5-1 Market Analysis

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EUROMED SUSTAINABLE CONNECTIONS ANNA LINDH FOUNDATION

BUSINESS ANALYSIS 5:1. EVALUATING FRANCE, UK AND

USA CONSUMER MARKETS IN OLIVE OIL: A QUANTITATIVE ANALYSIS APPROACH TO SUPPORT MARKET ENTRY SELECTION PROCESS WITH FAIR TRADE PRODUCTS

May, 2008

Abstract 1

In this report the France, UK and USA markets are evaluated in relation to olive oil exporting possibilities. Themain purpose of this research is to present the market and evaluate the markets in order to investigate thepossibility of exporting and promoting olive oil with fair trade procedures. Essentially, this report is a consumermarket analysis built for export decision making purposes.

Definitions and analysis

Sustainable development supports meeting human needs while preserving the environment so that these needscan be met not only in the present, but also in the future. The term was used by the Brundtland Commission

that gave the most popular definition of sustainabledevelopment that is; development that "meets the needs of the present without compromising the ability of futuregenerations to meet their own needs.

The field of sustainable development can be divided to 3categories: environmental sustainability, economic sustainability and sociopolitical sustainability. Sustainabledevelopment entails also many issues such as theinterdependent and mutually reinforcing pillars of sustainable development as economic development, social development,and environmental protection according to the United Nations2005 World Summit Outcome Document.

According to other opinions, there is also a cultural pillar of sustainable development.

The United Nations Division for Sustainable Development lists the following areas as coming within the scope of sustainable development:

• Agriculture• Atmosphere• Biodiversity• Biotechnology• Capacity-building• Climate Change• Consumption & Production Patterns• Demographics• Desertification & Drought • Disaster Reduction & Management• Education & Awareness• Energy• Finance • Forests

1 Research investigation prepared by By Kalizou G, Stavrakis D and Wojciech D, Hellenic American University in Athens

EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 1

http://en.wikipedia.org/wiki/Environment_%28biophysical%29

http://en.wikipedia.org/wiki/Brundtland_Commission


http://en.wikipedia.org/wiki/Sustainability

http://en.wikipedia.org/wiki/Economics

http://en.wikipedia.org/wiki/Society

http://en.wikipedia.org/wiki/2005_World_Summit

http://en.wikipedia.org/wiki/Drought

http://en.wikipedia.org/wiki/Green_economics

http://en.wikipedia.org/wiki/Forests

http://en.wikipedia.org/wiki/Forests

http://en.wikipedia.org/wiki/Green_economics

http://en.wikipedia.org/wiki/Drought

http://en.wikipedia.org/wiki/2005_World_Summit

http://en.wikipedia.org/wiki/Society

http://en.wikipedia.org/wiki/Economics

http://en.wikipedia.org/wiki/Sustainability


http://en.wikipedia.org/wiki/Brundtland_Commission


http://en.wikipedia.org/wiki/Image:Sustainable_development.svg



• Fresh Water• Health• Human Settlements• Indicators • Industry• Information for Decision Making & Participation• Integrated Decision Making• International Law• International Cooperation for Enabling Environment• Institutional Arrangements• Land management• Major Groups• Mountains• National Sustainable Development Strategies• Oceans and Seas •

Poverty• Sanitation • Science • SIDS• Sustainable tourism • Technology• Toxic Chemicals• Trade & Environment • Transport• Waste (Hazardous)• Waste (Radioactive)• Waste (Solid)

During the last ten years, different organizations have tried to measure and monitor the proximity to what theyconsider sustainability by implementing what has been called sustainability metric and indices.Environmental sustainability is the process of making sure current processes of interaction with the environmentare pursued by making sure that the environment stays as natural as possible.

In Relation with the Euromed projectIn the research, the export possibilities of olive oil and its products are studied. The purpose is to help specificregions to begin the production and packaging of these products in order to make profit that will return to theirvillages in other forms; such as schools, buildings, hospitals and that will, in the long run, produce job positions.So, the research of data is very important because it will define the possibilities of the project in general and atthe same time it is a small part at the greater project.

The olive oilThe data are based on recourses that are concerning olive oil and specific categories. This market report coversolive oils combined under the following Harmonised System1 (HS) classification:

Product Description

15.09.10 Virgin Olive Oil • Common virgin olive oil2

Virgin olive oil with free acidity, expressed as oleic acid, no higher than 3.3 gr/100 gr and with tastemark above 3.5


http://en.wikipedia.org/wiki/Dashboard_of_Sustainability

http://en.wikipedia.org/wiki/Sea

http://en.wikipedia.org/wiki/Sanitation

http://en.wikipedia.org/wiki/Science

http://en.wikipedia.org/wiki/Sustainable_tourism



http://en.wikipedia.org/wiki/Sustainable_tourism

http://en.wikipedia.org/wiki/Science

http://en.wikipedia.org/wiki/Sanitation

http://en.wikipedia.org/wiki/Sea

http://en.wikipedia.org/wiki/Dashboard_of_Sustainability



• Virgin olive oil Virgin olive oil with free acidity, expressed as oleic acid, no higher than 2.0 gr/100 gr and with tastemark at least 5.5

• Extra virgin olive oil Virgin olive oil with free acidity, expressed as oleic acid, no higher than 1.0 gr/100 gr and with tastemark above 6.5

15.09.90 Olive oil and its Fractions, refined or blend, but not chemically modified

• Lampante virgin olive oil

Virgin olive oil with free acidity, expressed as oleic acid, of more than 3.3 gr/100 gr. It is not fit forconsumption and it is intended for refining or for technical use

• Olive -pomace oil Olive-pomace oil is the oil comprising the blend of refined olive - pomace oil and virgin olive oils fit forconsumption as they are. It has a free acidity of not more than 1 gr/100 gr

• Refined olive- pomace oil

Refined olive - pomace oil is the oil obtained from crude olive - pomace oil by refining methods whichdo not lead to alterations in the initial glyceridic structure. It has a free acidity, expressed as oleicacid, of not more than 0.3 gr/100 gr.

