Rabobank Report: Emerging Markets embrace Olive Oil at a fast rate

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Demand for olive oil in emerging markets has grown at a rate of over 13%
since 2007 and such double digit growth is expected to continue for at least the next five years. According to a new report from Rabobank, suppliers will have to differentiate their strategy change the way in which they source their produce if they hope to access the full potential of these new markets. The nascent Chinese market offers a considerable opportunity, with A-brands and cost leaders best positioned for success.

“The global olive oil market grew at a 3% CAGR between 2008 and 2012, but this growth rate varies widely across different markets” commented Rabobank analyst, Vito Martielli.

“Traditional consumer countries in the North Mediterranean, i.e. Italy, Spain and Greece, have the highest per capita consumption (more than 12kgs per person) but are characterised by a very mature and stagnating market. In contrast, developed markets offer significant potential in terms of both value (at present they account for 41% of the global market) and growth; with levels projected to continue at around 4% for at least the next five years”.
Emerging markets that hold the greatest potential for the olive oil industry posting an impressive 13% growth rate over the last five years and looks set to continue. Brazil and China are the two most important in terms of volume and producers are gearing up to tap into the opportunities on offer in each country.

Business strategies need to adapt to different market structures

China imported 45,000 tonnes of olive oil in 2012 and is fast becoming a crucial market for producers. Several major state-owned enterprises (SOE) have been increasing their imports of bulk olive oil from southern Europe. Rabobank expects to see in China an increasing number of olive oil cost leaders partnering with local brands that have existing distribution capabilities. In other emerging countries, like Brazil and Russia brand players will have a critical role.
Private label products (PL) and A-brands represent the primary growth opportunities in developed countries. In the UK, the most developed food retailer market, the PL share in olive oil accounts for almost 5%, while it accounts for only 25% in the US and just 20% in the most fragmented Italian market. The latter two markets and several other northern European markets provide another interesting growth opportunity.

There are factors which will restrict the industry’s ability to realise its ambitions in emerging markets. First, there is a need for all players to strengthen their strategic sourcing options. Secondly, a generic marketing campaign is required in emerging markets, to educate consumers about the benefits and versatility of olive oil.

Source: Rabobank

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