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

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1 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. The main purpose of this research is to present the market and evaluate the markets in order to investigate the possibility of exporting and promoting olive oil with fair trade procedures. Essentially, this report is a consumer market analysis built for export decision making purposes. Definitions and analysis Sustainable development supports meeting human needs while preserving the environment so that these needs can 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 sustainable development that is; development that "meets the needs of the present without compromising the ability of future generations to meet their own needs. The field of sustainable development can be divided to 3 categories: environmental sustainability, economic sustainability and sociopolitical sustainability. Sustainable development entails also many issues such as the interdependent and mutually reinforcing pillars of sustainable development as economic development, social development, and environmental protection according to the United Nations 2005 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

2 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 they consider 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 environment are pursued by making sure that the environment stays as natural as possible. In Relation with the Euromed project In the research, the export possibilities of olive oil and its products are studied. The purpose is to help specific regions to begin the production and packaging of these products in order to make profit that will return to their villages 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 at the same time it is a small part at the greater project. The olive oil The data are based on recourses that are concerning olive oil and specific categories. This market report covers olive oils combined under the following Harmonised System1 (HS) classification: Product Description Virgin Olive Oil Common virgin olive oil 2 Virgin olive oil with free acidity, expressed as oleic acid, no higher than 3.3 gr/100 gr and with taste mark above 3.5 EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 2

3 Virgin olive oil Virgin olive oil with free acidity, expressed as oleic acid, no higher than 2.0 gr/100 gr and with taste mark 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 taste mark above 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 for consumption 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 for consumption 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 which do not lead to alterations in the initial glyceridic structure. It has a free acidity, expressed as oleic acid, 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 companies that 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 trade procedures, 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 worthy investment, 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 and consumption, which are the main tools of evaluation in our essay together with importing criteria and per capita analysis. During our research we faced many challenges and limitations due to the specific nature of the subject; the main limitations were that most of the resources were not providing numbers but mostly results that were not EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 3

4 based on charts or tables that would be useful. Other limitations were that we could find fair trade related material. Analysis and Findings Market Summary The data structure is presented in the following manner: 1. World market 2. EU market 3. France market 4. UK market 5. 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 the tools for comparison between different markets and quantities. Global Production (,000 Tonnes) % 80.90% % % % 75.60% 87.20% %77.10%78.20% 75.00%74.90% 75.70% 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 World Production EU Production EU/World % EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 4

5 2006/7 Production of Olive Oil for Major World Producers (,000 Tonnes) Spain 1108,7 Italy 603,0 Greece 370,0 Tunisia 170,0 Turkey 166,0 Syria 154,0 Morocco 75,0 Portugal 48,0 Jordan 37,0 Algeria 21,5 Palestine 16,0 Argentina 14,5 Libya 11,0 Israel 8,5 Cyprus 8,3 Australia 8, Global Consumption (,000 Tonnes) ,5 2926, ,5 2381,5 2413,0 2442,5 2590,5 2606,5 2677,5 2882,5 2923,5 2690,5 0,1 0, , % 1566,7 70% 1835,1 1894,4 1918,6 1997,3 2078,9 2035,5 2046,6 1917,9 1705,2 1708, % 72% 71% 71% 71% 73% 72% 71% 71% 70% 70% 0,3 0,4 0,5 0,6 0,7 0,8 0,9 0 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 World Consumption EU Consumption EU/World % 1 EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 5

6 2006/7 Consumption of Olive Oil for Major World Consumers (,000 Tonnes) Italy Spain Greece USA Syria France Portugal Turkey Morocco Germany Tunisia Australia Brazil Japan Canada UK 110,0 100,5 75,0 70,0 55,0 54,0 45,0 40,0 33,0 31,0 30,5 28,9 251,0 284,0 570,0 852, /7 Major World Exporters (,000 Tonnes) Tunisia Italy 185,0 184,0 Spain 110,0 Turkey 75,0 Syria 40,0 Portugal 24,8 Morocco Argentina Jordan USA Greece 15,0 14,5 14,0 10,0 10, EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 6