Methodology

The research was conducted using online recourses especially in official sites; for example, sites of companiesthat are involved in producing and exporting olive oil or the European Union official site.

Since the purpose of our research was to examine the possibility of exporting in specific markets, with fair tradeprocedures, we had to find the market factors that would clarify the possibilities.

In order to evaluate our markets and figure out whether virgin olive oil and its products could be a worthyinvestment, we had to collect data that could evaluate the present situation and the potential of any market.

Our methodology was based on statistical research of various factors of the market, such as:

• The volume of the market (the quantity of oil that is consumed)• The value of the consuming oil• The need for any oil• Oil Production• Value & volume of imports• The different categories of oils• The major brands of any category & their market shares• The main competitors

After finding the numbers, the markets had to be evaluated by some market factors such as production andconsumption, which are the main tools of evaluation in our essay together with importing criteria and per capitaanalysis.

During our research we faced many challenges and limitations due to the specific nature of the subject; themain limitations were that most of the resources were not providing numbers but mostly results that were not




based on charts or tables that would be useful. Other limitations were that we could find fair trade relatedmaterial.

Analysis and Findings

Market Summary

The data structure is presented in the following manner:1. World market2. EU market3. France market4. UK market5. USA market

World Market

A review of the World market will help to obtain information for the trends over last 10 years, and will offer thetools for comparison between different markets and quantities.

1735.5

2595.02465.52402.52374.5

2565.5

2825.5

2495.5

3174.03013.0

2572.0

2859.02820.5

1403.5

1754.5

2116.5

17071878.51940.5

2463.5

1942.5

2448

23571928.5

2142 2135.5

80.90%

67.60%

85.80%

71.10%

79.10%75.60%

87.20%

77.80%77.10%78.20%75.00%74.90%75.70%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

10

520

1040

1560

2080

2600

3120

3640

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

Global Production (,000 Tonnes)

World Production EU Production EU/World %




8,0

8,3

8,5

11,0

14,5

16,0

21,5

37,0

48,0

75,0

154,0

166,0

170,0

370,0

603,0

1108,7

0 200 400 600 800 1.000 1.200

Aus tr al ia

Cyprus

Israel

L ibya

Arg ent in a

Palestine

Alg eri a

Jordan

Portugal

Morocco

Syria

Turkey

Tunis ia

Greece

Italy

Spain

2006/7 Production of Olive Oil for Major World Producers (,000 Tonnes)

1888,5

2241,52381,5 2413,0 2442,5

2590,5 2606,52677,5

2882,5 2923,5

2690,5

2907,5 2926,5

1387

1566,71705,2 1708,9 1728

1835,1 1894,4 1918,61997,3

2078,91917,9

2035,5 2046,6

73%70%

72% 71% 71% 71%73% 72%

69%71% 71% 70% 70%

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

10

520

1040

1560

2080

2600

3120

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

Global Consumption (,000 Tonnes)

World Consumption EU Consumption EU/World %




28,9

30,5

31,0

33,0

40,0

45,0

54,0

55,0

70,0

75,0

100,5

110,0

251,0

284,0

570,0

852,4

0 100 200 300 400 500 600 700 800 900

UK

Canada

Japan

Brazil

Aus tr al ia

Tunis ia

Germany

Morocco

Turkey

Portugal

France

Syria

USA

Greece

Spain

Italy

2006/7 Consumption of Olive Oil for Major World Consumers (,000 Tonnes)

10,0

10,0

14,0

14,5

15,0

24,8

40,0

75,0

110,0

184,0

185,0

0 20 40 60 80 100 120 140 160 180 200

Greece

USA

Jordan

Arg ent in a

Morocco

Portugal

Syria

Turkey

Spain

Italy

Tunisia

2006/7 Major Wor ld Exporters (,000 Tonnes)




0,174

0,242

0,478

0,653

0,829

0,936

0,947

1,639

1,783

1,948

4,405

5,668

7,090

12,988

14,502

25,533

0 5 10 15 20 25 30

Brazil

Japan

UK

Germany

USA

Canada

Turkey

France

Morocco

Australia

Tunisia

Syria

Portugal

Spain

Italy

Greece

2006/7 Per-Capita Consumpt ion of Olive Oil for Major World Consumers (lt)

Early Conclusions:

Production: during the last years EU contribution stabilized at 75%Major producers: Spain, Italy Greece (EU), Tunisia, Turkey, Syria. It is worth mentioning that Argentina

and Australia are the leading non Mediterranean producers.Consumption: EU consumes, on a steady base, the 70% of the total productionMajor consumers: Italy, Spain, Greece (EU), Syria, Turkey, Morocco and Australia, from non

Mediterranean countries. It is clear that USA, France, Germany, Brazil, Japan, Canadaand UK are large consumers with not particular domestic contribution to theirconsumption, which means that they are open to imports, thus possible target markets

Exportations: Italy and Spain, as well as Tunisia and Turkey are the leading exporters exportingtogether the 79% of the total amount.

