37th Meeting of the IOC Advisory Committee on Olive Oil and

Greek Olive Oil Consumer ProfileConsumer Profile

37th Meeting of the IOC Advisory Committeeon Olive Oil and Table Olives

(Istanbul, Turkey, 27 June 2011)

Presentation byPresentation byPanayotis Karantonis

Director of ESVITE – Greece

Greek Olive Oil C P filConsumer Profile

I. The olive sector

The olive sector plays a key role in Greek agriculture,p y y gin terms of economic, social and also environmentalimportance, given that


- It is providing income and employment to morethan 500,000 families

- It is the only source of income and employment inthe primary sector of the economy in many less-favored regions of the country

- It is contributing to the protection and preservationof the environmentof the environment.


II. The olive oil

- Olive oil is the most important product of the olivesector in Greece.

P d i bili i i d i h f- Production capabilities are estimated in the area of400,000 tons.

Greek Olive Oil Consumer Profile

- During the last 3 crop-years there was a considerabledrop in the annual production around 300,000 tons,mainly due to adverse weather conditions

G i h hi d l li il d i- Greece is the third largest olive-oil producingcountry in the world behind, Spain and Italy.

More than 80% of the ann al prod ction is e tra- More than 80% of the annual production is extravirgin olive oil


III M k lIII. Market clearance

Gr i n t rpl ntr in th f li- Greece is a net surplus country in the case of oliveoil with annual production permanently exceeding bytoo far domestic demandtoo far domestic demand


- Domestic consumption, which is following adownward trend during the last few years, is currentlymoving slightly over the level of 200,000 tons

- A volume of exports of more than 100,000 tons perear is necessar in order to achie e a smoothyear is necessary in order to achieve a smooth

functioning of the market.


IV. Domestic Consumption

- Domestic consumption is very crucial for Greekolive oil given that it is accounting for about 2/3 of

l d iannual production


- During the last few years domestic consumption is declining, mainly due to the severe and deepeningdeclining, mainly due to the severe and deepening economic crisis facing Greece, which started in 2008

- Despite the drop in the level of annual consumption Greece is still by far world #1 in terms of the per capita consumption of olive oil, with the striking figure of 20 kgs per year.


In Graph I we can follow the trend of production andconsumption of olive oil in Greece from theconsumption of olive oil in Greece from themarketing year 2005/06 onwards.

Greek Olive Oil Market Production / Consumption Trend/ p

2005/06 - 2009/10

424 0450,0

Q/ty '000 tons

424,0

370,0

327,2320 0

350,0

400,0

305,0320,0

265,0 269,5 264,0

229,0 225,0250,0

300,0

,

150,0

200,0PRODUCTION

CONSUMPTION

50,0

100,0

0,0

2005/06 2006/07 2007/08 2008/09 2009/10

Marketing Year Source: IOC Statistics


In Graphs IIa and IIb we can see the per capitaconsumption of olive oil in Greece, the majorproducing countries and also some of the mostimportant mainly or exclusively consuming

t icountries.

Graph IIaPer Capita Consumption of Olive OilPer Capita Consumption of Olive Oil

Major Producer Countries

12,0

20,45G R E E C E

5,71

11,25

,

1

S P A IN

ITA L Y

S Y R IA

2,81

3,64

5,711 S Y R IA

TUNIS IA

MOR OC C O

1,49

2,81 MOR OC C O

TUR K E Y

Source: UN & IOC Statistics

0,00 5,00 10,00 15,00 20,00 25,00 K G S

Source: UN & IOC Statistics

Graph IIbPer Capita Consumption of Olive OilPer Capita Consumption of Olive Oil

Major Mainly or Exclusively Consumer Countries

1,83 AUS TR A L IA

0,90

1,09

1,72 F R ANC E

C ANADA

UK

0,32

0,55

0,831 US A

G E RMANY

J A P AN

0,01

0,13

0,26J A P AN

B R A ZIL

R US S IASource: UN & IOC Statistics

0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2,00K G S

C HINA


V. Break down of Domestic Consumptionp

At a first level Domestic Consumption of olive oil inGreece could be broken down into the followingth t b k t (G h III)three segments or sub-markets (Graph III)


Self consumption by olive oil farmers which-Self-consumption by olive-oil farmers whichaccounts for about 45% of the total domesticdemanddemand

