mercoledì 28 settembre 2011

Olive oil market review #1

We would like to start today a new activity, a database of references of selected pubilcation about the olive oil market.
There are really few energies paid to shed a light on this market. As we know, the olive oil market raised to a considerable total value only in the most recent years, and this could be the main reason behind the aforementioned lack of focus. There are really few articles about international trade dynamics, consumer preferences, industrial organization. A relatively fair amount of papers contributes to uncover the policy related to the olive oil sector. Given the specific nature of both the production function and the industry, and due to the large amount of small-to-medium sized farms involved (mainly in the mediterrean area), subsidies always played a relevant role, thus leading to a need for depth analysis.
Most of the contributions, use descriptive statistics and qualitative analysis methods. Most of the attempts of inferential modelling applied to the olive oil market deserve to be refined, some presents a considerable level of analytical skills.
Finally, many articles are related to the health and cultural implication of the olive oil consumption and production.
We hope, by opening this session, to rise interest for the modelling of the olive oil sector's dynamics and to a create a virtual place where compare perspectives, ideas, and results.

venerdì 23 settembre 2011

Reputation: does it matter?

How much could a company's reputation influence the purchasing behavior of the ultimate woman or man between the shelves of a Deli or iper-market thousands of miles far away?
And what about if we consider a Country's reputation? Well, hundreds of pages have been written about reputation and business, but we feel the need for you to read this unpredictably detailed article about italian's ability in olive oil frauds, that the "The New Yorker", one of the most prestigious and "elite" american cultural magazines, edited three year ago (by Tom Mueller), titled:
"Letters from Italy: Slippery business - the trade in adultareted olive oil". (go to)

Now, the question is: where did Tom get to know about it?
"Fraud is so widespread that few growers can make an honest living" one expert says.
Tom Mueller - The New Yorker, 13 August 2007.

venerdì 16 settembre 2011

Markets "ignoring" the crisis

There is a world wide crisis, and there are places were crisis means growth. We do not intend to infer about the global scenarios effects on the olive oil international trade, however, there are Countries were the consumption of olive oil is all but decreasing. China, Brazil, Poland and Australia.

These seem to be the emerging "Fantastic Four" of the olive oil market. while the World average growht rate was downsloping at a yearly pace of -1.7% (between 2007 and 2010), mainly due to the recent economic crisis claimed to be the worst since the '29, these markets - net importers, except Australia - were showing an increasing demand for olive oil. Take two minuets of your time and look at Brazil: in the last 10 years Brazil became the 5th market for the olive oil import values, growing at an average yearly pace of +21% (+24% in the last 3 years, disregarding any economic crisis). During the first semester of 2011, Brazil registered a +35.5% compared to the same time frame in 2010. Who took advanteges of such a growth? Spain and Portugal increased their sells by the 50% in the first semester of 2011. Italians, who have (or had?) the fame of being the greatest olive oil merchants, seemingly did not ride the Brazilian boom: their exports grew by the 0.5%.
On the other hand, Italy was able to attain better results in Poland and Australia, holding on its market quota - scaling up of a 5% in Australia.

mercoledì 10 agosto 2011

The Asian market #3 - Shadows and lights on the Japanese olive oil market.

Till the last year the Japanese demand for olive oil was seemingly a deepening sink. While the international trade in 2008 and 2009 was falling (with some exception), the Japanese olive oil imports were flowrishing. As showed in figure 1, the growth rate reached the roof of a +31.6% in 2010, and Japan was the 7th market in the world wall of fame of olive oil importers. The beginnig of 2011 stopped this favourable season. Comparing the first 5 months in 2011 and 2010, the Japanese olive oil imports decreased by a severe -10%.

The most likely reason could be addressed to the Tsunami disaster (see our previous post) and to the economic crisis that invested also this share of Asia. Turkey and Spain suffered the most for this debacle, leaving on the ground a -28.3% and a -17% respectively, while the Italian exports to Japan lost "only" a -6% (all variations are reffered to values of trade flows). Italy was probably helped by its higher quality product, as the average export price seems to suggest.

These figures could open interesting opportunities for the Italian exporters: beyond the shadow there could be light. Their "resistance" not only indicates a favorable consensus of the Japanese consumers' preferences, known to be picky toward quality and to prefer organic to conventional food (will this attitude increase as a consequence of the fear for the nuclear contamination?) but also the chance to regain market shares taking advantage of their direct competitors' debacle. All in all, figure 3 shows us that the Italian olive oil exports to Japan are slowly, but continuously, driving toward the 2007 level.

mercoledì 18 maggio 2011

The Asian olive oil market: issue #2 - waiting for the Japanese post-tsunami.

The Japanese virgin olive oil import fall down by the -13.6% -compared to the first trhee months in 2010- and the average price stops at 3.823 euros per kilo, -3.39% compared to the same period.