EU Market

A review of the EU market will help in the full understanding of the differences and the similarities of the

countries in relation to production, consumption of olive oil, but also concerning imports.




0,5

4,5

6,5

36,0

360,0

500,0

1228,1

0 200 400 600 800 1.000 1.200 1.400

Slovenia

France

Cyprus

Portugal

Greece

Italy

Spain

2007 Production of Olive Oil for major EU Producers (,000 Tons)




0,2

0,3

0,3

0,7

0,8

0,8

0,9

1,2

1,4

1,6

1,8

2,7

3,1

3,4

5,2

6,8

7,2

7,2

12,1

14,5

28,9

56,0

66,0

104,0

284,0

625,0

810,5

0 100 200 300 400 500 600 700 800 900

Lithuania

Estonia

Malta

Luxemburg

Hungary

Romania

Czech Republ ic

Poland

Aust ria

Belgium

United Kingd om

Portugal

Greece

Italy

2007 EU Consumption of Olive Oil (,000 Tonnes)




405

461

846

1.340

2.001

2.289

3.408

4.221

5.261

5.388

5.430

7.693

8.327

9.078

10.058

10.189

10.430

10.579

11.123

16.379

21.532

38.140

43.887

58.779

60.512

61.330

82.641

0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000

Malta

Cyprus

Slovenia

Lithuania

Finland

Denmark

Aust ria

Hungary

Belgium

Greece

Romania

Spain

United Kingdo m

Germany

2008 Population (,000,000 inhabitants)




0,039

0,059

0,084

0,136

0,139

0,148

0,224

0,228

0,304

0,306

0,478

0,626

0,640

0,678

0,793

0,800

0,865

0,885

1,160

1,696

1,952

1,975

6,239

8,038

13,789

14,241

25,533

0 5 10 15 20 25 30

Bulgaria

Romania

Hungary

Estonia

Czech Republi c

United Kingd om

Ireland

Sweden

Aust ria

Belgium

Luxemburg

Portugal

Italy

Greece

2007 Per-Capita Consumption of Olive Oil (lt)

Conclusions• EU market is dominated by Spain and Italy, being the main producers and exporters• The largest consumers are also the main producers with Greece having the highest per-capita

consumption worldwide!• France and UK are of the countries with the highest population (higher than any other olive oil

producing country), they are developed with strong economies and established trade structures. Theycover characteristic geographical locations over Europe (Northern Island and central Europe).

• France and UK have still low per - capita consumption, but not the lowest compared to otherconsumers, including olive oil producing countries. This would give another motive to examine thesemarkets.




French market

In order to evaluate the French market, we had to use statistical data on the market size and the populationhabits. To estimate the market size we have used data for the consumption and imports of olive oil. In addition,the population buying behaviour and the food market structure gave details for the extraction of trends in foodmarket in general and in olive oil market especially.

Production

2.3 2.5 2.7

3.4

4.1

3.23.6

4.7 4.6 4.74.4

3.4

4.5

0

1

2

3

4

5

6

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

French Production (,000 Tons)

In 2007, the French output was about 4.500 tonnes, holding the 6th place amongst European producers. Although output has doubled since 1995, France still has a very small contribution to the European production; just 0.21%. This quantity is not enough to cover the needs of the French market. The 2007 productionmanaged to cover only the 4.3% of total demand for olive oil, making imports the only solution.

Consumption

48.558.8

75.6 78.6 81.5

92.0 95.1 97.0 94.0 97.1 99.5 100.5 104.0

0

20

40

60

80

100

120

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

French Consumption (,000 Tonnes)

With a volume of 104,000 tonnes during 2007/08 season and a share of 5.08% of the total European (EU-27)olive oil consumption France is Europe’s 4th largest consumer of olive oil.




Imports

The imports section in every country’s economy is unbreakably bonded with the needs of the market; thus aglance on the course of French imports for the last years could be useful to recognize some market trends.

961.435

1108.739 1073.219 1093.386

1235.865

1470.644

1630.223

196.179 221.654 234.554 255.019 291.516380.093

330.087

180.516 204.937 217.635 240.207 276.411 360.353 314.15

0

300

600

900

1200

1500

1800

2001 2002 2003 2004 2005 2006 2007

Fats & Oils Imported Values (,000,000Euro)

Animal,veget able fat s and oils , cleav age pr oduc ts , etc

2.57% 2.12% 2.51% 2.85%

3.96%5.83%

8.94%

4.88% 4.43%

6.56%

4.28% 3.94%

2.44%2.87%

20.40% 19.99%

21.86%

23.32% 23.59%

25.85%

20.25%

11.27% 11.67%12.81%

12.22%

10.79% 10.87%11.42%

8.30%

11.88%

8.59%

6.51%

11.29%

14.25%

12.19%

3.37%

5.71% 5.56% 4.47%

3.24%2.49% 3.05%

10.72%

8.72%

5.19%

7.32% 7.48%8.64%

9.29%

0%

5%

10%

15%

20%

25%

30%

2001 2002 2003 2004 2005 2006 2007

Value Share of Impor ts of Vegetable Oils

Soya-bean Oils & Fract ionsGround-nut Oils & FractionsOlive Oil & FractionsPalm Oil & Fractions