7 2006/7 Per-Capita Consumption of Olive Oil for Major World Consumers (lt) Greece Italy Spain Portugal Syria Tunisia Australia Morocco France Turkey Canada USA Germany UK Japan Brazil 1,948 1,783 1,639 0,947 0,936 0,829 0,653 0,478 0,242 0,174 4,405 5,668 7,090 12,988 14,502 25, 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 production Major consumers: Italy, Spain, Greece (EU), Syria, Turkey, Morocco and Australia, from non Mediterranean countries. It is clear that USA, France, Germany, Brazil, Japan, Canada and UK are large consumers with not particular domestic contribution to their consumption, 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 exporting together 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. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 7

8 2007 Production of Olive Oil for major EU Producers (,000 Tons) Spain 1228,1 Italy 500,0 Greece 360,0 Portugal 36,0 Cyprus 6,5 France 4,5 Slovenia 0, EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 8

9 2007 EU Consumption of Olive Oil (,000 Tonnes) Italy Greece Portugal United Kingdom Belgium Austria Poland Czech Republic Romania Hungary Luxemburg Malta Estonia Lithuania 104,0 66,0 56,0 28,9 14,5 12,1 7,2 7,2 6,8 5,2 3,4 3,1 2,7 1,8 1,6 1,4 1,2 0,9 0,8 0,8 0,7 0,3 0,3 0,2 284,0 625,0 810, EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 9

10 2008 Population (,000,000 inhabitants) Germany United Kingdom Spain Romania Greece Belgium Hungary Austria Denmark Finland Lithuania Slovenia Cyprus Malta EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 10

11 2007 Per-Capita Consumption of Olive Oil (lt) Greece Italy Portugal Luxemburg Belgium Austria Sweden Ireland United Kingdom Czech Republic Estonia Hungary Romania Bulgaria 1,975 1,952 1,696 1,160 0,885 0,865 0,800 0,793 0,678 0,640 0,626 0,478 0,306 0,304 0,228 0,224 0,148 0,139 0,136 0,084 0,059 0,039 6,239 8,038 14,241 13,789 25, 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. They cover 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 other consumers, including olive oil producing countries. This would give another motive to examine these markets. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 11

12 French market In order to evaluate the French market, we had to use statistical data on the market size and the population habits. 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 food market in general and in olive oil market especially. Production 6 French Production (,000 Tons) /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 In 2007, the French output was about 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 production managed to cover only the 4.3% of total demand for olive oil, making imports the only solution. Consumption French Consumption (,000 Tonnes) /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 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 4 th largest consumer of olive oil. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 12

13 From 1995 to 2007 the consumption has been in constant rise leading the market to an impressive growth of Consumption Growth Rate % /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 World Growth Rate EU Growth Rate France Growth Rate Consumption growth rate is an indicator that allows comparison between markets of different sizes, giving a picture of the dynamic of every market during specific time periods. Comparing the French consumption growth rate, from 1995 to 2007, with world and EU growth rates, we understand that French consumption was having a decreasing rate until it stabilized to the level of 3% annual growth, while in the world and the EU markets there are still significant fluctuations. If we combine the consumption growth rate with the average per-capita consumption we will have a serious indicator of the consuming behavior of the market. %Growth Average per-capita Consumption (Liters) Countries 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, ,63 Austria 0,339 0,364 0,489 0,512 0,486 0,570 0,741 0,897 0,853 0, ,96 Netherlands 0,257 0,377 0,247 0,366 0,569 0,577 0,685 0,824 0,871 0, ,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, ,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 The table shows that although French consumption had recorded an impressive 114% growth, the average percapita consumption didn t follow at the same rate. It still scores the higher growth rate of 26%, among the rest major olive oil producing countries, but it is certainly not the most rapidly expanding market. We can see that no traditionally olive oil consuming countries, like Sweden, Austria and Netherlands have doubled or even tripled their average per-capita consumption. Even if their absolute numbers still remain at low level (below 1 liter) there is an obvious trend for Europe to adopt elements of the Mediterranean diet. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 13

