Sales of olive oil have plunged in its Mediterranean heartland as Spaniards and Italians are forced to shun their most beloved culinary ingredient following steep price rises.
Ignacio Silva, chief executive of Deoleo, the world’s biggest olive oil seller by revenue, said cost-conscious consumers were changing their habits to cope with the impact of droughts that have wrecked harvests.
“We’ve clearly touched a price that is a problem for Spanish and Italian consumers,” he told the Financial Times, alluding to falling sales of Deoleo brands including Bertolli and Carbonell.
“We began seeing six to eight months ago that when you cross the €8 per litre barrier people consume less, or turn to seed oils.”
Droughts and heatwaves exacerbated by climate change have knocked olive oil output in Spain, the world’s largest producer, as well as other major producing countries such as Italy and Greece, creating a global shortfall.
For the past two seasons, only 2.4mn tonnes were produced globally, far short of the typical annual demand of 3.2mn tonnes, according to Juan Vilar, a Spain-based consultant to olive oil producers and retailers. “It is the first time in history that we had two bad seasons one after another,” he said.
Export bans introduced by some countries have created further pressure. In a bid to tame runaway inflation last August, Turkey imposed an export ban — now partially lifted — on bulk and barrelled olive oil. In October Syria and Morocco also restricted exports, further squeezing global supplies and driving up prices.
The shortage of “liquid gold” has driven up consumer prices. Earlier this year, the EU statistics office reported increases in all the countries in the bloc, with shoppers in Portugal, Greece and Spain facing year-on-year price rises of more than 60 per cent. Italians meanwhile saw a rise of 45 per cent.
In Spain, which produces more olive oil than anywhere else and cherishes its tang, consumers purchased 22 per cent less in the first 20 weeks of this year than in 2023, according to industry data. Volumes were down 30 per cent from 2022, the year prices began to surge.
Explaining how habits had changed, Silva picked up a bottle of the Carapelli brand at Deoleo’s Madrid headquarters and mimed how people used to lather a plate of salad in extra virgin olive oil for three or more seconds.
“But when the olive oil is expensive, you do it like this,” he said, acting out a drizzle that lasted barely a second. “You’re more careful . . . So a bottle that used to last you a week, now it lasts two weeks.”
Deoleo is finding more resilience in the US, a largely untapped market where volumes have dipped but not as sharply as in the Mediterranean. “New consumers are entering the category every day in the US,” Silva said. “That increase in penetration may be slowing down, but it’s still happening because there’s still a lot of opportunity.”
The US, which gets most of its olive oil from Spain and Italy, is importing less but for a higher cost. Last year the world’s second-biggest consumer imported almost 350,000 tonnes for $2.19bn, compared with 410,000 tonnes for $1.86bn in 2022, according to data from the International Trade Centre — suggesting that some shoppers are being deterred by price increases.
Deoleo is pitching olive oil’s health benefits in the US, citing studies that show it reduces the risk of heart disease and improves digestion. But Silva said it had to overcome some misconceptions, persuading Americans that it can be used for cooking and is meant to have a strong taste. “An olive oil that is tangy is good,” he said.
In Spain, where olive oil is a pillar of the agricultural economy in the south, anxious farmers are hoping that spring rains and less brutal summer temperatures will lead to an improved harvest from October to January.
Silva said: “One issue is price, which is bringing down volumes, but the other is availability . . . There’s just no olive oil. There’s no oil in the mills today.”
At its worst, Spain’s olive oil production was down by more than half. From a high of 1.49bn tonnes in 2021-22, drought and heatwaves slashed it to 666mn tonnes in 2022-23 before a modest recovery to 851mn tonnes in 2023-24, according to agriculture ministry data.
Italy, the second-largest producer, harvested less than 240,000 metric tonnes in 2023, a 25 per cent drop from the previous year. Greece, meanwhile, produced only 120,000 metric tonnes of olives this year, less than half the previous crop.
The weather was to blame, said Kyle Holland, an analyst at Expana: “Too hot, too dry, for too long.”
Deoleo, which does not own any olive groves of its own, has sought to fill the gap in supplies by importing olive oil from Argentina and Chile. It has not escaped wholesale price rises but Silva said it had maintained profit margins by progressively passing on 90 per cent of the increase to consumers. In 2023, it recorded a net profit of €30mn on sales of €838mn.
Spaniards accustomed to paying less than €5 for a litre of extra virgin oil only four years ago have been aghast to see prices climb as high as €14 for premium brands.
In Italy, a recent poll by the Piepoli Institute found that nearly a third of consumers had cut back on extra olive oil as prices have risen to €9 a bottle. Analysts also warn that younger Italians and Spaniards are cooking less at home, which could weigh on demand.
For “hot” use, meaning frying, Spaniards and Italians were turning to low-budget alternatives such as corn and sunflower oil, Silva said.
But the Deoleo chief executive struck an optimistic tone about the future in Spain and Italy, its most mature markets, which account for 41 per cent of sales.
He predicted that the changes in habits would prove to be temporary rather than structural once harvest output improved. “Prices are going to come down within a year,” he said.