3,07%8,94%

2,87%

20,25%

11,42%12,19%

3,05%9,29%

7,11%

14,50%

7,32%

2007 Share Value of Imports of Animal, Vegetable Fats & Oils

Animal Fats & Oils Soya-bean oi l&i ts fracti onsGround-nut oil&its fractions Olive oil and its fractions

Palm oil & its fraction Safflower,sunflower/cotton-seed oil&fractions

Coconut (copra),palm kernel /babassu oil & their fractions Rape,colza or mustard oil & their fractions

Fixed vegetable fats&oils & their fractions Margarine

Other

46.727

49.777

49.986

115.882

119.311

145.784

151.411

186.106

198.763

236.388

330.087

0 50.000 100.000 150.000 200.000 250.000 300.000 350.000

Ground-nut o il&its fractions

Coconut (co pra),palm kernel/babassu oil & t heir fraction s

An imal Fats & Oil s

Fixed vegetable fats&oils & their fractions

Other

Soya-bean oil&its fractions

Rape,colza or mu stard oil & their fractions

Palm oil & its fraction

Saff low er,sunflower/cotton-seed oil& fractions

Margarine

Olive oil and its f ractions

2007 Imports of Animal, Vegetable Fats & Oils (,000 Euro)

From 2001 to 2007 imports of Animal, vegetable fats and oils, cleavage products, etc have increased by 70% tothe amount of 1,630,223 Euro. This category includes most kinds of animal and vegetable fats and oils, edibleor not. They have totally different pricing and in some cases packaging and tonnage, but each product’s marketbehavior affects the others’. Possible share changes for every product label illustrate changes in the consumerbehavior and could be regarded as a market trend. Having a look on the value share of the major categories of




vegetable oils, through last years, we can see that high quality (edible) oils, like olive, sunflower and soya oilhold the higher amount of importing investments.Olive oil & its fractions hold, by far, the bigger share in value of imports, with an average percentage of 22%.

But although that in absolute numbers the amount of money invested on olive oil imports has increased, itdoesn’t seem that this increase has followed by a growth in the value share. Imports of Olive oil and itsfractions have grown at the same rate with the main category of fats and oils; about 70%. This gives them asteady share of 20% of the whole category.

Imported unit value (Euro/Ton)

Exporters 2001 2002 2003 2004 2005 2006 2007

%Growth2001-2007

World 1.982 2.271 2.398 2.574 2.995 3.809 3.096 56,21

Spain 1.909 2.137 2.273 2.507 2.885 3.812 2.993 56,73

Italy 2.388 2.718 2.806 2.838 3.334 3.997 3.437 43,93

Belgium 2.202 2.455 2.486 2.792 3.235 3.198 2.906 31,99

Tunisia 2.707 4.380 3.559 3.032 3.356 3.942 2.865 5,82

Greece 3.197 3.257 3.149 3.673 4.116 4.528 4.234 32,47

Portugal 3.352 2.736 2.500 1.650 2.333 3.347 3.142 -6,26

Germany 243 809 651 749 2.690 3.735 2.686 1.004,27

Since 2001, the average world price per ton of olive oil has risen by 56% and as a result the almost steadyamount of importing volume costs more and more.

333

453

486

535

2.450

4.183

23.687

69.335

0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000

Germany

Portugal

Greece

Other

Tunisia

Belgium

Italy

Spain

2007 Imports of Olive Oil f rom Supplying Markets (Tonnes)




institutions, and companies responsible for any meal eaten away from home. This industry includes restaurants,school and hospital cafeterias, catering operations, and other formats.

420,1

71,9

Demanded Value (,000,000 Euro)

Retail Foodservice

89,4

18,6

Demanded Volume (,000 Tonnes)

Ret ai l Fo ods er vi ce

72,7

27,3

Market Products Share Value

Branded Own Label

In 2007, Retail had a share of 82.8% in volume and 85.4% in value of the total market, which could possiblymean that this is the main target market for our products. During the same year, the total demanded value wasestimated to be around 492.000.000 Euro, distributed to Branded and Own label (including various retaildistributors’ brands) products. Unbranded and Artisan (craft sales; independent producers or sellers considered

to be a single competitive entity/company). This isanother sign that French market supports product with

known label; thus, high quality products with distinctidentity, such as Virgin olive oil, could have a lot of possibilities to be consumers’ choice.

UK market

UK market has many similarities but also some importantdifferences compared to the French market. UK hasdifferent nutritional habits and consumer behaviour,although the market structure and segmentation issimilar to French.

Production

UK is not an olive oil producing country; it has not anydomestic production and has to satisfy its needs based exclusively on imports. This also means that UK marketisn’t familiar with olive oil.This could be a great opportunity, combining the introduction of olive oil with “fair trade”. It will be important toconnect the unfamiliar, to the British, product with a more common term.

Consumption


http://en.wikipedia.org/wiki/Catering

http://en.wikipedia.org/wiki/Catering



15,0

25,1 25,629,9

40,0

33,8

25,5

47,0

71,6

60,1

48,8

28,9 28,9

0

20

40

60

80

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

UK Consumption (,000 Tonnes)

Consuming about 29,000 tonnes during last two seasons, UK consumes the 1.41% of the total European (EU-27) olive oil, which is the 7th highest consumption in Europe.From 1995 to 2007 the consumption has been characterized from periodical ups and downs scoring on 2003/4the highest value of 71,600 tonnes. Since then there is a constant decrease of the consumptions, with

prediction to stabilize at 30,000 tonnes. In the last decade, consumption had doubled and in analogy the markettoo; 92.67% growth.

