In the ever-evolving world of global commodity markets, one item that consistently captures our attention is olive oil – a product as old as civilization itself. In this newsletter, we dive deep into a comprehensive understanding of the current olive oil pricing landscape and what future developments we can anticipate.
THE PRESENT LANDSCAPE
Recent years have seen a dramatic influence on olive oil prices due to an intricate dance of supply and demand forces. Inclement weather factors in leading production regions (Spain, Italy, and Greece) have led to lower yield, conversely driving prices up. As so often in bullish market conditions, sellers hold off on selling in the expectancy of an even higher price point. A perfect example of a self fulfilling prophecy.
While the present represents a whopping 180% YoY cost increase for olive oil, it's essential to shift our gaze forward and catch a glimpse of what the future may hold for retailers, distributors, and consumers. glass bottles, maintaining the tradition's sanctity.
WHAT TO EXPECT?
- Weatherly Adjustments: If weather patterns return to something akin to the norm in major producer countries, we're likely to see a bounce back in olive oil production. This increase should help to moderate prices in the coming months and years.
- Technological Advancements: Innovations in farming and production techniques could potentially pave the way for better yields, irrespective of adverse weather impacts. The gradual transition towards smart agriculture could prove a mitigating factor for olive oil price surges.
- Market Expansion: We're likely to witness an expansion. On the one hand there is the ongoing consumer trend towards fresh, organic, high quality EVOO. While on the other hand these high prices will also bring back trends that we hoped were near eradicated; the adulteration of olive oil with the sole goal of bringing back some profit for producers.
WHY ARE WE NOT SEEING THAT 180% PRICE INCREASE YET?
Much like crude oil prices being up will only partially affect your airline ticket initially, olive oil is behaving the same. The olive oil you currently buy may be more expensive than ever but the 180% price hike in COS is yet to hit the shelves. Many large players in the market have been able to efficiently source to be ahead of the curve and are holding off on adjusting their prices to current market conditions in the hope they will come back down.
ANTICIPATING THE FUTURE
At Neolea we’re working under the assumption that olive oil prices will not come down once the new harvest season starts. Current crops, we believe, are not telling us to expect a larger yield than last year and thus the price hike is likely to continue.
We’re currently rethinking the way we cooperate with our farmers, the way prices are established as well as packaging. These conditions command us to do so. However, the backbone of who we are and what we stand for will always be quality. Packaging, sourcing models and price establishment are all on the table. Our starting point is crystal clear: Getting the most fresh extra virgin olive oil to as many consumers world-wide as we can.