OLIVE OIL: ISSUES AND PROSPECTS IN THE

Transcription

1 THE GLOBAL MARKET FOR OLIVE OIL: ISSUES AND PROSPECTS IN THE MEDITERRANEAN BASIN. MASSIMO OCCHINEGRO (NICOLA PANTALEO S.P.A. FASANO OF PUGLIA - ITALY) GRAND HOTEL SAN MICHELE CETRARO JUNE

2 THE OLIVE TREE ROUTE IN THE MEDITERRANEAN BASIN 2

3 OLIVE OIL: MAIN PRODUCTION COUNTRIES IN THE MEDITERRANEAN BASIN SPAIN ITALY GREECE PORTUGAL SLOVENIA FRANCE CYPRUS ALBANIA TUNISIA TURKEY SYRIA MOROCCO EGYPT ALGERIA LIBYA PALESTINE ISRAEL 3

4 OLIVE OIL PRODUCTION IN THE E.U. (Source: International Olive Oil Council) PRODUCTION (1000 MT) OUR ELABORATION ON INTERNATIONAL OLIVE OIL COUNCIL DATAS. COUNTRY 1990/ / / / / / / / / / / / / / / / / /08 SPAIN 639, ,1 550,9 538,8 337,6 947, ,9 669,1 973,7 1411,4 861, ,8 826,9 1108,7 1228,1 ITALY 163,3 674, , , , GREECE , PORTUG ,1 32,2 43,7 44, ,1 50,2 24,6 33,7 28,9 31,2 41,2 29, CYPRUS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 7 7,5 7,2 8,3 6,5 FRANCE 1 4,3 1,6 2,3 2 2,3 2,5 2,7 3,4 4,1 3,2 3,6 4,7 4,6 4,7 4,4 3,4 4,5 SLOVENIA n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0,2 0 0,5 0,3 0,5 OUR ESTIMATION TOTAL 2007/ ,6 MALTA 0,5 0,5 0,5 4

5 OLIVE OIL PRODUCTION IN OTHER COUNTRIES OF THE MEDIT. BASIN (Source: International Olive Oil Council) PRODUCTION (1000 MT) TURKEY TUNISIA 2007/ / / / / / / / / / / / / / / / / /91 COUNTRY OUR ELABORATION ON INTERNATIONAL OLIVE OIL COUNCIL DATAS , , N/A N/A PALESTINE 21, ,5 21, ,5 12, JORDAN 34 21, ,5 69, ,5 26,5 33,5 54, ,5 51,5 16, ALGERIA MOROCCO SYRIA 3 3 2,5 2, ,5 0,5 2,5 0,5 1 0,5 2, ,5 EGYPT 5 8, ,5 7 2,5 4,5 3 5,5 5 5,5 1,5 7,5 2,5 8 ISRAEL 5 4, , ,5 N/A N/A N/A N/A N/A N/A N/A CROATIA 5,5 5,5 5,5 6 7, ,5 6, LEBANON ,5 12,5 6, , LIBYA 630,5 TOTAL 4 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A ALBANIA 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0, ,5 0,5 1,5 2,5 2 1,5 2 3,5 S.& MONT. 5

6 OLIVE OIL: WORLD PRODUCTION E.U. : MT OTHER COUNTRIES ON MED. BASIN: MT OTHER COUNTRIES OUTSIDE MEDITERRANEAN SEA: MT TOTAL WORLD 2007/2008 CROP: (estim.) 6

7 World production and consumption in the last 5 crops (MT/1000) 2003/ / / / /08 PRODUCTION 3, , , , ,820.5 CONSUMPTION 2, , , , ,926.5 BALANCE

8 CONSUMPTION ( BLUE) & PRODUCTION (PINK) TREND IN THE LAST 18 YEARS (SOURCE I.O.O.C.) O 3500 INVENTORY 3000 hazelnut oil? INVENTORY INVENTORY INVENTORY One crop Neutral oil? Three crops Three crops Four crops PRODUCTION SHOULD INCREASE TO MEET CONSUMERS DEMAND OR THERE IS THE CONCRETE RISK OF A FAKE OIL EXPLOSION (SUCH AS NEUTRAL WHICH BECOMES EXTRA VIRGIN OR BLENDED WITH OTHER SEED OILS)

