Global olive oil prices have soared about 80 percent compared to a year ago, according to the International Monetary Fund, after widespread heat and drought in key growing regions decimated olive yields.
While increased production in some areas of the world has compensated for the supply shortfall, prices are expected to remain elevated for many mass-market olive oil varieties, according to some reports.
Some specialty retailers that focus on high-end olive oils told SFA News Daily that rising costs for packaging and shipping are bigger concerns, however.
Greg Bernarducci, co-owner of O Live Brooklyn, said the olive oil price increases that have been generating headlines around the world have had minimal impact on his business, which specializes in fresh, single-origin olive oils from around the world and aged balsamic vinegars.
“I’m not seeing the major increases that other people are talking about,” he said, although he said he did stop carrying some olive oils from California because of rising prices.
Bernarducci said he was able to replace the California olive oils with others from Portugal and Spain that were “as good or better” quality than the California varieties, at lower costs.
Other than the California olive oils and some varieties from Italy, most of the olive oils he supplies, including varieties from Chile, Australia, Greece, Spain, and Portugal, have been priced in line with expectations, with some rising a manageable 50 cents to $1 per liter, he said.
“There's things that affect us more, like shipping and bottle prices,” said Bernarducci. “Bottle prices went up a lot over the past few years.”
He said he has been holding back on raising prices for his customers, even though his costs have risen. Retail prices at O Live Brooklyn range from $13.95 for a 200-milliliter bottle to $39.95 for 750 milliliters. His costs range from $8 to $15 per liter — prices that have been fairly consistent for the past three years or so, he said.
Weather Impacts California Harvests
Thomas Curry of Temecula Olive Oil Co. in Southern California said many olive growers in northern areas of the state suffered from an early frost last year, while in Southern California, where Curry operates his business, some olive groves were damaged by warm Santa Ana winds.
“There were areas that were down 60-70 percent, and when you combine that with the increases in demand, and tack on top of that some huge price increases in packaging and shipping, it all points toward prices going up,” he said.
Rising labor costs, including California’s minimum wage and workman's compensation requirements, are also contributing to rising prices, Curry said.
Temecula Olive Oil Co. has its own olive groves, operates olive oil tasting rooms, and specializes in retailing fresh olive oils and olive oil products, such as soaps, made from olives grown in that state, among other products. It sells directly to consumers and also offers bundled products as corporate gifts.
Although the harsh weather impacted some of the company’s olive yield, Curry said he was able to make up for the shortfall with olives from newer plantings.
“We were down over 50 percent in some areas, but luckily we had some new product from other areas,” he said. “We were not able to grow the business, but we remained stable.”
Unlike many of the olive groves in Europe, he explained, most California olive groves are irrigated, leaving them less susceptible to dry weather.
Curry said he expects that this year’s California crop will be better. The harvest in California usually begins in October.
Temecula Olive Oil has raised prices on some of its products, but Curry said the biggest impact on his costs has been from the glass bottles that the company imports from Italy. Shipping costs have also been increasing, he noted.
The olive oil shortfall comes as more and more consumers have come to appreciate high-quality olive oil, Curry said.
“I think most producers in California would agree that they wish they had a lot more oil, because the demand is there,” he said.
Other Factors Impact Pricing
Leah Bradley, buyer and chief financial officer at Veronica Foods, an Oakland, California-based supplier of gourmet olive oils to nearly 1,000 specialty retailers, said the recent price increases for “commodity” olive oils may be influenced by a variety of factors, including not only weather-related shortages, but also other behaviors, such as withholding product from the market to drive up prices.
“We don’t operate on world market olive oil pricing, which basically has always been fictitiously low,” she told SFA News Daily. “We know what it really costs to make good olive oil, and there’s suspiciously low pricing at times using that system over the years.”
Bradley estimated that less that 10 percent of all extra virgin olive oil production is of high enough quality for Veronica Foods.
“We carved out our own market, and created our own standard — the highest olive oil standard in the world,” she said. “The [mass produced] product really has nothing in common with the extra virgin olive oil that we're selling, which is like fresh fruit juice.”
Although Bradley conceded that the high-quality olive oil market is not immune to the same weather conditions that impact lower-quality oils, the market for the pricier products has not risen anywhere near the price increases that are being reported for the mass-market olive oils.
“We like to have fresh olive oil every six months for our clients, and we secured our supply before pricing went crazy,” she said. “But again, the farms that we work with typically are not using that pricing model, which is very much like a commodity structure, and instead we pay a premium.”
Sourcing from both the Northern and Southern Hemispheres and securing long-term relationships with farms has provided a buffer for Veronica Foods, said Bradley.
The olive oil shortages have led some former customers of Veronica Foods to reach out to the supplier for product, but Bradley said she has been forced to turn them away and reserve the company’s supply for existing customers.
“Our allegiance is obviously to these stores,” she said. “We would have a very difficult time right now if we were selling into big box stores. That’s where there’s just not enough supply and where the pricing correction will be most evident.”
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