SIAL: Olive oil industry looks beyond Europe for growth
Olive oil firms searching for new markets beyond Europe
The European olive oil industry is eyeing expansion in India, Asia and the Middle East to fuel growth, with the saturated European market offering little potential.
Olive oil makers have been out in full force at this year's SIAL trade show in Paris, with exhibitors travelling from the major European olive oil producing countries of Spain, Greece and Italy.
However, the industry is looking beyond the EU as it looks to grow sales. According to one trade representative from Spain, the European market is saturated and the strength of European retailers means that prices are "too cheap" despite the up-scale nature of the product.
Greece's H&H Hellenic Heritage offers three olive oil products - organic, PDO and conventional extra virgin - in conventional packaging that, MD Olga Labutina-Tzolou claimed, makes the brand "very different".
"Europe is a difficult market in general because it is so saturated with the brands already," Labutina-Tzolou told just-food yesterday (25 October). "Of course, we don't mind being in Europe - the UK, France and Germany - but I believe that the bigger point would be to be in Scandinavian and northern countries because the market there still has a little bit of potential."
H&H has established a joint venture in India, Deli Foods, and is expanding in the east of the country having secured listings with Pantaloon Retail's Food Bazaar supermarkets and with Spencers. The company is also "very interested" in Japan, China, Brazil, Latin America and Russia.
Likewise, Spanish firm Abril aims to expand its olive oil offering in China, Japan and the Middle East. While the group does have a presence in Europe, export manager Raymond Galje said that "there are so many brands if you go to a supermarket you have from five destinations the supermarkets own brand".
According to Galje, this level of competition makes the cost of competing in European markets challenging.
"To get in there you have to bring something different. A lot of marketing. A lot of study. It is doable but you have to really put the effort in."
European olive oil companies are also facing escalating raw material costs, after drought in Spain devastated this year's olive crop.
Karine Dos Santos, who also works in the export department of Abril, told just-food olive oil prices started to rise in July, when it became clear Spanish olive oil farmers were facing a poor harvest.
"It may surprise you to know that one litre of extra virgin olive oil was EUR2.02. Now it is EUR2.75," she told just-food.
According to Dos Santos, olive oil companies have been able to pass much of this higher cost along to retail customers, despite the highly competitive nature of the European olive oil industry. "You can not buy at one price and sell at less than this. The higher price is true for everyone," she explained.
Dos Santos said the industry "does not yet know" how long these elevated prices will persist. "Now the new season of olive crops have started, possibly in July the price will drop. We are not sure, but we hope."
Companies: Pantaloon Retail
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