Olive Oil: New Shelf Prices

Olive Oil: New Shelf Prices

A shelf price of up to 17 euros can lead to a producer price of 8.5 euros for olive oil as the retail price in the Greek market is – in general – twice the producer price if the cost of standardization, transport, margins in wholesale and retail as well as VAT are taken into account.

Today, although the industry is sourcing olive oil at a price of 8.5 – 8.7 euros/litre, up from 5 euros last January, the increased producer price has not yet been matched by the shelf price as both the industry and retailers have squeezed their margins in order to keep prices affordable. “We are even selling at a loss to maintain our shelf position.”

However, by the Christmas period it is estimated that the increased producer price of €8.5 – €8.7 will have made itself felt on the shelf, but it remains to be seen to what extent as retailers and industry are willing to move with as little upward pressure as possible.

From then on, the basic scenario of the market estimates is that there will be a deceleration in prices as a result of reduced demand, especially in countries without an olive oil culture, such as in Northern Europe. Greek interest is focused on the trend of olive oil consumption in Germany as Greek olive oil currently holds 14% of the German market.

The “perfect storm”: declining production and historically low stocks

Olive oil today, as mentioned yesterday at a joint event of olive oil operators, is facing the perfect storm as opening stocks (of the new season) are at historically low levels, while international production in the main producing countries in the new 2023/24 season is estimated to be down by 820. 000 tonnes compared to 2021/22 (2,390,000 tonnes from 3,210,000 tonnes) and by 170,000 tonnes compared to 2022/23 (2,560,000 tonnes).

In Spain in particular, which is the world’s largest producer, production is estimated at 700,000 tonnes, up from 660,000 tonnes in 2022/23 and 1,500,000 tonnes in 2021/22.

“Greek production takes a dive – demand determines prices

Greek production is also expected to be significantly reduced this year, following the olive cycle but also due to weather conditions. From 350,000 tonnes in 2022/23 it is estimated that it will fall to 160,000 tonnes, although other estimates put the production bar for 2023/24 at 180-200 thousand tonnes from 280-320 thousand tonnes last year, a year of very good production.

The further course of the producer price will, however, depend on the final level of production in Spain and the further course of consumption, which remains resilient for the time being. The market does not rule out a further upward trend (i.e. above EUR 8,5-8,7) in the price of olive oil and makes it clear that as long as consumption holds up, prices will not fall.

However, they predict a reduction in demand in the coming period, particularly in countries that do not produce olive oil, and are concerned that the consequences of the fall in consumption may prove to be more serious than the temporary benefit of the increased price.

Greek exports on an upward trajectory – Aiming for a further 20% increase

Greek exports of standardised olive oil have doubled in the last 10 years, reaching 40 thousand tonnes annually, while exports of unprocessed (“bulk”) olive oil – mainly to Italy – range from 60-100 thousand tonnes, depending on the production of each year. The industry estimates that over the next 2 to 3 years exports of standardised olive oil could increase by a further 20%.
It is noted that the Greek economy gains €1.5 for every litre of olive oil exported in standardised form compared to bulk.