’s familiar but I don’t know what they mean, let alone my friends.”
Germany: opportunities for slow food
Joachim Schalinski, editor of the retail newspaper Lebensmittel Zeitung, said Germans also chase the lowest price and tend to buy products on promotion.
There’s the high volume end of the market, where the lowest price is the aim, not premium quality, but the big opportunity for Greek olive oil producers is at the high end, where they have an unrivaled edge.
They should highlight that, unlike mass producers, they largely don’t use synthetic fertilizers and pesticides, and they offer both better quality and traditional Greek produce.
There’s interest in the “slow way” he said.
Finland: rapeseed dominates but olive oil’s making inroads
With a 75 percent share, rapeseed oil dominates the vegetable oils market in Finland , where there’s been a three-year promotional campaign with the tag “Rapeseed oil – too good to be true?”
Mirja Tyynysniemi, managing director of Findland’s Miraz Trading Oy, said rapeseed oil’s omega-6:3 ratio is emphasized in marketing and Finnish consumers assume it’s the better choice. She tells them olive oil has been around much longer and is tried and tested on humans.
Interest in olive oil is growing in Finland, however, as people travel more, and with the popularity of cooking shows and magazines, and of fine cooking on weekends. Produce that is of certified origin, organic or local is also valued, she said.