The city of Jaen and the surrounding Olive trees, Jaen is known as the capital of Olive Oil producing about 25% of the world’s supply and half of Spain’s olive oil production.
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Spain’s Deoleo, the world’s largest olive oil company, says a period of unprecedented volatility has given way to more stable market conditions, citing a factor that could help lift US sales.
“The most complex market cycle between 2022 and 2024, which had a negative but temporary impact on the industry, is now behind us,” Deoleo CEO Cristóbal Valdés told CNBC in an email.
Good rainfall patterns in major producing countries, including Spain, have paved the way for a strong global yield in the coming harvest, Valdés said, adding that global supply is strong and balanced.
The update comes as analysts raise concerns about the prospect of global olive oil supplies fluctuating from one season to the next, especially as issues such as climate change, water scarcity and pest and disease pressures continue.
Deoleo, maker of domestic olive oil brands such as Bertolli and Carbonell, previously described the three-year window from 2022 to 2024 as one of the most challenging periods in the history of the sector.
A severe drought and scorching heat across southern Europe has destroyed large parts of the olive oil harvest, resulting in a bewildering price rally that has shocked industry veterans and consumers alike.
Olive oil prices have since moderated, prompting an increasing number of American consumers to adopt what has long been a staple of the healthy Mediterranean diet into their daily routines.
“This stability of supply provides greater predictability throughout the value chain and allows us to expect a stable price environment. This, in turn, drives the recovery of global domestic demand,” said Valdés.
Next to Italy and Greece, Spain is one of the world’s leading producers of precious metals and a global reference for prices.
Extra virgin olive oil (EVOO) prices in Spain stood at around 3.9 euros ($4.47) per kilogram, according to the European Commission’s latest weekly data, extending the decline since the start of the year.
It’s a long way from Jan. 2024, when EVOO wholesale prices rose to a record high of 9.3 euros per kilogram.
Squeeze the bottles
Notably, Deoleo’s Valdés said that while the firm’s sales growth has improved in all key markets, the number of households buying olive oil in the US has also grown consistently across all income brackets.
Perhaps surprisingly, the company credited the packaging redesign with helping boost US sales, underscoring the importance of consumer-focused innovation as Deoleo seeks to increase its market share in the country.
Bottles of olive oil on a conveyor on a production line at the Deoleo SA plant in Cordoba, Spain, Friday, Nov. 11, 2022.
Bloomberg | Bloomberg | Getty Images
“Regarding the emerging trends, I believe that the main market driver is the new system in line with modern cooking habits, especially for young consumers and those who discover the benefits of olive oil for the first time,” said Valdés.
“A clear manifestation of this is the rise of functional, additive packaging; in fact, compression formats are already driving 40% of the growth of the entire category in the country,” he added, referring to the company’s Bertolli “Dress and Drizz” bottle.
