The collapse of olive oil consumption in the face of the price escalation is felt in the results of companies in the sector. Data from the Ministry of Agriculture, Fisheries and Food show a collapse of the business in volume of 35.4% compared to the previous season, which reaches up to 40% if only the internal market is taken into account.

The fall in accumulated production in this campaign reaches, in fact, 55.6%. Until last July, which is the latest data available in the monthly reports of the Ministry, 663,300 tons were produced, far from the almost 1.5 million of the same period of the previous season.

For its part, the records of the National Association of Industrial Packers and Refiners of Edible Oils (Anierac) reflect a decline of close to 14% in the accumulated sales of this campaign in relation to the previous one. This association brings together more than 60 companies that represent 70% of the total national market and, therefore, is a good thermometer of the situation that the sector is going through.

Specifically, total olive oil sales in the first eight months of 2023 amount to 170.6 million liters, representing 35.72 million liters less than in the same period last year and a percentage drop of 17.3%. And with the campaign practically finished, Anierac companies have placed on the market just under 244.4 million liters, a figure 13.8% lower than that of the previous campaign.

This market trend is reflected in the results of Deoleo, world leader in the olive oil sector, which has just made public the performance of one of the most complex semesters in the company's history. As reported to the National Securities Market Commission (CNMV), the escalation of prices and their impact on consumption have caused a reduction in sales volumes of close to 22% compared to the previous year.

"The drop in volumes has affected the shares of the brands for the benefit of the distribution brand," says the company in a statement in which it states that this fall in volumes "has caused an erosion in margins that could not be compensated by the increase in prices", impacting on Ebitda, which decreased by 43% in year-on-year terms, to 12.7 million euros.

On the other hand, both the rise in interest rates and the costs of the novation of the company's debt have meant an impact of 8 million euros due to the higher financial expense during the period, which has led the company to record net losses of 9.7 million euros.

The president and CEO of Deoleo, Ignacio Silva, said that throughout the first half of the year the company faced "a historical context due to the complexity of events", but defended that, despite the challenges, they have reacted "with agility, defending the margin" and relying on "the resilience" of their "iconic brands".

Quality oil, more expensive

In the face of the pressing drought and episodes of extreme and prolonged heat that have reduced the availability of raw material and caused a historic price escalation of more than 90%, the low production, "both in terms of quantity and quality" has resulted in a greater increase in the prices of quality oil, explain from Deoleo.

"This shortage has led the group to use its capillarity in the purchase and to collect greater volumes of stocks, to ensure both the quality and availability of the product," they add.

The escalation of raw material prices has also affected consumption, especially in mature markets such as Spain and Italy, which have registered double-digit falls in both cases. Meanwhile, in the United States, where demand remains strong, the reduction has been practically non-existent.

For the leading firm in the sector globally, the second half of the year will be "even more challenging", since the latest EU estimate for the olive oil harvest of the current campaign foresees a world production of 2.5 million tons, 27% less than in the previous campaign and 24% lower than the average of the last five campaigns. This reduction is concentrated in the EU countries, where a fall of 40% is estimated, while for the rest of the producing countries the expected decrease is 1%.