14 Imports The imports section in every country s economy is unbreakably bonded with the needs of the market; thus a glance on the course of French imports for the last years could be useful to recognize some market trends Fats & Oils Imported Values (,000,000 Euro) Animal,vegetable fats and oils, cleavage products, etc 30% Value Share of Imports of Vegetable Oils 25.85% 25% 20% 20.40% 19.99% 21.86% 23.32% 23.59% 20.25% 15% 10.72% 10% 0% 8.30% 5% 4.88% 3.37% 14.25% 11.88% 11.27% 11.67% 12.81% 12.22% 12.19% 11.29% 10.79% 10.87% 11.42% 8.72% 8.59% 8.64% 9.29% 8.94% 7.32% 7.48% 6.56% 6.51% 5.71% 5.56% 4.47% 5.83% 3.96% 4.43% 5.19% 4.28% 3.94% 2.49% 3.05% 2.57% 2.12% 2.51% 2.85% 3.24% 2.44% 2.87% 2001 Soya-bean 2002 Oils 2003 & Fractions Ground-nut Oils & Fractions Olive Oil & Fractions Palm Oil & Fractions EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 14

15 2007 Share Value of Imports of Animal, Vegetable Fats & Oils 14,50% 7,32% 3,07% 8,94% 2,87% 7,11% 20,25% 9,29% 3,05% 12,19% 11,42% Animal Fats & Oils Ground-nut oil&its fractions Palm oil & its fraction Coconut (copra),palm kernel/babassu oil & their fractions Fixed vegetable fats&oils & their fractions Other Soya-bean oil&its fractions Olive oil and its fractions Safflower,sunflower/cotton-seed oil&fractions Rape,colza or mustard oil & their fractions Margarine 2007 Imports of Animal, Vegetable Fats & Oils (,000 Euro) Olive oil and its fractions Margarine Safflower,sunflower/cotton-seed oil&fractions Palm oil & its fraction Rape,colza or mustard oil & their fractions Soya-bean oil&its fractions Other Fixed vegetable fats&oils & their fractions Animal Fats & Oils Coconut (copra),palm kernel/babassu oil & their fractions Ground-nut oil&its fractions From 2001 to 2007 imports of Animal, vegetable fats and oils, cleavage products, etc have increased by 70% to the amount of 1,630,223 Euro. This category includes most kinds of animal and vegetable fats and oils, edible or not. They have totally different pricing and in some cases packaging and tonnage, but each product s market behavior affects the others. Possible share changes for every product label illustrate changes in the consumer behavior and could be regarded as a market trend. Having a look on the value share of the major categories of EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 15

16 vegetable oils, through last years, we can see that high quality (edible) oils, like olive, sunflower and soya oil hold 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, it doesn t seem that this increase has followed by a growth in the value share. Imports of Olive oil and its fractions have grown at the same rate with the main category of fats and oils; about 70%. This gives them a steady share of 20% of the whole category. Imported unit value (Euro/Ton) Exporters World ,21 Spain ,73 Italy ,93 Belgium ,99 Tunisia ,82 Greece ,47 Portugal ,26 %Growth Germany ,27 Since 2001, the average world price per ton of olive oil has risen by 56% and as a result the almost steady amount of importing volume costs more and more Imports of Olive Oil from Supplying Markets (Tonnes) Spain Italy Belgium Tunisia Other Greece Portugal Germany EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 16

