When will its price finally fall?

The price of olive oil, a victim of drought and global warming, continues to rise. Nearly a million buyers have turned away in France this year. But a decline may begin.

Would summer be as delicious without a drizzle of olive oil on traditional tomatoes and mozzarella? As salad season approaches, “liquid gold” lives up to its name more than ever.

Now in supermarkets the cost of bottles often exceeds 10 euros. Over the year, their price in France increased by almost 20%. As a result, in an inflationary environment, purchases fell by 10% between March 2023 and March 2024, according to Nielsen.

Faced with a surge in labels, nearly a million families gave up olive oil entirely in one year. Others were able to switch to smaller bottle sizes: the average quantity per purchase is 0.9 liters, a drop of almost 5% over the year, again according to Nielsen.

To fully understand why the price of olive oil reaches new heights and when it may fall, you will have to cross the Pyrenees. Spain produces half of the olive oil consumed in the world.

Production in Spain halved

It would therefore be an understatement to say that the market is very dependent on Spanish production. But she suddenly fell. An unusual drought, a sign of climate change, has devastated olive fields.

Each year, the fruits, which provide precious nectar, are collected during an annual campaign that runs from October to February. Oil production in Spain in 2022/23, which produces the oil we currently consume, has been halved compared to the previous campaign. Global production fell to 2.5 million tonnes (down from 3.4 million in 2021/2022), according to the European Commission.

Due to the shortage of the product, the price logically skyrocketed. In Spain, 100 kg of extra virgin olive oil now costs almost 900 euros, in 2022 this price was half that, again according to the Commission. From January to September 2023, Spanish supermarket sales of olive oil increased by 42%, according to Spanish consumer organization Facua.

Olive oil is also expensive in the markets.

“We went from 3,000 euros per tonne to a maximum of 9,500 euros,” says Fanny De Gasquet, CEO of Baillon-Intercor, a vegetable oil brokerage.

Such a sharp increase can also be explained by the specifics of the olive oil market. “It is a niche market, with small volumes compared to other vegetable oils and few contacts. Sellers are largely concentrated in one country, so they have a lot of influence on prices, which can vary. They take off very quickly depending on the context. “, explains Fanny De Gasquet.

Falling prices in the fall?

Olive oil has become too expensive, so everyone, both consumers and producers, is cutting back on their consumption.

“For example, ratatouille producers need a lot of olive oil, at these prices they may have to blend it with another oil to preserve the flavor but reduce costs,” illustrates Fanny De Gasquet.

Amid inflation and falling purchasing power, consumption in Europe fell by 20% between 2021/22 and 2022/23, according to the European Commission. This drop in demand could provide some oxygen and lower prices. Fanny de Gasquet noted a fall from 9,500 to 7,500 euros per ton over the past month. “This is mainly due to falling consumption in Europe,” she said.

But until this fall is reflected on the labels, we will have to wait “at least until the end of summer 2024,” according to Fanny de Gasquet. Since olive oil is so dependent on the weather, a better harvest is expected this year. “The outlook is slightly better as there has been more rain in the early spring and there is likely to be less drought expected this year.” The Commission expects European production to increase slightly by 7% in 2024.