9 The negative impact of media on olive oil image Olive oil fraudes are normal in olive oil market. Recently media pointed out some criminal facts which are referred to very few quantities of a fake olive oil (25,000 liters). Such criminal facts are endemic in olive oil market and in other food markets but for the public opinion i seems to be a big problem with a big impact on the market side in many foreign Countries. 9

10 10

11 Olive Oil production increase: the case of Tunisia & Morocco TUNISIA: Tunisian olive oil production is currently turning to irrigated farming. Thus intensive cultivation on large expanses in the north constitutes an attractive investment opportunity. The Tunisian Government has set a series of developmental goals for the olive sector: 1) Raising production to reach at least t; 2) Improving tree yields, among other things by using modern olive harvesting methods; 3) Increasing exports to t/year. 4) Stimulating consumption to increase it from the current level of Mt to Mt. MOROCCO: They are going to plant over than 1,000,000 of olive trees; 600,000 already under production; financial funds came from United States; they put 1,800 olive trees par hectare. 11

12 EXPORT FROM ITALY & SPAIN 12

13 EXPORT 2006 E 2007 OF ITALY AND SPAIN JANUARY/DECEMBER 2006/2007 ITALY 2006 SPAIN MARKET % ITALY % SPAIN ITALY 2007 SPAIN MARKET % ITALY % SPAIN ITALY fluctuation 2007/2006 SPAIN fluctuation 2007/ ,38 50,62 46,40 53,60 1,52 12,60 1) United States ,02 22, ,95 27,05-0,67 19,03 2) United Kingdom ,02 65, ,91 60,09 22,78 0,53 3) Germany ,13 15, ,11 16,89-5,21 2,35 4) Australia ,12 56, ,09 70,91-17,05 36,65 5) Japan ,71 40, ,69 41,31-5,91-1,53 6) Belgium ,80 63, ,87 63,13 3,55 3,29 7) Canada ,69 4, ,46 4,54 11,16 15,91 8) Netherlands ,02 38, ,93 51,07-36,35 16,57 9) Brazil ,11 83, ,01 76,99 46,23 16,35 10) Switzerland ,26 27, ,61 29,39 2,69 10,27 11) Russia Federation ,66 73, ,65 74,35 30,33 33,89 12) Mexico ,78 79, ,37 75,63 14,58-4,96 13) South Korea ,25 75, ,08 75,92-19,07-18,00 14) China ,72 58, ,86 61,14 38,02 44,98 15) Poland ,51 39, ,49 37,51 18,76 11,70 16) Sweden ,23 24, ,10 24,90 20,67 21,19 17) Austria ,88 17, ,73 17,27 9,16 10,11 18) Ireland ,97 78, ,46 80,54 8,97 21,88 19) Saudi Arabia ,86 75, ,40 73,60 9,42 1,76 20) Czech Republic ,69 68, ,15 67,85 23,52 21,91 21) New Zealand ,36 38, , ,53-40,69 23,11 22) South Africa ,13 40, ,92 45,08 25,20 37,02 23) Taiwan ,95 16, ,51 20,49-2,33 24,10 24) United Arab Emirates ,64 87, ,51 87,49 15,80 16,80 25) Denmark ,86 43, ,22 45,78-4,68 5,96 26) Venezuela , , ,00 82,00 23,89 19,26 27) Colombia ,84 93, ,15 91,85 32,22 18,03 28) Norway 29) Romania 30) India ,22 90,17 32,41 83,78 9,83 67, ,30 93,09 41,59 80,70 6,91 58,41 17,69 24, ,08-1,73-10,42 22,91 31) Thailand ,13 69, ,67 65,33 27,25 10,47

14 CONSUMPTION DATAS (IOOC SOURCE) 14

15 15

16 16

17 17

18 18

19 19

20 20

21 EXPORT FROM ITALY & SPAIN COMPARED TO CONSUMPTION DATAS ASOF I.O.O.C. OOC USA: ITALY+SPAIN = 164,000 MT IOOC = 251,000 MT ; ASIDE DOMESTIC PRODUCTION AND IMPORT FROM OTHER COUNTRIES OF ABOUT 87,000 MT. (35%) 21