17 2007 Share of Imported Virgin Olive Oil Spain 68,34% 23,35% Italy Belgium Tunisia 0,53% 0,33% 0,48% 4,12% 0,45% 2,41% Portugal Greece Germany Other The 98% of French olive oil imports comes from EU and more specifically from the 4 major producing countries, Spain, Italy, Greece and Portugal. Spain is, by far, the leading country of origin for imported Virgin olive oil, accounting tons in 2007, which is the 68% of the French market. Italy is in second place with a volume of and market share of 23%, having less than half the Spanish share, but much more than every other supplier s. The major non-european supplier is Tunisia with a rising share 2.4%. The amounts imported from Belgium and Germany, are actually re-exports, since those countries do not grow olives. In summary, the French olive oil market is extremely interesting, thanks to its growth and its future consumption potential. During last decade, consumption has grown about 114%, while in the world and EU 55% and 48% respectively. This is strong evidence that the French market grows more than average. In addition, the steady growth rate represents a mature behaviour of the market, which allows us to make 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 French market will keep on being in strong need of olive oil. Moreover, France with average per-capita consumption around 1.6 liters a year, versus 14.5 liters in Italy and 13 liters in Spain still remains in lower level than its neighbor olive oil producing countries, making it obvious that French market has the potential for further expansion. In 2006, French market invested more than Euro on olive oil imports; on 2007 more than Euro, recording the highest turnovers. We can understand that French market has become a positive importing environment for any kind of edible oil and especially for olive oil, showing the will to keep its share in value at high levels. There is strong competition among the major European olive oil producers with Spain to dominate the market and this makes difficult any non-european penetration, except from Tunisia, which has a noticeable presence during last years. Olive oil products from Spain, Italy and Greece have already established their reputation in the market and they are the main competitors for higher share, with different dynamic for each country. Virgin olive oil is a quality product and in a low olive oil producing country, like France, could be a luxury. In addition, it has to face alternative cheaper nutritional substitutes; such are sunflower and soya oils, which have extremely competitive prices. This could be a disadvantage for olive oil, but looking over the years we find out that olive oil always had higher price than any other oil, and still keeps on increasing its imports even with lower rate. This is perhaps a strong EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 17

18 point rather than a weakness, because the French market seems ready to accept expensive olive oil. Besides, it is already established as a quality product, with high nutritional value and recognized origin. In our case, markets that already are willing to pay for quality products, will probably be ready to accept the concept of fair trade and combine the right quality with the right purpose. France is a market where investments in olive oil imports will find fertile ground and it is worthwhile in being at least one of the options. Competitor Analysis 2008 French Market Major Suppliers Saipol 48,30% 6,10% Grupo SOS Reitzel Unilever 5,50% Wessanen A L'Olivier Barral 22,40% 2,00% 2,00% 2,00% 2,00% 3,20% 3,00% 3,50% Codefa-Orca Costa d'oro Delverde Other The French olive oil market is dominated by the French company Saipol, with key subsidiary the firm Lesieur. It is the bigger olive oil supplier of the French market, with a share of 48% in value and about 40% in volume. In the 2nd and 3rd place are respectively the Grupo SOS, with Carapelli and a share of 6.1%, and Reitzel with 5.5%. The rest is shared to other companies including Unilever and Wessanen with Greek brands Gaea and Liohori being among its major brands. The weak Greek presence is quite obvious. There are only two eponymous brands in the market, and their products are imported by a company which holds only the 3.2% of the market. Of course, other companies as well import Greek olive oil products, but in bulk; so, they reach the French market not as an imported autonomous, eponymous product with a name of origin, but as a variety or specialty under the name of a domestic brand. This could be important for the promotion of the Greek olive oil, because it affects its own identity. It is an opportunity, that eventually can allow to the Greek olive oil to establish it s position with the consumers and raise the imports of Greek olive oil. Market Segmentation French market is divided to two main categories; Retail market and Foodservice market (or catering). Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store, in small or individual lots for direct consumption by the purchaser. The foodservice industry encompasses those places, EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 18

19 institutions, and companies responsible for any meal eaten away from home. This industry includes restaurants, school and hospital cafeterias, catering operations, and other formats. Demanded Value (,000,000 Euro) Demanded Volume (,000 Tonnes) 71,9 18,6 420,1 89,4 Retail Foodservice Retail Foodservice In 2007, Retail had a share of 82.8% in volume and 85.4% in value of the total market, which could possibly mean that this is the main target market for our products. During the same year, the total demanded value was estimated to be around Euro, distributed to Branded and Own label (including various retail distributors brands) products. Unbranded and Artisan (craft sales; independent producers or sellers considered to be a single competitive entity/company). This is Market Products Share Value another sign that French market supports product with known label; thus, high quality products with distinct identity, such as Virgin olive oil, could have a lot of possibilities to be consumers choice. 27,3 UK market 72,7 UK market has many similarities but also some important differences compared to the French market. UK has different nutritional habits and consumer behaviour, although the market structure and segmentation is similar to French. Branded Own Label Production UK is not an olive oil producing country; it has not any domestic production and has to satisfy its needs based exclusively on imports. This also means that UK market isn t familiar with olive oil. This could be a great opportunity, combining the introduction of olive oil with fair trade. It will be important to connect the unfamiliar, to the British, product with a more common term. Consumption EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 19

