Olive oil Italian focus

Transcription

1 Olive oil Italian focus January 2015

2 Company profile Mintec Limited Mintec is the principal independent source of global information for commodities and raw materials. Mintec has a suite of unique procurement tools and training courses all intended to assist with the daily process of analysing and interpreting market information. Mintec helps purchasing professionals minimise risk, ensure continuity of supply and ultimately to gain a commercial advantage. Mintec's core product is Datagain, a sophisticated tool for analysing and interpreting market information. We also offer market reporting, price benchmarking services and training courses. Mintec Ltd 9 The Courtyard, Glory Park Wooburn Green High Wycombe Buckinghamshire HP10 0DG United Kingdom Tel: +44 (0) Fax: +44 (0) support@mintec.ltd.uk Web: All Rights Reserved Mintec Ltd has endeavoured to ensure that Mintec Ltd has the rights to use all images, company names and information contained within these documents. All materials contained in these documents are protected by copyright laws and may not be reproduced, republished, distributed or otherwise exploited in any manner without the express prior written permission of Mintec Ltd. You may utilise this information for your own personal and commercial use only, without altering or removing any trademark, copyright or other notice from such material. The forecast shown in this report should be used for guidance only and Mintec accepts no responsibility for losses incurred by using this information. 2

3 Contents Contents Market background Italian olive oil profile Production by region Current market situation Quality issues in Italy

4 1. Market background Approximately 2.9m tonnes of olive oil are produced globally each year, based on the five-year average from 2010 to The major producers are Spain (43% of world production), Italy (14%) and Greece (10%). Spain and Italy are the top exporters, accounting for around 29% of world exports each, followed by Tunisia (16%). The US is the biggest importer, accounting for 37%, followed by Brazil and Italy with 9% of shipments each. Olive oil is graded based on a set of chemical parameters as well as taste and smell characteristics. The table below summarises the key internationally recognised grades of olive oil, although parameters and testing methods vary slightly depending on the country and the body which set the standards. Table 1. Olive oil grades Grade Virgin Extra virgin Lampante Refined olive oil Pomace Description Produced using only physical or mechanical means with no chemical treatment. Deemed to be the highest quality (i.e. least acidic) virgin olive oil. It contains no more than 0.8% acidity (no more than 0.8g of free fatty acids per 100g) and is judged to have superior taste. Virgin olive oil with acidity over 3%. It is not suitable for food use unless refined and is mainly used in the industrial market. The high acidity can result from poor quality olives or increased exposure to heat and air. Olive oil which has been chemically treated to reduce the strong olive taste and lower the acidity to around 0.3%. Obtained from the ground pits and flesh which are left after crushing, using solvents. Not usually sold at retail. 2. Italian olive oil profile Italy is the second largest producer of olive oil in Europe, after Spain. Production is characterised by a wide range of grades, qualities, olive varieties, and flavour profiles. Many Italian growers focus on producing higher-quality oil using predominantly traditional methods. Approximately 60% of all olive oil produced in Italy is extra virgin olive oil, 17% is virgin olive oil and 23% lampante oil. These percentages change from year to year, depending on how growing conditions affect quality. 4

5 Italy is the world s leading importing country, responsible for about one-third of global trade in olive oil. The origin of imports is mainly Spain and Greece. Italy s olive oil imports are largely imports of bulk product, bottled in Italy and exported further. Therefore, Italy is also home to large companies that focus on blending, marketing and distribution. Many of them are not vertically integrated and are not involved in oil production, instead sourcing bulk oil from mills, mostly from Europe, outside Italy. Growing and milling are mainly done by small farms and a very large number of small mills Production by region As the olive plant requires a mild climate, the cultivation of olive trees is widespread in the south (around 80%), with the largest share of production from the southern regions of Puglia, Calabria, Sicily and Sardinia. In the past, large areas of southern Italy produced lower quality olive oil. However, in recent years, improvements in cultivation and processing have resulted in an increase in olive oil quality. Oil from southern Italy still tends to be priced lower than from other producing areas, predominantly due to less advanced marketing. Olive production also comes from central regions (around 19%). The central-southern area includes lower Lazio, Abruzzo, Campania and Molise. Production in the north is more limited than in the south and central Italy (around 2%). The northern area includes the central-northern olive producing regions of Lazio, Marche, Umbria, Tuscany, Liguria, Emilia Romagna, Lombardy and Veneto. The oil from this area is typically of medium to high quality. Production depends on the local tradition of harvesting and processing processes, notably in Tuscany, Umbria, as well as in northern Lazio and Liguria. Total estimated production in 2014: 302,470 tonnes Source: Ismea 5