22 22

23 EXPORT FROM ITALY & SPAIN COMPARED TO CONSUMPTION DATAS OF I.O.O.C. AUSTRALIA: ITALY + SPAIN= 35,000 MT ; IOOC 41,000 MT - ASIDE DOMESTIC PRODUCTION AND IMPORT FROM OTHER COUNTRIES; AUSTRALIA HAS AN ADDITIONAL CONS. OF ABOUT 6,000 MT. (15%) 23

24 EXPORT FROM ITALY & SPAIN COMPARED TO CONSUMPTION DATAS OF I.O.O.C. BRAZIL: ITALY+ SPAIN= ABOUT 10,900 MT; IOOC 34,000 MT WITH A BALANCE OF 23,100 MT (68%) COMING FROM OTHER AREAS 24

25 EXPORT FROM ITALY & SPAIN COMPARED TO CONSUMPTION DATAS OF I.O.O.C. JAPAN: ITALY + SPAIN = 26,628 MT; IOOC : 31,500 MT, WITH A BALANCE OF 4,872 MT. (15%) PURCHASED OUTSIDE 25

26 EXPORT FROM ITALY & SPAIN COMPARED TO CONSUMPTION DATAS OF I.O.O.C. CANADA: 17,743 MT ; IOOC 30,500 MT WITH A BALANCE OF 12,757 MT (42%) PURCHASED OUTSIDE 26

27 CANADA 27

28 WORLD OLIVE OIL MARKET DEMAND: PROBLEMS TO BE FACED EVERY DAY IN TRADE 28

29 THE CASE OF U.S.A. 29

30 U.S. PROBLEMS ABOUT LEGISLATION The United States is not a member of the IOOC, and the US Department of Agriculture does not legally recognize its classifications (such as extra-virgin olive oil). The USDA uses a different system, which it defined in 1948 before the IOOC existed. The California Olive Oil Council, a private trade group, is petitioning the USDA to adopt IOOC rules. 30

31 I.O.O.C. STANDARDS. As IOOC standards are complex, the labels in stores (except in the U.S.) clearly show an oil's grade: Extra-virgin olive oil comes from cold pressing of the olives, contains no more than 0.8% acidity, and is judged d to have a superior taste. t Virgin olive oil has an acidity less than 2%, and judged to have a good taste. Pure olive oil. Oils labeled as Pure olive oil or Olive oil are usually a blend of refined olive oil and one of the above two categories of virgin olive oil. Olive oil is a blend of virgin oil and refined oil, containing no more than 1.5% acidity. It commonly lacks a strong flavor. Olive-pomace oil is a blend of refined pomace olive oil and possibly some virgin oil. It is fit for consumption, but it may not be called olive oil. Lampante oil is olive oil not used for consumption; lampante comes from olive oil's ancient use as fuel in oil-burning i lamps. Lampante oil is mostly used in the industrial market. 31

32 U.S. STANDARDS The United States is not a member of the IOOC and therefore the retail grades listed above have no legal meaning in the United States; t terms such as "extra virgin" may be used liberally. The U.S. Department of Agriculture (USDA), which controls this aspect of labeling, li currently lists four grades of olive oil: "Fancy", "Choice", "Standard", and "Substandard", also called Grade A through D, respectively.these were established in The grades are based on acidity, absence of defects, odor and flavor 32

33 Olive oil grades in U.S.A. The United States standards date from 2 March 1948 and are much less sophisticated than those adopted by the IOOC. There are four grades, Grade A, U.S. Fancy, Grade B, U.S. Choice, Grade C, U.S. Standard and Grade D, substandard. The maximum free fatty acid content, calculated as oleic, is 1.4%, 2.5% and 3% respectively. In 2004 American growers were agitating to adopt stricter European standards. 33

34 The Agricultural Marketing Service (A.M.S.) The Agricultural Marketing Service, of the Department of USDA is soliciting comments on the proposed revision to the United States Standards for Grades of Olive Oil. The proposal includes two major groups of oil: Olive Oil produced by mechanical means; and Olive pomace oil. The proposal includes new product descriptions, definitions and requirements for the following grade designations: U.S. Extra Virgin Olive Oil; U.S. Virgin Olive Oil; U.S. lampante Virgin Olive Oil not fit for Human consumption; U.S. Refined Olive oil; U.S. Olive Oil; U.S. Olive Pomace Oil; U.S. Refined Olive Pomace Oil; U.S. Crude Olive Pomace Oil. COMMENTS MUST BE SUBMITTED ON OR BEFORE AUGUST,