20 UK Consumption (,000 Tonnes) 80 71, ,1 47,0 48, ,1 25,6 29,9 40,0 33,8 25,5 28,9 28, ,0 0 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 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 2003/4 the 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 market too; 92.67% growth Consumption Growth Rate 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 World Growth Rate EU Growth Rate UK Growth Rate The consumption growth rate does not allow us to conclude to optimistic results. UK consumption is characterized 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 growth rate of consumption. According to this and keeping in mind the last signs of stabilization, we can assume that at least for the next 2 years we can wait positive rate meaning increase in consumption. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 20

21 Countries Average per-capita Consumption (Liters) 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 %Growth Germany 0,288 0,369 0,396 0,442 0,469 0,485 0,466 0,561 0,549 0, ,63 Austria 0,339 0,364 0,489 0,512 0,486 0,570 0,741 0,897 0,853 0, ,96 Netherlands 0,257 0,377 0,247 0,366 0,569 0,577 0,685 0,824 0,871 0, ,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, ,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 and downs, 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 northcentral European countries. Imports In a non olive oil producing country like UK, imports are the only way to supply its market. Thus, analyzing the importing value and volume of olive oil is a reliable way to evaluate the UK market Fats & Oils Imported Values (,000,000 Euro) Animal,vegetable fats and oils, cleavage products, etc EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 21

22 Value Share of Imports of Vegetable Oils 30% 29,28% 29,94% 28,51% 25% 24,78% 25,13% 22,33% 20% 15% 10% 5% 0% 19,68% 17,91% 16,88% 15,39% 16,78% 12,23% 12,81% 10,31% 11,37% 11,80% 11,27% 10,57% 10,09% 10,40% 9,95% 9,19% 7,28% 6,97% 8,40% 7,53% 7,57% 6,89% 6,92% 5,70% 4,65% 4,97% 5,13% 4,98% 5,38% 5,43% 5,09% 3,51% 3,83% 4,28% 3,29% 2,18% 0,54% 0,60% 1,10% 0,73% 0,57% 0,49% 0,50% Soya-bean Oils & Fractions Ground-nut Oils & Fractions Olive Oil & Fractions Palm Oil & Fractions Safflower,sunflower/cotton-seed Oil & Fractions Coconut (copra),palm kernel/babassu Oil & Fractions Rape,colza or mustard Oil & Fractions 2007 Share Value of Imports of Animal, Vegetable Fats & Oils 4,17% 4,35% 4,28% 3,29% 11,92% 10,42% 11,80% 12,81% 0,50% 16,78% 19,68% Animal Fats & Oils Ground-nut oil&its fractions Palm oil & its fraction Coconut (copra),palm kernel/babassu oil & their fractions Fixed vegetable fats&oils & their fractions Other Soya-bean oil&its fractions Olive oil and its fractions Safflower,sunflower/cotton-seed oil&fractions Rape,colza or mustard oil & their fractions Margarine EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 22

23 2007 Imports of Animal, Vegetable Fats & Oils (,000 Euro) Palm oil & its fraction 259,57 Safflower,sunflower/cotton-seed oil&fractions 221,26 Olive oil and its fractions Other Soya-bean oil&its fractions Animal Fats & Oils 168,96 157,17 155,68 137,43 Margarine Rape,colza or mustard oil & their fractions Fixed vegetable fats&oils & their fractions Coconut (copra),palm kernel/babassu oil & their fractions Ground-nut oil&its fractions 57,36 56,42 54,97 43,42 6, Imported unit value (Euro/Ton) Exporters %Growth World 2,757 2,888 2,267 1,839 3,055 3,979 3,271 18,64% Spain 2,121 2,415 2,458 2,154 2,793 3,869 2,900 36,73% Italy 3,639 3,331 1,912 1,511 3,654 4,543 4,127 13,41% Greece 2,925 4,175 4,205 3,474 3,111 3,638 2,748-6,05% Belgium 1,791 2,878 1,317 2,663 1,695 2,662 2,363 31,94% Germany 2,323 2,545 2,630 3,109 3,617 4,537 3,574 53,85% Netherlands 3,167 3,410 2,990 3,744 4,474 6,722 3,165-0,06% France 2,065 2,355 3,009 2,964 3,365 3,044 6, ,67% Portugal 3,346 1,653 3,533 2,412 2,8 2,913 2,416-27,79% From 2001 to 2007 imports of Animal, vegetable fats and oils, cleavage products, etc have increased by 51.8% to the amount of 1,318,801 Euro. Olive oil and its fractions hold the 3rd bigger share in value of imports, with an average percentage of 14%. Palm Oil is the traditional leader of the market, while Sunflower Oil is in constant rise since 2004, having the dynamic to become the leading choice of the UK market. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 23

