Olive oil’s misfortune opens new opportunities
Three times over the past five years, bad weather has hit Spain and Italy; the two most important olive oil producing countries responsible for 70% of total production, halving olive oil production.
Increased yields in Greece and Tunisia were not enough to compensate for the shortages and this has inevitably pushed olive oil prices up, hitting demand in traditional consumer markets.
As 33% of global shoppers’ food purchases are influenced by product price and promotions, increases in prices might encourage value-conscious shoppers to either trade down for cheaper products offered by private labels - considered by 63% of consumers as a good alternative to famous brand names - or to look for substitute products encouraging experimental shoppers to switch to other oil types such as vegetables or sunflowers oils.
Olive oil manufacturers can either try to compete on price by mixing olive oil with cheaper oils to offer more competitive price points or aim to put the value back up of their products. Higher prices of olive oils can be justified by offering high quality products made with selected olives in a premium packaging design. Claims such as “pure”, “extra virgin” or “superior quality” olive oil will resonate well with quality seeking consumers.
Fuelled by an increase in health concerns among consumers and high level of experimentation within the category – globally, 66% of consumers often/sometimes try different types of oil, butter or margarine - oils perceived as having positive effect on health can expect growth. For instance, sunflower oil, globally recognised as having positive effects on health by 60% of shoppers, has increased its presence on the table of consumers.
The olive oil crisis will also unlock new opportunities in adjacent categories. Non-oil manufacturers can capitalise on the crisis by promoting alternatives to olive oil in dishes. Developing new sauces and dressings that pair well with food normally flavoured with oil – such as salads, vegetables and snacks – can enable producers to widen their traditional consumer base.
The misfortune of olive oil will open up doors to new opportunities and manufacturers are called to be responsive by developing new product formulations and reinventing their product positioning.