European olive oil production in the last ten years (IOC data) averaged 2 million tons, reaching a value of 2,219, 2 million tons in 2018/2019.
Still considering the average of the last 10 years, more than 60% of European olive oil production comes from Spain, followed by Italy with about 20%, Greece with about 14% and Portugal with about 5%.
The Italian production of pressure oil is affected by strong fluctuations depending on the year, having reached 428.9 thousand tons in 2017/18 and was estimated at 265 thousand tons in 2018/19, although the latest ISMEA calculations indicate a production of olive oil of 185 thousand tons for 2018, -57% compared to 2017. Thanks to about 538 different varieties of olives, Italy is able to express many different flavours and aromas that make the country a unique and exclusive olive grove. The main varieties of olives are Ogliarola, Coratina, Cima and Cellina in Puglia; Taggiasca and Lavagnina in Liguria; Frantoio in Tuscany; Casaliva on Lake Garda; Moraiolo in Umbria; Carboncella in the Sabina area (Lazio); Gentile in Abruzzo; Rotondella in Campania; Carolea in Calabria; Nocellara del Belice in Sicily; and Bosana in Sardinia. Altogether, there are 900 thousand farms with 1.1 million hectares of olive groves. Among other things, the cultivation of olive oil in Italy is present on almost the entire territory of the peninsula, thus contributing to the maintenance of a rich social, productive and landscape fabric. Italy holds the leadership in the production of quality oils recognised in the European Union, almost 40% is represented by Italian brands, equal to 46 products with denomination (of which 4 PGI). Greece and Spain follow with 29 awards each.
The production of certified oil, however, does not exceed 2%-3% of the total. It reaches 6% by reasoning in terms of value. The Italian production of certified PDO/PGI oil in 2017 has exceeded 10 thousand tons, still too little compared to the potential. The production is still very concentrated on a few denominations: the first 5 absorb more than 75% of the entire national production.
In the last decade, the olive sector in Portugal has recorded extraordinary growth, which has led the Iberian country to quadruple the production of olive oil and triple the volumes exported. The radical transformation of the sector has enabled the European State to become the fourth largest exporter in the world and the seventh largest producer worldwide. According to IOC data, Portuguese olive-growing covers 352,000 hectares, 23% of which are irrigated.
The most important olive-growing region is Alentejo, where about 50% of the olive-growing area is located, followed by Tras-os-Montes (22%), Centro (18%), Ribatejo (7.7%) and Algarve (2.3%).
97.5% of the olive-growing area is used for the production of oil, thus only a very small proportion is used for the production of table olives.
Today about 40% of the olive-growing area in the Alentejo region is occupied by the Arbequina, Arbosana, Koroneiki and Picual varieties, replacing Carrasquenha, the main variety in the area.
The most widespread indigenous Portuguese cultivar, however, is Galega Vulgar, together with Cobrançosa, the main variety of the Tras-os-Montes region. Other important varieties are Cordovil de Serpa in the Alentejo region, Verdeal and Madural in the Tras-os-Montes area and Cordovil de Castelo Branco in the Beira Interior region.
Portugal has PDO recognition for six extra virgin olive oils.
The total turnover of the Portuguese olive oil sector is close to €95 million, equal to 1.36% of Portugal’s agricultural production where 495 mills, 12 olive oil refineries and 17 olive pomace oil production plants are active. National olive oil production has almost doubled in the last decade, from 47 thousand tons in 2006 to 135 thousand tons in 2018.
Although not as well known as the olive oils of Spain, Italy and Greece, 22 Portuguese olive oils were recognised among some of the best in the world at the 2015 New York International Olive Oil Competition.
Unaprol is the largest association of the olive sector in Italy and Europe. It associates 56 organisations of olive producers located throughout Italy, representing over 60% of the controlled supply chain. It monitors, traces and controls the quality of an extra virgin olive oil production from over 350 thousand hectares, corresponding to over 270 thousand olive-growing enterprises.
Unaprol represents over 40% of the Italian olive sector with a marketable production value of 350 million euros. In fact, in Italy the olive oil sector consists of about 825 thousand farms and about one million hectares of land. However, it is a productive structure with many difficulties from a competitive point of view, given that only 37% of the companies have a certain market orientation (La Scheda di settore, Istituto di Servizi per il Mercato Agricolo Alimentare, 2017).
In this context of Italian and European production, strongly subject to the climatic events that have become more and more extreme in recent years, and of a poorly organised production structure, Unaprol works both in terms of the concentration of the offer and of its organisation with regard to the selection of the quality and the different types of extra virgin olive oil.