35 Sounds Italian problem IN THE U.S. MARKET MANY BRANDS ARE PRODUCED IN U.S.A. (OR ANYWAY OUTSIDE ITALY), USING AN ITALIAN NAME (I.E. ROMOLO OR LIO) FOR OBTAINING A GOOD IMAGE AND MARKET SHARES IN SUPERMARKETS. 35

36 FROM TURKEY 36

37 THE CASE OF INDIA & CHINA THE FUTURE PASS THROUGH THESE NEW BIG ECONOMIES 37

38 Customs duties and under invoicing in India in 2007 IN INDIA CUSTOMS DUTIES ON OLIVE OIL WERE 45% ON PRICE. IT CAUSED SEVERAL PROBLEMS OF UNDER INVOICING. SINCE APRIL 2008, DUTIES REDUCED DRASTICALLY (NOW 7,5%) EVEN IF ARE NOT 0% AS IN MOST OF FOREIGN MARKETS. THE SAME PROBLEM COULD OCCUR IN THE CHINESE MARKET; SOME IMPORTS COME FROM HONG-KONG OTHERS FROM CHINA WITH AN UNDER INVOICING 38

39 39

40 1,49 Euro per Liter 1,45 Euro per Liter 1,47 Euro per Liter 1,43 Euro per Liter 40

41 0,87 Euro per Liter 0,834 Euro per Liter 41

42 42

43 Olive Oil Market in India Quantity Growth (%) Total (MT) 1,500 2, Edible (MT) Non-edible edbe (massages) (MT)

44 WHAT S ABOUT THE FUTURE? 44

45 OLIVE OIL CONSUMPTION PER CAPITA IN SOME PRODUCTION COUNTRIES CONSUMPTION (KG) SPAIN 13,62 kg ITALY 12,35 kg GREECE 23,70 kg TURKEY 1,2 kg TUNISIA 9,1 kg SYRIA 6,0 kg 45

46 OLIVE OIL CONSUMPTION PER CAPITA IN SOME NOT PRODUCER COUNTRIES UNITED STATES based on 300,000,000 people : 0,87 Kg UNITED KINGDOM based on 59,778,002 people :0,76 Kg GERMANY based on 83,251, people:0,51 51kg AUSTRALIA* based on 19,189,000 people: 2,13 kg JAPAN based on 127,757,000 people: 0,25 kg BRAZIL based on 186,770,562 people: 0,195 kg RUSSIA FED. based on 141,380,000 people: 0,07 kg CHINA based on 1,321,851,888 people: 0,0048 Kg INDIA** based on 1,027,015,247 people: p 0,0020 Kg *Australia started already an olive oil production; **: India invested in Rajasthan, Maharashtra and Pradesh. United States already is producing olive oil. 46

47 What s the future for Olive Oil in the mediterranean basin? Scenario Production increase of not E.U Countries -> due to an economy development; Consumption increase of not E.U Countries -> due to the growth of G.N.P.; Consumption decrease in E.U. Countries -> due to depressed economies. 47

48 What s about the Western Countries, such as U.S.A. & E.U? Recently we know well what s happening. It s always difficult to forecast the future, anyway we think that basically seems that the economic cycle is absolutely negative at the moment and most of middle class households are becoming low class households. U.S.A. and deu E.U. are becoming too old and no more competitive. 48

49 PRODUCTION & CONSUMPTION TREND. THE PRODUCTION INCREASE TREND IS MUCH LOWER THAN CONSUMPTION INCREASE TREND, IT SHOULD MEAN THAT PRICE LEVEL EXPECTATION SHOULD BE MUCH HIGHER THAN NOW. CONSEQUENTLY IT COULD CAUSE A CONSUMPTION REDUCTION IN E.U. AND U.S.A PASSING TO OTHER VEGETABLE OILS FOR SAVING MONEY. 49

50 And what about the rest of the world? Consumption trend of some new economies: Brasil Russia; India; China (BRIC Countries) 50

