Last week while quoting various requests from U.S. clients, we seemed to be fighting against a force greater than us: a rise in the price of olive oil coming from the law of supply and demand.
Two factors came into effect:
 – An adjustment for the possibility of a relatively smaller olive oil harvest for fall 2014*
 – The large seasonal forward purchases from Italian companies that re-sell Spanish olive oil to the American market (under Italian brands)
Although most olive oil brands seen on American supermarket shelves appear to be Italian and Greek, a lot of the olive oil in the bottles is actually sourced from Spain where 40% of the world’s olive oil is produced. Of the three largest consuming olive oil markets – Italy, Spain, the United States (in that order), only Spain is capable of producing olive oil quantities greater than domestic demand. In fact, at least 300,000 tons of Spanish olive oil are shipped from Spain to Italy every year.
Today, 97% of the olive oil consumed in the United States is imported. We think that over time American olive oil supplies will grow and achieve a very solid price/quality level akin to what happened with American wine over the past 30 to 40 years. Nonetheless, the majority of olive oil will continue to be sourced and imported from Mediterranean countries.
The American olive oil market is very interesting for its growth potential because it has a per capita consumption level that is still quite low. According to some market surveys, only 40% of U.S. households buy any olive oil at all as of year 2014. Compare that to a 100% figure in per capita consumption in the countries of Spain and Italy.
American olive oil consumption is projected to grow at an annual rate of 5% for the coming years. We at MedOlives hope to see with this growth that the American olive oil user becomes more discerning in the quality of olive oil which would hopefully be the catalyst for two occurences:
[A] – Greater support of American olive oil producers with quality product
[B] – Greater support of quality Spanish olive oil sourced directly from Spain rather than from intermediaries and bottling companies in Italy and Greece (who are at present possibly not delivering the end product in its original form)
The above scenario is the win-win scenario for us at MedOlives. Afterall, the MedOlives owners are American and Spanish and we are perhaps a bit patriotic.
* Note: Spanish olive oil production is maintaining expected levels, but other Mediterranean country producers are behind expected production levels. This speculation is based on the flora of olive trees as of May 2014 which is utilized to predict harvest quantities for Fall 2014.
Data for this blog were collected from our e-mail conversations with our olive oil partners and various articles from the Spanish newspaper “El Pais”