` Adulteration Risk as Olive Oil Gains Ground in China - Olive Oil Times

Adulteration Risk as Olive Oil Gains Ground in China

May. 14, 2012
Julie Butler

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A new report on a huge poten­tial to sell olive oil to China also comes with a warn­ing — oppor­tunists there are already cash­ing in by sell­ing adul­ter­ated oil.

According to The Olive Oil Market in China 2012″ from the Spanish Institute of Foreign Trade (ICEX), this mal­prac­tice risks taint­ing the Chinese con­sumer per­cep­tion that olive oil is a high qual­ity prod­uct.”

The 58-page report even sug­gests that a good deal of the growth spurt in olive oil imports in China is thanks to such importers.

Nevertheless, among the advice for Spanish olive oil com­pa­nies is that China is their fastest grow­ing mar­ket and the one offer­ing the most poten­tial. The chal­lenge is to con­vert a grow­ing mid­dle class from occa­sional to daily olive oil users. They may not like its strong taste for now but they do like its health ben­e­fits and pres­tige, the report sug­gests.

Market snap­shot

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Overseen by the Spanish Embassy Office for Economic and Commercial Affairs in Shanghai, the report says that while olive oil accounts for only about 1 per­cent of oil and fat sales in China, it is the most dynamic seg­ment. It grew 21 per­cent in sales last year to reach 697,51 mil­lion RMB (about €84m or $110m), ahead of sun­flower oil, which grew 20.8 per­cent and has a 7 per­cent share.

In terms of vol­ume, China is now the world’s sev­enth biggest olive oil importer, though it is still small com­pared to the United States and Italy. Last year it took 32,886 tons of olive oil — up 55 per­cent on 2010 — and 92 per­cent of it was vir­gin. Spain is the main sup­plier, fol­lowed by Italy, and the oil comes in equal parts bulk and bot­tled.

Use of veg­etable oil has risen along with dis­pos­able incomes in the Asian giant. But seven other, cheaper veg­etable oils are con­sumed more than olive oil. Chief among them are veg­etable oil blends, rape­seed and soy oil.

The Chinese olive oil con­sumer

In blind tast­ings, Chinese con­sumers favor refined olive oil. They feel vir­gin olive oil has a strong fla­vor hard to adapt to their cui­sine and thus pre­fer blander oils. However, they see vir­gin olive oil as a higher qual­ity prod­uct and this is a key fac­tor when buy­ing, as are health con­cerns.

The main rea­son Chinese con­sumers buy olive oil is that it is good for the health,” the report says. This increas­ing inter­est in healthy eat­ing is a huge oppor­tu­nity for Spanish olive oil com­pa­nies to exploit.”

The main oppor­tu­ni­ties: beyond the big smoke

Olive oil, like other for­eign goods, has been enter­ing China via its major cities, such as Shanghai, Beijing and Guangzhou. These remain the main mar­ket and must not be neglected. However the real growth and poten­tial lies in the sec­ond and third tier cities and in the coun­try­side, in that order.”

Unlike in the big­ger cities, there is not yet such a high pres­ence of olive oil in super­mar­kets and that com­bined with ris­ing incomes make these zones enor­mously promis­ing for Spanish com­pa­nies.”

While big super­mar­kets account for 75 per­cent of olive oil sales, this chan­nel has less growth poten­tial than oth­ers, such as the gift mar­ket — very impor­tant, par­tic­u­larly for Chinese New Year staff gift bas­kets — and rapidly-increas­ing online sales.

The bat­tle to get into the Chinese super­mar­ket has already been fought and is prac­ti­cally over, with the vast major­ity of the key inter­na­tional brands already on store shelves. Most large chains now have sta­ble rela­tion­ships with their own small range of importers.”

Trade in cos­met­ics based on olive oil is thriv­ing. In some zones, olive oil is con­sid­ered a beauty and even med­i­c­i­nal prod­uct. China’s pop­u­lar busi­ness direc­tory, Alibaba, has more than 1200 list­ings related to olive oil- based cos­met­ics.

Threats

The main threats (for Spanish exporters) are the heavy invest­ments by Chinese com­pa­nies in build­ing their own brands, and dam­age to olive oil’s image by oppor­tunists with sales of adul­ter­ated or blended oils.”

Many Chinese com­pa­nies from out­side the food sec­tor have been attracted by olive oil’s enor­mous poten­tial. They also import bulk oil but in some cases take advan­tage of loop­holes in China’s olive oil and label reg­u­la­tions to sell the oil mixed with other veg­etable oils, reduc­ing their costs along with the qual­ity ” the report says, describ­ing a prac­tice that the world’s sec­ond biggest importer, Italy, is also some­times accused of.

It’s pos­si­ble that a good deal of the growth that has been seen in olive oil imports in China is due to such (Chinese) importers, given the dif­fer­ence between the fig­ures for imports and those for sales.”

This can lead to over­stock­ing, and if the oil is stored in poor con­di­tions, and there is insuf­fi­cient rota­tion, it could suf­fer con­sid­er­able loss of qual­ity, thereby fur­ther under­min­ing olive oil’s pres­tige in China.”

Labeling

Label laws changed recently but in gen­eral olive oil bot­tles must include details includ­ing pro­duc­tion and expiry dates, har­vest year, coun­try of ori­gin, instruc­tions for use, and trans fatty acids con­tent.

Great leap com­ing in Chinese olive plan­ta­tions

Though for cli­mac­tic rea­sons China is con­sid­ered unlikely to ever reach self-suf­fi­ciency in olive oil, its cur­rent five-year plan pro­vides for a five-fold expan­sion in plan­ta­tions for both table olives and olive oil.

About 160,000 new hectares are planned in the vicin­ity of Tibet, on the Himalayan slopes, up from a cur­rent plan­ta­tion area of no more than 40,000 hectares mainly in the provinces of Sichuan, Gansu and Hubei and largely used to pro­duce dry olives eaten as snacks.

Spanish com­pa­nies are advised this is a big oppor­tu­nity to sell their tech­nol­ogy and exper­tise and to get in before the Italians or oth­ers do.



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