Japan is the fourth largest Italian export market with 99 million euros in 2018, corresponding to a value in quintals of about 194 thousand. Taiwan is in fifteenth position, with 18 million euros and about 39 thousand tons. Both countries are characterised by a slight upward trend in volume, respectively by 4 and 14%, and a downward trend in value, respectively by 4.8 and 2.5%.
In the last decade, Portugal’s olive sector has experienced extraordinary growth, which has led the Iberian country to quadruple its olive oil production and triple its export volumes. The radical transformation of the sector has enabled the European State to become the fourth largest exporter in the world and the seventh largest producer in the world. Portuguese olive oil exports reached a total value of 411 million euros in 2016. Spain and Brazil accounted for 40 and 30% of the total quota respectively. Japan and Taiwan are therefore embryonic markets to be consolidated.
Production and availability balance in target countries
Japan consumes vegetable oils derived from about 60% rapeseed and soybean. Total domestic production of vegetable oils, which amounts to about 1.8 million tons per year, is not sufficient to cover domestic demand of more than 2.7 million tons, resulting in a significant proportion of imports. After rapeseed and soybean oil in terms of consumption there are palm oil, rice oil, maize, coconut and sunflower oil and others. As for olive oil, which has started to spread in Japan in the last twenty years, it covers a very low percentage of total consumption of vegetable oils, about 2%.
However, Japan produces very small quantities of extra virgin olive oil in the Kagawa region (500 hectares of olive groves according to the IOC), which do not meet domestic demand at all. The country imports about 60,000 tons of olive oil per year, mainly from Spain, Italy, Greece, Turkey and Tunisia. It is the third largest importer of olive oil, outside IOC members, after the United States and Brazil. Its market is growing rapidly and an increasing number of consumers are turning to the properties offered by this product, adding it to their diet mainly for health reasons.
The increase in volumes brought about by the project would not, however, lead to problems of product availability in the proposing countries. In fact, Japan is among the non-producing and non-European countries one of the largest importers of olive oil in the world and it is expected that imports will continue to grow in the coming years so it is a very interesting market.
A further trend is towards an increase in imports of extra virgin olive oil compared to normal olive oil, which argues in favour of an accentuated perception of the segmentation of olive oil production into different quality types.
There is no olive oil production in Taiwan because there are no suitable climatic conditions, as the island is characterised by high rainfall and humidity. Instead, there are other types of food crops, such as soybeans, peanuts, and sesame, from which vegetable fats are extracted that are characteristic of Taiwanese gastronomic tradition and culture and used to cook and flavour traditional dishes. The most common oil is soybean oil with a production of 353,000 tons in 2016/2017, corresponding to consumption of 332 tons or 13.2 kilograms per person over the same period (USDA and COA data).
Following a sensational scandal in 2014 involving Taiwan’s leading supplier of oil to restaurants and schools, accused of mixing imported vegetable oil with imported animal oil, the market was opened up in 2015 for other vegetable oils including palm oil and olive oil. In 2018, palm oil accounted for 69% of the country’s oil and fat imports and olive oil for 2.2% (Data: DIRECTORATE GENERAL OF CUSTOMS, MINISTRY OF FINANCE, ROC).
The origin of olive oil is 96% European, in particular 55% Italian, 33% Spanish and 8% Greek; unlike Italy and Greece which is negative, Spain has a positive growth rate of about 3%.
What is the market position of EU producers in the same product sector (volume and value, market share, etc.)?
Italy and Spain have historically been the main supplier countries to Japan. In 2014, the quantity of oil imported from Spain exceeded, for the first time, the quantity imported from Italy, subsequently maintaining the record. In 2014/2015, Japan imported 33,584 t (54% of the total) from Spain, compared to 25,066 t imported from Italy (40% of the total). This can be attributed to many factors, including: Spain’s higher production than Italy, Spain’s attention and investment in the production of a high quality product; and the promotional campaign undertaken by the Interprofesional del aceite de Oliva, an institution supported by the Spanish government to promote the development of the Spanish olive oil market.
Competition between EU countries on the Taiwanese market takes place exclusively between Italy and Spain, with Greece, Portugal and France in a very marginal position. Italy is the leading exporting country with a market share, both in value and volume, of around 43%.
Although the perception of Spanish olive oil has improved in recent years, the majority of Taiwanese consumers continue to associate this product with Italy, it is believed that this is due to the fact that Italian oil was the first to be marketed in the region. The high number of Italian restaurants on the island favours the positioning of the Italian product, which is perceived as characteristic of Mediterranean cuisine.