-Consumption by the Food Service (restaurants,tavernas hospitals hotels etc) which accounts fortavernas, hospitals, hotels, etc), which accounts forabout 25% of the total, and

C b h d h h-Consumption by the end-consumers, which accountsfor about 30% of the total (Graph III)

Graph IIIGreek Olive Oil Consumer ProfileGreek Olive Oil Consumer Profile

Market Break Down

30%

45% S elf C ons umption

F ood S ervic e

E nd C ons umer

25%

Source: ESVITE

Total Annual Volume 210,000 tons


VI Consumption of Branded s Non branded ProductVI. Consumption of Branded vs Non-branded Product

However, another very important and at the samei i l f f h d itime very crucial feature of the domestic

consumption of olive oil in Greece is the fact thatdemand by the Food Service and End consumersdemand by the Food Service and End-consumers,which all together accounts for an annual volume ofmore than 120 000 tons consists of two completelymore than 120,000 tons, consists of two completelyseparate and distinctive markets, ie


-The market of Branded Product and-The market of Branded Product, and

-The market of Non-branded Product

with a market share of 45% and 55% respectivelywith a market share of 45% and 55% respectively

(Graph IV)

Graph IVGreek Olive Oil Consumer ProfileGreek Olive Oil Consumer ProfileBranded Vs Non-Branded Market

45% B randedMarket

55%Non‐B randedMarket

Source: ESVITE



In the case of the branded product market we arepreferring to sales of branded olive oil in containersof maximum capacity 5lts, by packing enterpriseslegally established and specially recognized by theGreek Ministry of Agricultural Development andFoods.


In the case of the non-branded product market we arepreferring to direct sales of olive oil to the FoodService and also to end-consumers, usually inmetallic 16 kilos tins carrying no labeling at all,either by farmers or third unauthorized individuals.In this case we are talking about olive oil which


- Is not undergoing any official quality or authenticitycontrol,

- Is distributed without the issuance of any officialsales document, as provided by law (receipt orinvoice)

- Is always presented and sold as pure and authenticIs always presented and sold as pure and authenticextra virgin olive oil.


According to surveys carried out across the countryAccording to surveys carried out across the countrymore than 30,000 tons of non-branded olive oil soldmainly to end-consumers but also to Food Servicemainly to end consumers but also to Food Serviceenterprises is usually not authentic.


VII. Structure of Branded Product Market

From the previous analysis we draw the conclusionth t th ti f b d d li il i Gthat the consumption of branded olive oil in Greece,which refers to


-Sales by legally operating and specially authorized y g y p g p yby the Greek Ministry of Agriculture packing enterprises

-Sales of branded olive oil in containers of maximum capacity 5literscapac ty 5 te s

-Sales to Food Service companies and also end-consumersconsumers.

The branded product market is accounting for b 55 000about 55,000 tons per year.

Greek Olive Oil Consumer ProfileConsumer Profile

Out of the total quantity of branded product sold onthe domestic market it is estimated that

73% or about 40 000 tons is sold to end consumers- 73% or about 40,000 tons is sold to end-consumers,and

27% b 15 000 F d S i- 27% or about 15,000 tons to Food Service

(Graph V)

Graph VGreek Olive Oil Consumer ProfileGreek Olive Oil Consumer ProfileBranded Product Market Structure

27%

E d CE nd C ons umer

F ood S ervic e

73%

Source: ESVITE



VIII. Sales through S/M chains

A. Sales by Product Quality Category

The annual volume sales of olive oil in Greecethrough the major S/M chains is estimated in the

f 40 000 Th b k d farea of 40,000 tons. The per category break down ofS/M sales is the following (Graph VI)


- Extra virgin olive oil 13,000 tons or about 33% of thetotaltotal

- Olive oil 20,000 tons or about 50% of the total

- Olive pomace oil 7,000 tons or about 17% of the total

Graph VIGreek Olive Oil Consumer ProfileGreek Olive Oil Consumer ProfileS/M Sales by Product Category

17%17%

50%O live O il

50%E x tra V irg in O liveO ilO live P omac e O il

33%O live P omac e O il

Source: ESVITE



It is important to point out that the category ‘‘virginolive oil’’ does not exist in Greece, especially inS/MS/Ms.


