Olive oil trends in Russian market

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In 2012, the global market of olive oil underwent a dramatic change. In spring, when the whole of Europe was experiencing a new wave of economic crisis, the price of olive oil was reduced by more than half. A ton of oil costs an average of $2,900, whereas seven years ago, the cost was $6,000 per ton.
However, the situation is such a critical one, lower prices are not the only issue of concern. • Spain, one of the largest exporters of olive oil, attracted a huge crop of olives which greatly reduced the global price of the original raw materials;

Manufacturers of cheaper corn and soybean oils flooded the market with massive advertising campaigns;

News on the possible exit of Greece from the euro has damaged the external economic relations of the country, causing export prices of its olive oil to fall. Interestingly, these factors will not affect the Russian olive oil market. It continues to adorn the supermarket shelves, and lower prices are not on the horizon. Moreover, experts agree that the market will continue to grow.

Russian realities and new trends

Price stability and growth in consumption of olive oil in Russia are natural. Although its market share among other vegetable oils is only 0.5% loyal consumers continue to seek it out and are prepared to buy at a set price. Olive oil is perceived in Russia as an elite product and hence its consumers are people with high incomes and high purchasing power.
At the same time the country has increased its imports of the extraction of olive oil from a cheaper meal (a by-product formed after the first pressing). Its market share in 2011 was 19% in volume and 13% in value. This shows the growth of customers with medium and low incomes. A small portion of the extraction of olive oil supply market leaders are Spain and Italy, and the bulk of the second-tier brands are provided mainly by Turkey. The price of olive oil from the meal has a tendency to decrease and in 2011 and it fell by 6%.

Leaders in 2012

Spain holds the leading position in the domestic market of olive oil. Its share in 2012 was 55% in volume and in value terms. Spain’s permanent rivals – the Italians again this year failed to close the gap. The share of Italian oil in Russia in 2012 was slightly higher than 28% in value and volume terms (compared to 26% in 2011). Sales growth recently slowed to less than 10%.
Greek producers, despite major promotions in the past, have been unable to improve their position in the promising Russian market. The share of Greek oil in Russia for the year amounted to 9% in volume and 11% in value.
Other significant suppliers of olive oil are Turkey, Tunisia and Portugal. The total share of their products in the Russian market in volume terms is 9%.

Manufacturers and Brands

The rating of brands of olive oil in recent years has not changed. According to euromonitor.com, the most popular oils on the Russian market are Spanish Borges and ITLV (Borges Mediterranean Group, 15,8% of the market), Italian Monini (Monini SpA, 8,4% of the market), as well as Spanish Carbonell (Deoleo SA, 10 , 2% of the market) and Maestro de Oliva (Olive Oil International sl, 8,1% of the market).
These clear leaders, determined over the last ten years, hold 45% of the imports of olive oil to Russia. However, new manufacturers and brands may well find a place in the Russian market, and possibly enter the top ten.

Russian companies are also importing from the market leaders. According to a study OilWorld.Ru: LLC ‘Basque Country’, a Moscow-based company is involved in the supply of Borges olive oil, whilst ‘Interfood’ a St. Petersburg-based company works with a wide range of brands (Monini, Maestro de Oliva, Ibetrica, Bioitalia, Oliveto). The share of each company is 13%.
Russian consumers regard olive oil as an exclusive product, not one of mass consumption. There are a number of reasons for this: • Consistently high prices, amid falling prices in Europe, are unattractive and discouraging.

Despite their consumption of olives and olive oil, the bulk of consumers know very little about the grades and quality of olive oil and olives.

The popularity of sunflower oil. Despite the increase in prices, it is more common for domestic consumers.

A lack of local production. Olives are not grown in Russia and the main source of supply is from southern Europe.
Olive oil has been in Russia a long time, its sales have continued to grow, and the market as a whole appears to be promising. Its current levels are indicative of a growing market and it is believed that the sale of olive oil will be doubled over time.
Olive oil is still perceived as a gourmet product and for people who are concerned with their health. Producers’ next aim is to now make olive oil appealing to the mass consumer.
In 2002 the Ministries of Agriculture of Spain, Italy and Greece combined to promote olive oil in Russia with a massive advertising campaign promoting their product. This campaign has already yielded results: Spanish, Italian and Greek oil hold the leading position in the Russian market, maintaining their regular customers and attracting new clientele.
There are a number of global programs to promote the product:

‘Olive oil Spain’ is a program that was commissioned by the Trade and Economic Section of the Embassy of Spain. It also supports the Spanish Institute for Foreign Trade (ICEX), the Spanish Association of Producers and Exporters of olive oil (ASOLIVA), EXTENDA (sales office Andalusia) and Interprofesional del Aceite de Oliva (a professional organisation for the Spanish olive oil industry). This program is carried out jointly with the Spanish olive oil distributors in Russia.

‘Mediterranean diet’ and ‘Liquid Gold’ are projects of the Greek Ministry of Agriculture along with the European Union. These opened up great prospects for Greek olive oil in Russia with Greek manufacturers claiming that the result of large-scale advertising campaigns has resulted in the increase of exports and profits.
Methods of promotion

Price reduction is the simplest and most obvious way to promote olive oil in Russia. The price should be at least the same as in Europe; however the main obstacle to this is the cost of transport.

Repackaging. Most of the olive oil is sold in glass bottles; however glass creates a sensation of elitism and inaccessibility for the Russian consumer. The use of tin remains affordable as does the use of plastic bottles and it is hoped that producers will use this packaging in the future. .

The availability to the consumer. When a bottle of olive oil is readily available, the product is no longer seen as something elite. In addition, the supply of large quantities allows for the reduction of the price, thus making it more affordable and attractive to new customers.

The lack of a relationship with the various retailers will not allow other brands to break into the Russian market and to compete with the leaders. In addition, foreign suppliers find it very difficult to carry out their own advertising campaigns in Russia. Therefore, these strategies are increasingly moving to local distributors and subsidiaries.

Promotion of healthy lifestyles and advertising the benefits of the Mediterranean diet. As well as endorsements by doctors, athletes and other professionals, interviews with experts, representatives of the industry, and a variety of educational materials on healthy eating.
Other methods
• Tours to the country of production have become very popular for Russian officials, representatives and journalists.
• The publication and promotion of recipes including the use of olive oil.
• Promotions in supermarkets and participation in major exhibitions.
• Famous brands of olive oil are often used and promoted in cooking shows.
• Advertising signs and leaflets particularly in the metro. The product has a great potential in the Russian market despite olive oil being perceived as exotic for most Russians. Part of the responsibility for this lies with the producers themselves, who initially presented it as an exclusive product. Now it’s time for a change!

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