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

Consumption Growth Rate

World Growth Rate EU Growth Rate UK Growth Rate

The consumption growth rate does not allow us to conclude to optimistic results. UK consumption ischaracterized from extremes and has a different behaviour compared to the global rate.There seems to be a periodicity that shows that every couple of years there is a diversification to the growthrate of consumption. According to this and keeping in mind the last signs of stabilization, we can assume that atleast for the next 2 years we can wait positive rate meaning increase in consumption.




Average per-capita Consumption (Liters)Countries

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

%Growth1998-2007

Spain 13,925 13,333 12,627 14,502 15,594 14,435 14,735 14,540 11,102 13,026 -6,46

France 1,266 1,315 1,355 1,520 1,560 1,580 1,520 1,560 1,589 1,595 26,03

Greece 22,337 22,668 24,398 24,762 24,700 24,615 24,531 25,633 23,911 25,528 14,29

Italy 12,272 12,389 12,546 12,807 12,904 13,510 13,695 14,511 14,508 14,509 18,22

Portugal 6,880 6,538 6,552 5,934 5,996 6,283 6,438 7,112 6,800 7,096 3,14

Germany 0,288 0,369 0,396 0,442 0,469 0,485 0,466 0,561 0,549 0,655 127,63

Austria 0,339 0,364 0,489 0,512 0,486 0,570 0,741 0,897 0,853 0,871 156,96

Netherlands 0,257 0,377 0,247 0,366 0,569 0,577 0,685 0,824 0,871 0,882 243,09

United Kingdom 0,440 0,512 0,683 0,575 0,432 0,794 1,205 1,007 0,813 0,479 8,86

Belgium NA NA NA 1,211 1,237 1,145 1,101 1,183 1,120 1,161 -4,16

Sweden 0,305 0,328 0,316 0,530 0,597 0,595 0,425 0,479 0,477 0,785 157,06

EU (27 countries) 3,563 3,553 3,588 3,801 3,916 3,959 4,104 4,253 3,906 4,129 15,90

Data show that British are not very familiar with olive oil. During the last decade, although significant ups anddowns, the average per-capita consumption stayed at the same level.

Even with a total consumption growth of 92.67%, UK per-capita consumption is the lowest amongst north-central European countries.

Imports

In a non olive oil producing country like UK, imports are the only way to supply its market. Thus, analyzing theimporting value and volume of olive oil is a reliable way to evaluate the UK market.

868.747 901.066943.831 966.126 988.59

1194.447

1318.801

89.55 89.651 115.419148.672 166.87

213.981168.962

60.552 64.652 80.803 114.535 119.664 142.266 122.7260

300

600

900

1200

1500

2001 2002 2003 2004 2005 2006 2007

Fats & Oils Imported Values (,000,000Euro)

Animal,vegetable fats and oils , cleav age pr oduc ts , etc




2,18%

3,51%

6,97% 7,57%8,40%

11,27%11,80%

0,54% 0,60%1,10% 0,73% 0,57% 0,49% 0,50%

10,31%

9,95%

12,23%

15,39%

16,88%17,91%

12,81%

24,78%

29,28%29,94%

28,51%

25,13% 22,33%

19,68%

10,57%11,37%

7,28%

5,09%

9,19%10,09%

16,78%

4,65% 4,97% 5,13%5,70% 5,38%

3,83%3,29%

10,40%

7,53%6,89% 6,92%

4,98%5,43%

4,28%

0%

5%

10%

15%

20%

25%

30%

2001 2002 2003 2004 2005 2006 2007

Value Share of Imports of Vegetable Oils

Soya-bean Oils & Fractions Ground-nut Oils & Fractions

Olive Oil & Fractions Palm Oil & Fractions

Saffl ow er ,s unfl ow er /cotton -s eed Oi l & Fr ac ti ons Coc onut (c opr a),palm k er ne l/babas su Oi l & Fr ac ti ons

Rape,colza or mustard Oil & Fractions

10,42%

11,80%

0,50%

12,81%

19,68%16,78%

3,29%4,28%

4,17%4,35%

11,92%


Animal Fats & Oils Soya-bean oi l&i ts fracti ons

Ground-nut oil&its fractions Olive oil and its fractions

Palm oil & its fraction Safflower,sunflower/cotton-seed oil&fractions

Coconut (copra),palm kernel /babassu oil & their fractions Rape,colza or mustard oil & their fractions


Other




125

156

377

829

995

3.020

3.121

11.626

17.267

0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 20.000

Portugal

France

Other

Netherlands

Germany

Belgium

Greece

Italy

Spain

2007 Imports of Olive Oil from Supply ing Markets (Tonnes)

46,03%

30,99%

8,32%

8,05%

2,65%2,21%1,00%

0,42%

0,33%

2007 Share of Imported Virgin Olive Oil

Spain

Italy

Greece

Belgium

Germany

Netherlands

Other

France

Portugal

The 85% of UK olive oil imports comes from EU and more specifically from the 3 major producing countries,Spain, Italy and Greece. Spain is, by far, the leading country of origin for imported Virgin olive oil, accounting17,267 tons in 2007, which is the 46% of the UK market. Italy with a volume of 11.626 and market share of 31% is in second place, while Greece has a share of 8% with 3,121 tons.The amounts imported from Belgium, Germany and Netherlands, are actually re-exports, since those countriesdo not grow olives.Summarizing, UK olive oil market doesn’t seem mature and stable enough to allow us to make certainconclusions.




