By Natasha Telles D’Costa
As the trend towards preventive medicine grows, the demands on the food industry have gotten increasingly arduous. These demands question the industry’s ethical responsibility to provide food that is not only tasty but economically provides a wholesome balance of nutrients.
Indeed even Hippocrates probably didn’t realise the truth in his words when he said, “Let food be thy medicine, thy medicine shall be thy food”. With the rise of this manner of thinking food producers have had to revamp their entire value chain to ensure that healthy features on their product packages. Edible oils in particular have come under much speculation for their fat content and cholesterol raising effects. However the one oil that has come through this scrutiny and actually benefitted from it is the earlier niche market of olive oil.
Olive oil is a fat obtained from the olive (the fruit of Olea europaea; family Oleaceae), a traditional tree crop of the Mediterranean Basin. The oil is produced by grinding whole olives and extracting the oil by mechanical or chemical means. It is commonly used in cooking, cosmetics, pharmaceuticals, and soaps and as a fuel for traditional oil lamps. Olive oil is used throughout the world, but especially in the Mediterranean countries of Greece, Italy and Spain. Together these countries account for 75 percent of the world’s olive oil production.
Local demand
While still a comparatively nascent producer market New Zealand olive oil production has witnessed impressive growth in terms of its ability to meet the quality standards demanded of an oil that is expected to be a one stop shop to a healthy diet. While New Zealand olive oils have not been able to compete on price their quality is something that is gaining international acclaim. The industry is still mainly dependent on imported olive oil from Europe with local production accounting for less than three percent of total demand. However, European imports have come under scrutiny for their quality with concerns that they are being harvested in low cost North African countries and repackaged in Europe with added margins. This scenario is an opportunity for local production who unable to compete with the European prices could claim a share of the market via an extensive consumer awareness programme on the benefits of NZ produced olive oil over the cheaper imported varieties.
Export demand
While the local market continues to remain an attractive if difficult market to enter the opportunities for export is an avenue that most players need to address better. In 2011 New Zealand exported US$0.4 million worth of olive oil with a volume of 65 tonnes.
Key export opportunities
With a rising incidence of global heart disease the consumption of heart healthy olive oil has skyrocketed in countries such as India and China where olive oil was considered an exotic ingredient. Both nations are potential target for New Zealand based olive oil should the industry renew focus on exporting significant amounts of olive oil.
- India: With one of the world’s largest incidence of heart disease and backed by huge government awareness campaigns olive oil consumption in India has risen 60 percent to over 6,000 tonnes in 2011 from 2500 tonnes in 2009 and is continuing to grow explosively with retailers claiming they often need to update their shelves every six hours in the urban cities. Catering to the rising urban middle class and seen as a symbol in affluence olive oil has achiever premium pricing in India and is a huge attraction to importers as this bracket of Indian consumers are largely price insensitive and a growing demographic. During 2012-13, two major campaigns to promote olive oil are underway in India funded by the European Union along with partnerstate Italy and one campaign funded by the EU along with Spain
- China: China entered the olive oil import market much earlier than India and continues to be a key importer with imports expected to be over 100,000 tonnes in 2012. Olive oil primarily imported from Spain (over 50 percent) accounts for eight percent of total Chinese edible oil demand. With a semi tropical climate and a genuine lack of facilities Chinese local production is and will remain unable to satisfy the demand and imports will remain the primary source of supply
As the olive oil industry witnesses continued growth, New Zealand based olive oil needs a complete image revival and awareness building on its quality as well as ability to supply larger markets.
There is considerable scope for exports, a market that remains barely tapped and one that could provide producers with the much needed margins to help balance the need to be extremely cost competitive domestically. In a world of self-promotion it’s time for the NZ olive oil industry to get over the tall poppy syndrome and market their capability of providing world standard products at competitive prices.
Natasha Telles D’Costa is research manager, New Zealand GIC, Frost & Sullivan.