What is their position in relation to non-EU competitors?
In both markets, EU oils enjoy a much stronger position than non-EU competitors, both in terms of volume and price. Moreover, the EU is the world’s largest producer of pressure olive oil, with production in the last three years ranging from 1.8 to 2.1 million tons, out of a world total of 2.5 to 3 million tons. Furthermore, EU controls and guarantees on food products are internationally known and appreciated.
Oil of North African and South American origin tends to be in lower price ranges.
EU exporters benefit from the bilateral trade facilitation agreements recently signed between the EU and Japan.
Currently, competing non-EU countries are in a very marginal position.
What are the characteristics, demography, socio-professional profiles and type of consumers today?
The Japanese population lives mainly in big cities. There is a wide cultural gap between the inhabitants of the metropolis, who have increasingly international tastes, and the traditionalist inhabitants of the province. It is therefore essential to concentrate communication initiatives in the city, where they can show greater effectiveness and where there is still a large potential for improving product awareness.
The Japanese population, like the Italian one, is progressively ageing, a phenomenon that has strong and different implications on domestic consumption and public finance: the population over 65 is close to 30% of the total (in Italy it is just over 22%). Households have been progressively reduced in size, with those with 4 members increasing from a quarter to 14% and those with two members to over a third of the total, all accompanied by a considerable development of the population of singles. This has favoured the development of ready-made dishes (lunch box) and meals out (also because lunch breaks are short and the shops keep regular hours). Families often do not eat together even in the evening, because the many hours of overtime push workers to dine with colleagues.
According to statistics from the Directorate-General of Budget, Accounting and Statistics of Taiwan, the Taiwanese population is 23.57 million. About 11% of the total population is concentrated in the capital Taipei, the other major metropolitan areas include New Taipei City, Taoyuan, Taichung, Kaohsiung and Tainan.
Taiwan’s unemployment rate fell to 3.70% in the first half of 2018. The working population is 11.4 million. Average monthly salaries in the first half of 2018 increased by 3.66% to 55,435 NTD (about €1,580). The average salary in Taiwan remains below that of the other three Asian Tigers (Hong Kong, Singapore, South Korea).
What is the per capita consumption and what are the medium-term consumption trends for the product category and the specific products of the planned action?
Since the early 1990s, total purchases have increased from 4943 t in 1992/93 to 61903 t in 2014/15, an increase of more than 12 times over 22 years. Olive oil, especially extra virgin olive oil, is appreciated by the Japanese mainly for its beneficial effects on health, its pleasant taste and its cultural and historical associations. Other key factors to consider are economic and cultural. Japan is one of the largest economies in the world; disposable income is high and is reflected in household consumption behaviour. Culturally, the country is increasingly open to the outside world, discovering and adopting practices from elsewhere, particularly the West. This openness, allied to the relative wealth of the country, is demonstrated in the consumption of olive oil, a pillar of the Mediterranean Diet. Meals away from home are a relevant habit, and Japanese consumers tend to require the use of high quality ingredients.
With 23 million inhabitants and a consumption of about 7,000 tons, Taiwan has an annual per capita consumption of 300 grams. In general, the presence of Italian products, while registering a growing interest from local consumers, remains below the potential expressed by the market, always favourably disposed towards “Made in Italy”. To date, the Italian commercial penetration has been favoured above all by two factors: the intrinsic strength of some sectors that are “self-promoted” thanks to a consolidated image at a global level, as is generally the case for luxury and fashion products, and the initiative of local importers who independently identify growing market niches, as is the case for some food products, coffee, olive oil, chocolate.
Due to the absence of strong Italian entrepreneurs in the area, the reduced participation in fairs, even if local, which here remain crucial for the knowledge and diffusion of products, and the lack of ad hoc advertising and communication campaigns, the generality of consumers and importers remains linked to a stereotyped image of the Italian offer and its production system. The very generalised attraction that Italy exerts on the local collective imagination does not sufficiently stimulate interest in diversified product ranges. The main challenges to be faced therefore concern the information related to our productions and the training/”education” to Italian taste and style, to be transmitted at all levels. These observations are valid essentially for food and wine products, but also and more generally for the whole of our offer.
Euromonitor International’s data confirm a continuation of the demand for olive oil, which should develop in the coming years at a slightly slower rate in volume than in value (+30.30% until 2022; +30.51% in value), which implies that Taiwanese consumers will continue to focus on the highest quality products, considered safer. Cheaper alternatives for consumers with elastic, price-sensitive demand will continue to be a linear share of the shelves.