Olive oil consumption has grown at faster rate than in the rest of the world, but the average per-capitaconsumption still remains in low level, with every British to consume averagely less than half a litter per year.In 2006, the market invested about 142.000.000 Euro on olive oil imports; in 2007 less than 123.000.000 Euro.

We cannot see a trend that future investments in olive oil are about to be made, because other kinds of vegetable oil look more attractive.Of course, the population of the UK and the high value per unit that British pay to purchase olive oil offer uselements for future improvement of this situation. According to Mitsubishi Co (UK), British media claim that “consumers are set to spend more than 2 billion pounds this year on free-range, fair-trade and organicproducts. British shoppers are choosing to buy food that is sourced ethically".

Competitor Analysis

41,00%

29,00%

15,00%

9,00%

2,00%2,00%0,50%0,50%

1,00%

2008 UK Market Major Suppliers

Mitsubishi

Bunge

Unilever

Grupo SOS

Vandermoortele

Aarhus Uni ted

Odyssea

Trustin

Other

The UK Food branch of the Mitsubishi Co, with key subsidiary the firm Frenkel is the leading olive oil supplier of the UK market with a share of 41%.On the 2nd and 3rd place are respectively the Bunge, with Cereol and a share of 29%, and Unilever with 15%.The rest 15% is shared to other companies including Grupo SOS with a share of 9%, the Greek companyOdysea with the brand Karyatis and a share of 0.5%, and Trustin with Gaea.

Market Segmentation




186,3

24,4

Demanded Value (,000,000 Euro)

Ret ai l Fo ods er vi ce

22,7

3,6

Demanded Volume (,000 Tonnes)

Ret ai l Fo od ser vi ce

In 2007, Retail had a share of 86.4% in volume and 88.4% in value of the total market. In the same year, thetotal demanded value was estimated to be around 211.000.000 Euro, distributed to Branded and Own label(including various retail distributors’ brands) products.

49.650.4

Market Products ShareValue

Branded Own Label

Compared to French market, the UK market has a significant lower size, as its demand is almost the half thanFrench. It is also impressive that the market is divided evenlybetween branded and own labeled products. Own labeled productsare by definition cheaper than branded and sometimes have not thesame high quality. On the other hand own labeled products in largeretail stores are promoting better and their competitive prices makethem more attractive. But when the half of the market is consisted of

own labeled products, it is more difficult to be found places andmeans to promote products under the label of “fair trade productfrom specific origin”.

USA market

The US market has many particularities compared to European markets, but also to any other marketworldwide. In order to evaluate the USA market, we had to compare it with the more familiar Europeanbehaviour and to distinguish it from any other market. We found some impressive evident, that helped us tomake some results.

Production




1.0 1.0 1.0 1.0 1.0

0.5 0.5

1.0 1.0

1.5

1.0 1.0 1.0

0

1

2

3

4

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

USA Production (,000 Tons)

USA olive oil production is quite restricted, so domestic output stays in extremely low levels. Last year’s outputwas about 1,000 tonnes.Production is stabilized on about 1.000 tonnes per year, being of the lowest in the world and much below theneeds of the market for olive oil.

Consumption

101.0

130.5142.5 151.0

169.5

194.5 188.5 184.0

216.5 215.5 223.0

251.0 251.0

020406080

100120140160180

200220240260280

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

USA Consumption (,000 Tonnes)

From 1995 to 2007 the consumption has scored an impressive growth of 149%. With a volume of 251.000tonnes during 2007/08 season USA market is world’s 4th largest consumer, with a share of 8.57% of the totalWorld olive oil consumption. It is also the first non-European consumer and by far with the largest consumptionamongst all non olive oil producer countries.




0.8

0.9

1

1.1

1.2

1.3

1.4

95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

Consumption Growth Rate

World Growth Rate EU Growth Rate US Growth Rate

In general, the consumption growth rate follows the world’s rate with a small divergence. In the last 4 years,USA consumption grows with higher rate than the rest of the world and 3 times faster than the mature Frenchmarket.The average per-capita consumption fluctuates at high levels too, increasing more than 52% through last tenyears, with Americans to consume on about 830 ml during 2007.

Average per-capita Consumption (Liters)

Countries 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

%Growth1998-

2007

Spain 13,925 13,333 12,627 14,502 15,594 14,435 14,735 14,540 11,102 13,026 -6,46

France 1,266 1,315 1,355 1,520 1,560 1,580 1,520 1,560 1,589 1,595 26,03

Greece 22,337 22,668 24,398 24,762 24,700 24,615 24,531 25,633 23,911 25,528 14,29

Italy 12,272 12,389 12,546 12,807 12,904 13,510 13,695 14,511 14,508 14,509 18,22Portugal 6,880 6,538 6,552 5,934 5,996 6,283 6,438 7,112 6,800 7,096 3,14