6 3. Current market situation Olive oil prices from the two top producing countries have been increasing since summer 2014; this is due to drought conditions earlier in the year and an infestation of the olive fruit fly. Above average dry and warm weather throughout the Mediterranean olive growing belt in May and June hit olive trees during the blooming period, when moisture is vital to ensure maximum olive growth and the eventual oil yield. Spanish olive trees were also already stressed from the record output in Estimates of global production for 2014/15 are at 2.4m tonnes, 27% down y-o-y. Spain s 2014/15 production is forecast at 0.82m tonnes, down 54% y-o-y from 1.8m tonnes in 2013/14. Italian olive oil production for 2014/15 is forecast to fall 34% y-o-y to 0.3m tonnes from 0.46m tonnes in 2013/14. As the 2014 harvest began, the damage done to the fruit became clearer and the supplies of the previous year s production tightened. Despite good production expectations for Greece, with reductions to production in both the major producers and memories of the poor harvest of 2012 still fresh, prices rose sharply. Table 1. World olive oil production (thousand tonnes) Production 2010/ / / / /15 Change % World % Spain % Italy % Greece % (e)=estimate; change = 2014/15 to 2013/14; Source: International Olive Oil Council 3.1. Quality issues in Italy Prices in both Italy and Spain have been rising steadily throughout the year. However, between early October and mid-november, prices in Italy were rising more sharply than in Spain. The adverse weather affected both Spanish and Italian olive groves. However, in addition to the impact of drought conditions that have affected most of the Mediterranean belt during April and May, Italy has also suffered from an infestation of the olive fruit fly over the summer. This has led to a fall in projected production in all of the producing regions with the exception of Piedmont and Sardinia, leading to sharp price increases. Although Italian production is still expected to decline less than production in Spain, the fruit fly infestation led to concerns about quality, causing prices to spike. The average price in Italy for extra virgin oil was up 58% between early September and mid-november. 6

7 Prices in Italy then eased in the second half of November and December (down 11%), partly due to demand rationing as prices reached an unsustainable level; although they have stabilised since and are still up sharply y-o-y. The average prices from a variety of regions; Source: Mintec Quality concerns also resulted in an increasing premium between extra virgin and virgin olive oil in Italy, whereas in other markets premiums have not increased so much. 7

8 The impact of the fruit fly issue varied from region to region in Italy depending on the level of infestation and the efficacy with which it was dealt with. The regions of Liguria, Basilicata, Marche, Abruzzo, Tuscany and Umbria were affected the worst, with combined production in these regions estimated to fall by 45% y-o-y. Projected production in Puglia, the top producing region, fell by 35% y-o-y from 184,826 tonnes in 2013 to 119,398 tonnes in Piedmont managed to treat the infestation quickly and successfully with a resulting projected production increase of 39% y-o-y. Sardinia, in contrast to the rest of Italy, had a poor harvest in 2013 and although weather conditions there were not ideal, production there is projected to increase by 30% y-o-y. The average fall in production across all Italian regions is 29%. Table 2. Italian olive oil production (tonnes) 2014 e 2013 Change* % Puglia 119, ,826-35% Calabria 67, ,205-35% Sicily 38,439 49,281-22% Campania 22,815 38,026-40% Lazio 12,219 19,395-37% Abruzzo 10,226 18,592-45% Tuscany 9,245 16,808-45% Sardinia 5,876 4, % Other 17,168 29,047-41% Total 302, ,701-30% (e)=estimate; change = 2014/13; Source: Ismea 8