Olive Oil Promotions Boost Retailers' Sales, but With a Hidden Cost

Summary

Italian super­mar­kets are pro­mot­ing extra vir­gin olive oil for less than €3 per liter, a price that is dam­ag­ing the indus­try and pro­duc­tion chain. Farmers’ asso­ci­a­tions are warn­ing against the col­lapse of olive oil prices and are call­ing for new laws to pre­vent retail­ers from using olive oil as a loss-leader in pro­mo­tions.

Less than €3 ($3.25) per liter.

That is the price for extra vir­gin olive oil pro­moted by super­mar­ket chains in their coupons and pro­mo­tional mag­a­zines in Italy, a price so tempt­ing that mar­ket­ing experts con­sider it a strong draw for con­sumers — a way to get them in the door.

That price is so low, though, that the pro­duc­tion chain — from olive grow­ers to the mills — can­not afford it.

Farmers’ asso­ci­a­tions all over Italy are again warn­ing that the col­lapse of olive oil prices is tak­ing a heavy toll on the indus­try and that the con­tin­ued manip­u­la­tion by mass mer­chants will not help any­one.

A peti­tion on Change.org aimed both at con­sumers and insti­tu­tions is grow­ing momen­tum. It asks retail­ers not to use olive oil as a loss-leader and calls for new laws against pric­ing manip­u­la­tion for mar­ket­ing pur­poses.

Olive oil prices are at a record low in Italy prompt­ing the European Union to pay pro­duc­ers to with­hold prod­uct from the mar­ket until prices rebound.

Meanwhile, low-price pro­mo­tions by food retail­ers con­tinue to make the rounds, adding more fuel to the fire.

The biggest food chains see their over­all sales boosted by con­sumers’ grow­ing inter­est in low-priced olive oil offers. Critics of the prac­tice believe those offers con­ceal the real costs of high-qual­ity olive oil pro­duc­tion and erode the per­ceived value in con­sumers’ minds.

“It is absolutely nec­es­sary to coun­ter­act the spe­cial low-cost offers by the food retail­ers that not only cause eco­nomic dam­age to the indus­try, but those offers also make con­sumers believe that extra vir­gin olive oil comes cheap,” said Alberto Statti, pres­i­dent of the farmer asso­ci­a­tion Confagricoltura Calabria.

“A new law is needed,” Maria Lisa Clodoveo told Olive Oil Times. A pro­fes­sor of food sci­ences at the University of Bari, Clodoveo launched the ​“No EVOO Low Cost” peti­tion on Change.org which is attract­ing grow­ing inter­est from farm­ers and con­sumers alike.

“If you use extra vir­gin olive oil to allure con­sumers and make them swarm to your food venues you are not doing a good ser­vice to them or to any­one, and you risk dam­ag­ing the Italian agri­cul­tural econ­omy,” Clodoveo said.

Food retail­ers, the peti­tion says, should be pre­vented by law from using low-priced extra vir­gin olive oil in their coupons and pro­mo­tions.

“Selling off extra vir­gin olive oil,” Clodoveo wrote in the peti­tion, ​“means to debase thou­sands of years of his­tory, cul­ture, tra­di­tion and gas­tron­omy which have shaped our land and iden­tity. It means to con­demn olive groves to extinc­tion, because a cul­ture that does not pro­vide a fair income to the guardians of bio­di­ver­sity, the olive grow­ers, is a cul­ture with no social, eco­nomic or envi­ron­men­tal sus­tain­abil­ity.”

Discounts and rebates, so pop­u­lar among con­sumers, specif­i­cally tar­get extra vir­gin olive oil because of the impor­tant place it holds in the shop­ping cart of the Italian fam­ily.

Looking for the low­est price instead of a fair one for the Mediterranean diet sta­ple, Clodoveo warns, will even­tu­ally bring more oils to the mar­ket whose qual­ity will not even be worth their price. In other words, we are in a race to the bot­tom.

• Confagricoltura Calabria


• Change.org