Germany 0,288 0,369 0,396 0,442 0,469 0,485 0,466 0,561 0,549 0,655 127,63

UK 0,440 0,512 0,683 0,575 0,432 0,794 1,205 1,007 0,813 0,479 8,86

USA 0,547 0,607 0,689 0,661 0,640 0,746 0,735 0,754 0,841 0,833 52,41

Australia 1,289 1,354 1,627 1,425 1,612 1,745 1,625 1,705 1,952 1,976 53,31

Brazil 0,137 0,144 0,142 0,126 0,116 0,128 0,142 0,138 0,172 0,175 27,73

Canada 0,606 0,746 0,788 0,765 0,790 0,815 0,996 0,926 0,934 0,926 52,93

J apan 0,226 0,213 0,237 0,248 0,240 0,251 0,251 0,235 0,243 0,247 9,50

We can see that the enormous increase of 149% of the consumption has followed by a lower but significant

increase in the per-capita consumption, making USA market one of the most rapidly expanding markets. On theother hand, Americans still consume lower than 1 lt of olive oil per year, which is considerably lower than majorEuropean markets, but also than other non producing countries like Australia and Canada. Combined to thelarge population of the USA, there are clear margins for further increase and expansion of the market.

ImportsImporting is the only way for USA to cover the domestic need for olive oil and according to the previous indexesthere is an expected increase on olive oil imports. We have to note that USA imports olive oil from much morecountries covering the areas of Europe, North Africa, Middle East, South America and Australia.




468.450

2588.000

1694.230 1746.1801894.190

3189.720

2895.510

446.564

487.358 481.551600.662

719.167808.366

685.891

252.488 277.657 298.653 362.691 477.479 544.709 495.019

0

300

600

900

1200

1500

1800

2100

2400

2700

3000

3300

3600

2001 2002 2003 2004 2005 2006 2007

Fats & Oils Imported Values (,000,000 Euro)

Animal,vegetable fats and oils , cleav age pr oducts, etc

1.17% 0.81% 1.20%

3.81%

0.31% 0.29% 0.46%

2.09% 1.57%0.38%

3.33%

0.67%1.85%

0.50%

31.64%32.68%

33.59%

31.91%

36.53%

34.87%

27.48%

4.64%5.40% 5.50%

6.07%

7.76%

10.62%

15.49%

1.47% 1.85% 3.21%

1.88%

2.40% 1.92%3.06%

19.54% 19.79%

17.90% 18.27% 18.66%

16.49%17.07%

14.41% 14.20%15.30%

14.10%12.72%

15.27%

19.56%

0%

5%

10%

15%

20%

25%

30%

35%

2001 2002 2003 2004 2005 2006 2007

Value Share of Imports of Vegetable Oils

Soya-bean Oils & FractionsGround-nut Oils & FractionsOlive Oil & FractionsPalm Oil & Fractions




0,46%

0,50%

27,48%

15,49%

3,06%

17,07%

19,56%

2,04%

5,36%3,25%

5,73%


Soya-bean oil&its fractions Ground-nut oil&its fractions

Olive oil and its fractions Palm oil & its fraction

Saffl ow er,s unfl ower/cotton-s eed oi l&frac ti ons Coc onut (c opra),pal m k ernel /babas su oi l & thei r fr ac ti ons

Rape,colza or mustard oil & their fractions Animal or veg fats, oils&fract, hydrogenated


Other

11.476

12.553

50.910

76.375

81.025

133.697

143.008

386.704

425.897

488.136

685.891

0 100. 000 200. 000 300. 000 400. 000 500. 000 600. 000 700. 000 800. 000

Soya-bean oil&its fractions

Ground-nut o il&its fractions

An imal or veg fats, oils&f ract , hydrog enat ed

Saff lower,sun flower/cotton-seed oil& fractions

Margarine

Fixed vegetable fats&oils & their fractions

Other

Palm oil & its fraction

Coconut (copra),palm kernel/babassu oil & their fraction s

Rape,colza or mu stard oil & their fractions

Olive oil and it s fractions

2007 Imports of Animal, Vegetable Fats & Oils (,000 Euro)

From 2001 to 2007, imports of Animal, vegetable fats and oils, cleavage products, etc have increased averagelyby 96%, to the amount of 2.895,510 Euro. Olive oil and its fractions hold, by far, the bigger share in value of imports, with an average percentage of 33%, following exactly the same growth of 96% in consumption, whichcould explain why the USA imports are proportional to the consumption. Even after last year’s decrease, olive oilis the dominant of the vegetable oils market.




Imported unit value (Euro/Ton)

Exporters 2001 2002 2003 2004 2005 2006 2007

%Growth2001-2007

World 2,333 2,449 2,512 2,683 3,067 3,696 2,875 23,23%

Italy 2,411 2,482 2,590 2,803 3,148 3,799 3,040 26,09%

Spain 2,227 2,293 2,414 2,548 2,983 3,539 2,766 24,20%

Tunisia 1,781 2,870 2,286 2,357 2,572 3,716 2,418 35,77%

Argentina 4,956 2,703 2,076 2,551 3,069 3,025 2,394 -51,69%

Turkey 1,772 2,094 2,052 2,368 2,719 3,533 2,323 31,09%

Greece 2,854 3,003 2,820 3,357 3,634 4,157 3,320 16,33%

Australia 6,448 4,522 3,556 3,760 3,389 -47,44%

Morocco 1,848 2,338 2,037 3,389 3,067 2,457 32,95%

Portugal 1,934 2,257 2,226 2,870 3,053 3,399 2,828 46,23%

Syrian Arab

Republic 1,726 1,576 1,844 2,452 2,563 3,447 2,242 29,90%Lebanon 3,481 2,769 2,197 2,292 2,668 3,367 2,444 -29,79%

