Soaring Generic Olive Oil Sales Worry Producers

By Sarah Schwager

Sep. 22, 2010 19:45 UTC

By Sarah Schwager
Olive Oil Times Contributor | Reporting from Buenos Aires

The sale of generic and private label olive oil products in Spain has risen dramatically prompting a drop in investment on high quality products, according to the country’s National Association of Edible Oil Manufacturers, Packers and Refiners (Anierac).

Anierac President Pedro Rubio has told food and agriculture information agency Efeagro that generic edible oil brands are managing a rate of sales that is “truly spectacular, stunning and unprecedented” in Europe, with the generic brands now controlling up to 60 – 80% of the market share. Rubio has connected the
rise of generic products to the financial crisis which saw prices dive as large
retailers endeavored to attract customers.

Pedro Rubio

Early last year fears surfaced that the battle between generic and manufacturers’ brands of olive oil could harm the entire sector. Reports were that in some categories, such as refined olive oil, retailers’ own brands were achieving a distribution of 78% while the generic versions of the highly-regarded extra virgin olive oil managed between 45% and 50% of market share.

At the time, Rubio stressed that generic brands should not exceed 50% of the market share and dialogue between manufacturers and distributors was crucial for the survival of the industry.

Rubio says generic brands and manufacturers’ brands need to co-exist on an equal level in terms of market share, which is not happening now. He says anything above a 50% market share is “dramatic” as this imbalance prevents producers as well as industrialists, traders and exporters from achieving adequate profit margins.

The increase in sales of generic brand olive oil is surprising as olive oil has generally been considered as one of the few products, like wine, that can’t be replaced by a cheaper ‘no name’ product and retain its quality and flavor.

However, as economies have slumped across the globe in recent years, it seems consumers have been willing to skimp on any product that will save a few dollars, justifiably so. This is evidenced in the boom of cheaper oils such as sunflower oil, corn oil, soybean oil and canola oil, particularly in countries with struggling economies, such as Argentina.

europe-soaring-generic-olive-oil-sales-worry-producers-olive-oil-times-anierac

Spain has experienced a 2.38% fall in olive oil sales in the domestic market this season, but Rubio says this drop has been balanced out by success in global exports, which has seen the Spanish olive oil market grow in leaps and bounds.

He believes within the domestic market, however, some crucial changes are needed and so has advocated for the promotion of niche markets and high value-added brands, to enhance EVOO and look for new international buyers.

Still, Rubio says in recent years there has been a shift from “intense” (lower grade) olive oils (-21.36% so far this season) to virgin (+16.18%) or extra virgin (+2.59%) olive oils. He attributes this trend to buyers valuing the higher quality of virgin olive oil and the minuscule difference in prices of the different oil grades.

However, the Anierac President said he deeply regrets that there appears to be no hope of revival for olive pomace oil with a drop of 8.8% to 11.17 million liters this season after the “unjust” ban and recall of the product a few years ago that stripped the product from the shelves.

The Spanish Government banned olive pomace oil in July 2001 after finding high levels of polycyclic aromatic hydrocarbons – environmental pollutants that include chemicals that can potentially cause cancer.

Since then, pomace oil has received a string of bad publicity, mostly related to the risk of carcinogenic and mutagenic components forming in the delicate high heat extraction process and because of its inferior flavor compared to other grades of olive oil.

Soaring Generic Olive Oil Sales Worry Producers

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Pedro Rubio

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