B. Sales by Packaging Size and Material

- On the shelves of S/Ms the consumer can findcontainers of 750 ml 1lt 2 lts 3 lts and 5 ltscontainers of 750 ml, 1lt, 2 lts, 3 lts and 5 lts

- 750 ml containers are in all cases glass bottles

- 1 lt are mainly plastic and to a lesser extent glassbottles


-2lts are in all cases plastic bottles

-3lts are mainly metallic but also plastic tins

-5lts are mainly metallic but also plastic tinsy p

In some cases one can come across 500 ml glassbottles or metallic containers (spray)bottles or metallic containers (spray)


C S l b P k in SizC. Sales by Packaging Size

The situation with regard to sales of olive oil through/the major S/M chains, on the basis of packaging

size is the following

-1lt bottles-mainly plastic- is the best sellingpackaging size

-2lts plastic bottles take the 2nd place in terms ofconsumer preferencesp


5l lli d l i i i h 3 l- 5lt metallic and plastic tins are in the 3rd place,losing ground during the recent years mainly as aresult of the economic crisisresult of the economic crisis

- 3lt containers follow in the relevant ranking buti h d dwith an upward trend

- 500 and 750 ml take, at least for the time being, theglast place in consumers' preferences.


D. Private Labels (PL)

Sales of olive oil under a private label (brand names/owned by S/M chains) are steadily increasing in

Greece mainly due to


-The considerably lower price compare to market leaders’ brands

-The serious negative effect of the economic crisis on gconsumers’ income and purchasing power and therefore on their behavior.


According to some recent market surveys sales ofAccording to some recent market surveys, sales ofprivate label olive oils account for about 25 to 30%of the total volume sales through the major S/Mof the total volume sales through the major S/Mchains.


It is also necessary to point out that during the lastIt is also necessary to point out that during the lastfew years Greek consumers are buying morequantities of olive pomace oil substituting forquantities of olive pomace oil, substituting forhealth but also for tasty reasons the usage ofvegetable oils mainly in frying.vegetable o ls a nly n f y ng.


E. Price structure and market consequences

Market prices June 2011Market prices – June 2011

i) Market leaders 1lt evoo Euro 5.54

ii) Private label >> >> >> 4.70

iii) Producer price 1kg >> acidity 0 5o >> 2 25iii) Producer price 1kg >> acidity 0.5 >> 2.25


Taking into consideration the existing situation withTaking into consideration the existing situation withregard to olive oil prices in the Greek marketduring the current month of June which is moreduring the current month of June, which is moreor less proportionately reflecting the way themarket is behaving over time, we see thata ket s behav ng ove t e, we see that


-The price of market leaders’ 1lt plastic bottle of extravirgin olive oil is higher by 18% compare to the price

f h i P i l b l dof the respective Private label product

-The price of market leaders’ 1lt plastic bottle of extravirgin olive oil is higher by 2.5 times compared tothe producer price for 1kg of extra virgin olive oil

d º ( b l h d ff h h facidity 0.5º (obviously the difference is even higher ifwe take into consideration the 1lt/kg difference)


the price of Private label 1lt plastic bottle of extra- the price of Private label 1lt plastic bottle of extravirgin olive oil is more than double compared to theproducer price for 1kg of extra virgin olive oilproducer price for 1kg of extra virgin olive oilacidity 0.5º.


Looking a little deeper into the price-structureLooking a little deeper into the price structurecharacterizing the Greek olive oil market andkeeping in mind the consequences of the severep g qeconomic crisis that the country is facing, we canunderstand and also explain to a very large extentthe reasons why

-Sales of Private Label olive oils are following anSales of Private Label olive oils are following anupward trend, steadily expanding their marketshare in both absolute and relative terms


- There was and still continues to be a very large volumeThere was and still continues to be a very large volumeof sales of non-branded olive oils, a situation which ismainly due to the existing huge gap between producery g g g p pand retail prices, but is also favored by the fact that themajor olive-oil consuming urban areas of the country,mainly Athens, are very close to some of the mostimportant producing regions (e.g. Peloponnese) which

d h il ibl di lrenders them easily accessible to direct sales.


ConclusionConclusion

The previous brief analysis of the domestic demandfor olive oil in Greece reveals a market which is to avery large extent served by non-branded product, asituation which is not effectively protecting theinterests of the consumers and also of the legallyoperating packing enterprises.


The Greek competent authorities must take andimplement appropriate measures which willp pp pconsiderably enlarge the branded product market.Such a structural change would also contributetowards bridging the existing relatively very big gapbetween producer and retail prices.

37th Meeting of the IOC Advisory Committee on Olive Oil and

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