Egypt 2,042 1,708 2,318 2,470 3,699 2,260 10,68%

Israel 2,644 3,096 3,386 3,371 2,833 5,503 4,827 82,56%

France 4,720 2,975 3,440 3,398 4,176 5,152 3,383 -28,33%

Chile 3,754 6,395 3,879 4,406 4,335 15,48%

Mexico 1,994 1,989 1,900 1,454 2,632 2,085 2,869 43,88%

120

224

241

278

289

555

845

868

1,191

1,199

1,263

4,961

7,084

9,056

14,61331,329

98,090

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

Mexico

Chile

Other

France

Israel

Egypt

Lebanon

Syria

Portugal

Morocco

Aust ralia

Greece

Turkey

Arg ent ina

TunisiaSpain

Italy

2007 Imports of Olive Oil from Supplying Markets(Tonnes)




56.96%

18.19%8.49%

5.26%

4.11%2.88%

0.73%

0.70%

0.69%

0.50%

0.49%

2007 Share of Imported Virgin Olive Oil

Italy

Spain

Tunisia

Argenti na

Turkey

Greece

Aus tral ia

Morocco

Portugal

Syria

Lebanon

The 79% of the USA olive oil imports comes from EU and more specifically from the 4 major producingcountries, Spain, Italy, Greece and Portugal.Italy is the leading country of origin for imported Virgin olive oil, accounting 98,090 tonnes in 2007, which is the57% of the US market.Spain follows with a volume of 31,329 and market share of 18.The major non-European supplier is Tunisia with a share of 8.5%.We have to mention the Middle East presence with share more than 1%, while Argentina and Australiacontribute with 5% and 0.7% respectively.

In summary, the US olive oil market shows great potential.During the last ten years, US consumption has grown almost 3 times faster than the rest of the world.In 2006, the market invested about 545,000,000 Euro on olive oil imports; in 2007 more than 495.000.000

Euro, which is more than the sum of French and UK markets. This underlines the size of USA market and howmuch positive environment for future investments is.

The consumption growth rate follows the global pattern and in combination with extremely high percentages of increase of the consumption and the per-capita consumption, allows us to make future predictions withincreased certainty. The steady growth rate represents a mature behaviour of the market, which allows us toexaggerate reliable estimations for the next year’s consumption. According to this pattern, it could be about 3%higher than today’s. So, we can safely assume that US market will keep on being in strong need of olive oil.

The US market purchases olive oil with averagely lower prices than the French and UK markets do. This couldpossibly mean that here will be satisfactory profit margins to future sales of olive oil under the label of “fairtrade”.

Competitor Analysis




label; thus, high quality products with distinct identity, such as Virgin olive oil, could have a lot of possibilities tobe consumers’ choice.

REFERENCES

• Eurostat, http://epp.eurostat.ec.europa.eu • World Customs Organization, www.wcoomd.org • Food and Agriculture Organization of the United Nations (FAOSTAT) http://faostat.fao.org/ • International olive Oil Council (IOOC), http://www.internationaloliveoil.org/ • Food For Thought (FFT) Real-time Food & Drink Market Data Provider), http://www.fft.com • Institut National de la Statistique et des Etudes (INSEE), National Institute for Statistics and Economic

Studies, http://www.insee.fr/french_population.html • Trade Map, Trade Statistics for international business development, http://www.trademap.org


http://epp.eurostat.ec.europa.eu/

http://www.wcoomd.org/

http://faostat.fao.org/

http://www.internationaloliveoil.org/

http://www.fft.com/

http://www.insee.fr/french_population.html

http://www.trademap.org/

http://www.trademap.org/

http://www.insee.fr/french_population.html

http://www.fft.com/

http://www.internationaloliveoil.org/

http://faostat.fao.org/

http://www.wcoomd.org/

http://epp.eurostat.ec.europa.eu/



General food retail stores and mini-markets(3) 8,6 8,7 0,8 0,6

Supermarkets, neighborhood stores, andhypermarkets 67,1 67,3 19,9

17,9

Supermarkets 30,8 33,0 6,1 4,4

Neighborhood stores 1,0 1,4 0,4 0,3

Hypermarkets35,4 32,9 13,4

13,2

Department stores (4) 0,1 0,1 2,2 2,0

Pharmaceutical and medical products,cosmetic and toilet articles 0,2 0,3 9,4

10,5

Other retail sale of new goods in specialized

stores 0,2 0,3 41,1

42,

3Retail sale not in stores 4,0 3,7 4,6 4,3

Retail sale via mail order houses 0,2 0,3 3,2 3,2

Other 3,7 3,4 1,4 1,0

Repair of personal and household goods (3) /// /// 0,8 0,6

Retail sale and craft shops97,9 97,2 79,0

78,5

Retail sale of motor vehicles (4)0,2 0,5 14,1

15,2

Other retail sale (5) 1,9 2,3 6,9 6,3

Total retail sale100,0

100,0 100,0

100,0

(1): excluding motor vehicles. (2): including craft shops.

(3): for their retail sale and repair services.

(4): excluding sale, maintenance, and repair of motor vehicles.

(5): sales by other sectors: services such as bars/tobacco retailers, wholesalers, and direct sales by producers.

5-1 Market Analysis

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