Figure 1

The March 2011 11th Tsunami's effects over the Japanese economy will wait no longer. The "disaster economics" analyists are not new to such forecasts, and they are setting the pace with the first figures. International trade exchanges, mainly for those sectors where the catastrophic event could have broken entire supply chains characterized by externalizations in foreign Countries are the most vulnerable (Escith et al., 2011). The virgin olive oil Japanese import (that includes also extravirgin with or without origin and/or organic certification) should not be affected. However, the willingness to pay for such product cold be affected by several other factors, such as emotional reactions, over-payed attention to more basic needs, reduced purchasing power, destruction of selling points or any other commercial and productive activities. Basically, it is too early to come out with a exaustive evaluation, since data actually stop at March 2011.
Nonetheless, we can say something. If since February 2011, the Japanese virgin olive oil import raised by 150 thousands euros, a deeper looks shows that import fall by the -13.6% comparing Jan-March 2011 with Jan-March 2010. But what kind of olive oil reaches the Japanese shelves? Well, it seems that the Japanese consumers and industry (especially cosmetic) are quite aware of quality issues. If we take the average unit value as an average price (that includes insurance and toll) it is still high, indicating a quite high quality product, although it fell down to 3.823 euros, -5.72% with respect the average price in 2010 (say 4.055 euros), and - 3.39% with respect Jan-March 2010. Import value and quantity fall down - following a negative trend begun almost a year ago (Figure 1) - as well as the average price, but the truth is hidden in the details. So, while we invite you to order (for free) our complete report, we signal the latest trends for the main exporters to the Japanese market: Italy, Spain and Turkey. Comparing the first three months of 2011 with the respectives in 2010, Italy is the only showing positive variation (+8.5%, see figure 2), while both Spain and Turkey lost some points (-12.2 and -2.1 respectively).
Figure 2

Figures and facts from our elaboration on ICE and ISTAT data.
Creative Commons License

venerdì 15 aprile 2011

What's happening in Asia

While we are here analyzing figures and data, companies, small business and Governments move their steps in the Asian olive oil market. Here some example, just to tickle your curiosity.

Portuguese olive oil and wine at the Shangai 2010 Expo: pictures showing promotional activities, tasting and chefs.

Some good impressions about olive oil consumption in Japan (from October 2009..), although not as grounded as a consumption analysis could be, can be found on Teatro Naturale, just click.

The Spanish Government went further. Spain is actually (March 2011) the larger exporters of olive oil in China - still we need to deepen the details. May be this leading position can be addressed to the Spanish Foreign Trade Institute, that created a dedicated website to promote Spanish olive oil in China (in Chinese and English). Check it out here.

India, where all still have to come, starts showing interest toward olive oil. That's what the Press Trust of India, PTI, the largest press agency in India says.

"Driven by increasing health-food awareness in India, and aggressive marketing by various firms, Olive oil consumption in the country is likely to grow by over 5-fold to 25,000 tonnes in the next five years." "Olive oil consumption in India is growing at a fast pace in India as more and more people are switching to healthier foods. It is likely to grow over five fold by 2015," Indian Olive Association President V N Dalmia said.He said various Olive oil producing countries and marketing firms are investing in creating awareness about the oil in the country. "European Union, particularly Italy, has earmarked a budget of over 1.3 million euros, which will be spent in the next three years, for spreading awareness about the Olive oil in the country," Dalmia said. According to the Association, India's Olive oil consumption was around 2,600 tonnes in 2009 and is projected to cross 5,000 tonnes this year. "By mid-2010, the consumption had already crossed 2,600 tonnes and as the maximum growth is expected during the festive season, we are hopeful that it would easily cross 5,000 tonnes mark," he added. Besides, efforts are being made to grow Olives in India".

Just a "candy" to close with Inda: here a Spanish company exporting to India: what to say about it? We could start from the packaging.
As professionals all we can say is take this facts as they come: they are not based on reliable investigations, still they are representative of the dynamics in the Asian Olive Oil Market. We will do our best to support them with proofed analysis.
More to come.

martedì 12 aprile 2011

The Asian olive oil market: issue #1

We start today a new focus over the Asian olive oil market, namely imports.
If the early rise in olive oil consumption in the Asian Countries made this topic interesting, the latest events in Japan call for some further investigation. Although we do not have figures about organic olive oil, we believe these information can be of a real use also for organic producers and traders. Asia is not considered a producing area - we will come across it later - thus imports are a good aproximation of this market.

Today we begin looking at the growth rates in the last two years. As you can see in the picture below, 2009 will be remembered as a "not-so-good" year among olive oil marketers, while 2010 shows interesting perspectives. Compared to the World market the Asian imports turn out to contain losses in 2009 (-3.9% growth rate vs -14.6%) and show an incredible reaction in 2010 (+42.7% vs +13.9).

source: our calculation on Istat and ICE data.