Olive oil is so expensive that we stop using it. The big question is whether we will do it again when the price drops.
In December 2022, I visited an olive oil factory at the height of the olive oil rush. At that time, a liter was 114% more expensive than two years ago, the campaign was going very poorly and the industry was beginning to realize that it was heading into a dead end. And yet, the head of the cooperative I interviewed told me that this is not the worst thing.
His worst fear was that, as he had felt for years, this could be the death knell for oil culture in Spain.
The end of oil culture? I was surprised, but he had the data. In the last decade, olive oil consumption has been falling year on year. This is a curious phenomenon that we do not understand well: it is unclear what socio-demographic factors influence it; But yes, crisis after crisis (and through profound cultural and gastronomic changes) large sections of the population fell out of the oil culture, and the vast majority did not return to it.
Culture in numbers. We see that this culture still exists in conditions of inelastic demand. In fact, we can see this in the behavior of the market these years. According to Circana’s consumption barometer, olive oil was the most expensive product in April this year. This is 62% more than last year and 100.4% more than two years ago.
However, demand did not fall in the same proportion. 19.8% less than last year; 44.5% less than two years ago. It’s true that we stop consuming it, but in a way, we Spaniards are quite a captive audience. Or rather, we were. This is a fear of the industry.
Other oils are rising. As prices skyrocketed, consumers switched to other products. As explained in Olimerka, the category “other types of oils” grew by only 9.6% in April, without moving further. So now that we know that (almost certainly) the next campaign will be much better than the last two, the big question being asked in the sector is whether all those people will come back.
The olive oil sector is experiencing difficult times. The problem during these years was never just a shortage of olives. It was also a boom in input costs (energy, irrigation, fertilizer, labor, administrative costs…) and an industrial reconversion that had been delayed for too many years.
Therefore, even good news can turn into drama. Therefore, any fear (and even more so if, as in this case, it is justified) becomes a threat to their existence.
Image | Lightning
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