New trends in the olive oil market at the center of the debate in Bitonto. The increase in prices, the evolution of food consumption and demographic changes have a decisive influence on the prospects of olive oil
In the wonderful setting of the Traetta municipal theatre, a round table entitled ” “Olive oil at an epochal change” organized by Unifol, the Italian Union of olive oil families established less than two years ago – on the initiative of 11 Italian family companies in the olive oil sector – together with Cibus and with the collaboration of GDO-news.
The participation of brands such as Coop, Conad, Vègè, Maiora, Megamark and Apulia was an opportunity to witness a comparison on recent trends in the olive oil marketbetween professionals who find themselves negotiating opposing positions on a daily basis, in a frank context free from commercial responsibilities.
Olive oil with potential
From the very first moments it became clear that, for distribution, the olive oil market And Always the typical commodities market, where margins are expendable and volumes and traffic remain key variables. We immediately asked ourselves, not so much about the causes, but about the concrete prospects of changing what appears increasingly unified cul de sac where no one seems to be at ease anymore. If nothing else, because no one is unaware of the objective potential of a fat so “different” compared to others, in terms of nutritional value and sensorial pleasure, but the information asymmetry is such that consumers ignore it.
There is full awareness among distributors that the consumer of extra virgin olive oil is no longer what he once was: he is more aware of the value of the product and if the price increases, he does not easily abandon it by moving to lower categories as he did in the past, but rather reduces his consumption. A consideration that changes the cards on the table and opens a glimmer of light on the prospects. Yet, it does not seem obvious or easy to change thehabitus of a commodity so rooted and consolidated, at least not for the category as a whole, in the presence of increasingly older consumers, accustomed to cooking, but less receptive to those innovations that the repositionings attempt to stimulate.
The data presented
The member companies of Unifol have done well to delve into the rapidly changing scenario of extra virgin olive oil consumption, because the photographs that the research institutes presented in Bitonto are those that change perspectivesurging everyone to consider the enormous impact that variables other than price, inside and outside the sector, will have on the evolution of product consumption.
The data that emerged paint a scenario where in Italy, in the next 10 years, we will be less than 60 million, but life expectancy is getting longer and the age groups that will continue to grow will be the more mature ones, around two million more people between 56-70 years of age and around one million more people over seventy years old. In 10 years therefore, compared to a population which is declining and who will be increasingly youngerwe will also have smaller families with increasingly fragmented moments of consumption across Europe, with the aggravating circumstance in Italy of a drop in real wages.
If it’s true that oil consumption drops, it is also true that the decline is structural, reports Nielsen, because there is a portion of the population that disappears. The contingent situation linked to the drastic reduction in supply therefore exacerbates a consolidated trend. Families of young people under 44 have decreased by 900 thousand units in the last 5 years, while those with a purchasing manager over 64 have grown by 450 thousand.
Decline in consumption
The decline in consumption of extra virgin olive oil is also encouraged by the growing trend from young people, to purchase foods with a high service content such as ready-made sauces, i ready meals vegetables, ready-made first courses, etc. constantly increasing in value and volume even in the last year.
In Bitonto, Nielsen data confirm a market that has grown in the last period, on an annual basis, by 27% in value with a contraction of 9.7% in volume, which was known to be the consequence of two consecutive years of drought, but, according to analysts, inflation, the change in the product mix with the reduction of the medium format and the reduction in promotional pressure also contributed to the price increase , today at 40%, with a drop of 10 points in the last year. A joint effect in the same direction is also the growth in purchases of “100% Italian”, up 4 points compared to last year, generally perceived as a premium segment compared to the “EU” segment. A trend explained by the narrowing of the price rangewhich makes “100% Italian” relatively cheaper than in the past.
An epochal change
At the conclusion of the debate it was clear to all those present that the changes that the data predict for the next few years could radically change the commercial strategies of operators and create concrete opportunities to reposition brands and references, developing more complex and unprecedented service contents than in the past.
Indeed, the branded companies present representing Unifol, including De Santis, Farchioni, Monini and Pantaleo, all take the opportunity to highlight the urgency of 360 degree cooperation with large-scale retail trade to work on a new category management formatwhich aims to more effectively represent the qualitative differences between olive oils, making it easier for consumers to choose and which remunerates producers more correctly.
How to communicate the product
It needs to be reviewedaccording to the companies present, a good part ofthe comunicationwhere the language will have to abandon traditional concepts, to become more modern and able to tune in to the needs and expectations of young people. It will be necessary to create interest and curiosity around its nutritional and gustatory valueswhere the consumer will have to be educated rather than accustomed, also breaking some wrong habits in the way of selecting extra virgin olive oils, storing them and using them.
Quality protection
President Giuseppe Vacca, after underlining the importance of the Unifol initiative to periodically check the quality of its members’ extra virgin olive oils with a certification body, closes the meeting by drawing attention to the urgency of adopting organic supply chain measures , not excluding intervening also on the quality parameters of the category, to prevent high quality extra virgin oils from being dragged in the future towards debased prices that do not remunerate the producers and to allow lower quality virgin oils to find their dignity as a employment and image outside the extra virgin category. Solutions must also be sought through a better and clearer differentiation of qualities, which the current categories no longer represent.
Undoubtedly the change could be epochal, from what we heard from the audience, but we will have to see if the players in the supply chain are capable of putting healthy competition before preventive cooperation between themselves, to agree on those structural interventions desired by all the participants at the table and no longer deferrable.
Read the article on Olive and Oil n. 3/2024
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