Spain’s Deoleo, the world’s largest olive oil producer, is facing a series of challenges that are impacting the olive oil industry as a whole. These challenges include climate change, soaring prices, high interest rates, and robust inflation. Two consecutive years of scorching heat in Spain have limited olive harvests, leading to an unprecedented price rally that has surprised consumers and industry experts. Spain, which accounts for over 40% of the world’s olive oil production, is a global reference for prices.
Price of extra virgin olive oil in Spain’s Andalusia hit a record high of 9.2 euros per kilogram in January, but has since cooled to around 7.8 euros. Despite the recent rain in Spain that boosted production estimates, Deoleo believes that the current situation is cyclical and expects prices to return to a more reasonable level when future harvest yields return to normal. The company remains cautious about the outlook for olive oil prices and emphasizes the need for a profound transformation in the industry in terms of sustainability, innovation, and quality.
Most of the world’s olive oil supply comes from the Mediterranean region, with countries like Spain, Italy, and Greece among the top producers. Climate change poses a significant threat to olive trees, as they are susceptible to extreme weather conditions. Deoleo highlights how droughts and high temperatures during critical phases of olive fruit development have led to severe shortages in Spanish harvests. The company stresses the importance of addressing price volatility, as prices at origin make up a substantial portion of total costs.
To better protect olive trees from climate-related extreme weather events, Deoleo believes that the olive oil sector as a whole needs to take action. All industry stakeholders must work together to reduce price volatility and increase predictability in order to mitigate the impact of external factors on product pricing and company decisions. This strategy will be crucial in ensuring the long-term sustainability of the olive oil sector.
Deoleo’s chief sales officer, Miguel Angel Guzman, emphasizes the need for a comprehensive transformation in the olive oil industry. He underscores the importance of adopting best practices in sustainability, innovation, and quality, with a focus on meeting consumer needs. The company believes that a proactive approach to addressing the challenges facing the sector will be instrumental in shaping the future of the industry.
As the olive oil sector navigates through a challenging period marked by climate change, soaring prices, and high volatility, Deoleo stresses the importance of implementing strategic changes. The company remains hopeful that with a concerted effort to address these challenges through innovation, sustainability, and quality, the sector will emerge stronger and more resilient in the face of future uncertainties. By taking proactive steps to transform the industry and adapt to changing market conditions, Deoleo believes that the olive oil sector can overcome its current challenges and thrive in the years to come.