51 GOLDMAN SACHS REPORT The Goldman Sachs global economics team released a follow-up report to its initial BRIC study in 2004.The report states t that t in BRIC nations, the number of people with an annual income over $3,000, will double in number within three years and reach 800 million people within a decade. d This predicts a massive rise in the size of the middle class in these nations. In 2025, it is calculated that the number of people in BRIC nations earning over $15,000 may reach over 200 million. This indicates that a huge pickup in demand will not be restricted to basic goods but impact higher-priced h i goods as well. 51

52 OLIVE OIL GROWTH IN INDIA(DATAS PROVIDED BY INDIAN OLIVE ASSOCIATION) 2006 MT 2007 MT CGR (06-07) % 2010 MT CGR (07-10) 2012 MT CGR (07-12) % TOTAL 1,500 2,300 53% 25, % 42,218 79% 52

53 Forecast for Olive Oil consumption in some Countries. UNITED STATES based on 300,000,000 people : 0,85 Kg = 255,000,000 KG UNITED KINGDOM based on 59,778,002 people :0,78 Kg = 46,600,000 KG GERMANY based on 83,251,851 people:0,48 kg = 39,960,000 KG AUSTRALIA* based on 19,189,000 people: 1,87 kg = 35,883, KG JAPAN based on 127,757,000 people: 0,22 kg = 31,939,250 KG BRAZIL based on 186,770,562 people: 0,10 kg = 36,420,260 RUSSIA FED. based on 141,380,000 people: 0,10 kg = 14,138,000 CHINA based on 1,321,851,888 people: 0,10 Kg = 132,185,000 INDIA** based on 1,027,015,247 people: 0,10 Kg = 102,701,525 TOTAL : 694, compared to 418,557,491 (+ 66%) It means a global consumption of about Mt +21 % compared to 2007 (this is the optimistic opinion, in the sense of not lack of olive oil in the world, which should be sustained by the olive oil production increase in the world) We also forecast a reduction of olive oil consumption in the main UE production Countries. 53

54 PROBLEMS RELATED TO OLIVE OIL WORLD EXPANSION THE KEY WORD IS EDUCATION MOST OF FOREIGN CONSUMER DON T KNOW THE REAL CHARACTERISTICS OF A GOOD EXTRA VIRGIN OLIVE OIL SIMPLY BECAUSE THEY DON T HAVE CONFIDENCE ABOUT THIS PRODUCT. THEY KNOW THAT OUT OF OLIVE OIL GRADES, EXTRA VIRGIN OLIVE OIL IS THE TOP ONE, BUT THEY DON T LOVE THE STRONG TASTE. CONSEQUENTLY THERE IS A STRONG DEMAND OF NEUTRAL OILS (BY OLIVE OIL COMPANIES) WHICH ARE NOT CONTROLLED BECAUSE ANALYSIS ARE NOT ABLE TO DISCOVER THEIR PRESENCE. NEUTRAL OLIVE OIL HAS LOW ACIDITY (WHICH IS ONE OF OTHER KEY WORD FOR A GLOBAL CONSUMER) AND NO TASTE. IT IS USED FOR LET BECOME LIGHTER IN TASTE AN EXTRA VIRGIN OLIVE OIL AND IT IS ILLEGAL. ONE OF THE MOST IMPORTANT CHALLENGES IS TO EDUCATE PEOPLE TO RECOGNIZE THE REAL GOOD EXTRA VIRGIN OLIVE OIL WHICH IS HIGHER IN POLYPHENOLS CONTENTS AND CONSEQUENTLY IS REALLY AN HEALTHY PRODUCT. THE LAST BUT NOT THE LEAST, IS THE STRONG APPRECIATION OF THE EURO AGAINST THE MAIN CURRENCIES, FIRST OF ALL USD. IT IS CREATING A LOT OF PROBLEMS DIFFICULT TO BE SOLVED. 54

55 OTHER OBSTACLES TO OLIVE OIL EXPANSION STRONG TRADITIONAL CUISINE MIGHT AFFECT THE OLIVE OIL SALES; STRONGER ATTENTION TO HEALTHY PRODUCTS COULD LET INCREASE THE DEMAND. BOTH FACTORS WILL PLAY A CRUCIAL ROLE FOR OLIVE OIL DEMAND ESPECIALLY IN CHINA AND INDIA WHERE LOCAL CUISINES ARE PLANTED DEEPLY. 55

56 THANK-YOU FOR YOUR KIND ATTENTION 56