24 2007 Imports of Olive Oil from Supplying Markets (Tonnes) Spain Italy Greece Belgium Germany Netherlands Other France Portugal Share of Imported Virgin Olive Oil 30,99% 8,32% Spain Italy 46,03% Greece Belgium 0,42% 0,33% 1,00% 2,21% 2,65% 8,05% 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, accounting 17,267 tons in 2007, which is the 46% of the UK market. Italy with a volume of 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 countries do not grow olives. Summarizing, UK olive oil market doesn t seem mature and stable enough to allow us to make certain conclusions. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 24

25 Olive oil consumption has grown at faster rate than in the rest of the world, but the average per-capita consumption still remains in low level, with every British to consume averagely less than half a litter per year. In 2006, the market invested about Euro on olive oil imports; in 2007 less than 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 us elements 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 organic products. British shoppers are choosing to buy food that is sourced ethically". Competitor Analysis 2008 UK Market Major Suppliers 41,00% 29,00% 1,00% 0,50% 0,50% 2,00% 9,00% 15,00% 2,00% Mitsubishi Bunge Unilever Grupo SOS Vandermoortele Aarhus United 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 company Odysea with the brand Karyatis and a share of 0.5%, and Trustin with Gaea. Market Segmentation EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 25

26 Demanded Value (,000,000 Euro) Demanded Volume (,000 Tonnes) 24,4 3,6 186,3 22,7 Retail Foodservice Retail Foodservice In 2007, Retail had a share of 86.4% in volume and 88.4% in value of the total market. In the same year, the total demanded value was estimated to be around Euro, distributed to Branded and Own label (including various retail distributors brands) products. Compared to French market, the UK market has a significant lower size, as its demand is almost the half than French. It is also impressive that the market is divided evenly Market Products Share Value between branded and own labeled products. Own labeled products are by definition cheaper than branded and sometimes have not the same high quality. On the other hand own labeled products in large retail stores are promoting better and their competitive prices make them more attractive. But when the half of the market is consisted of own labeled products, it is more difficult to be found places and means to promote products under the label of fair trade product from specific origin. Branded Own Label USA market The US market has many particularities compared to European markets, but also to any other market worldwide. In order to evaluate the USA market, we had to compare it with the more familiar European behaviour and to distinguish it from any other market. We found some impressive evident, that helped us to make some results. Production EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 26

27 4 USA Production (,000 Tons) /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 olive oil production is quite restricted, so domestic output stays in extremely low levels. Last year s output was about 1,000 tonnes. Production is stabilized on about tonnes per year, being of the lowest in the world and much below the needs of the market for olive oil. Consumption USA Consumption (,000 Tonnes) /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 From 1995 to 2007 the consumption has scored an impressive growth of 149%. With a volume of tonnes during 2007/08 season USA market is world s 4th largest consumer, with a share of 8.57% of the total World olive oil consumption. It is also the first non-european consumer and by far with the largest consumption amongst all non olive oil producer countries. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 27

28 Consumption Growth Rate /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 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 French market. The average per-capita consumption fluctuates at high levels too, increasing more than 52% through last ten years, with Americans to consume on about 830 ml during Average per-capita Consumption (Liters) %Growth Countries 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, ,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 Japan 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 the other hand, Americans still consume lower than 1 lt of olive oil per year, which is considerably lower than major European markets, but also than other non producing countries like Australia and Canada. Combined to the large population of the USA, there are clear margins for further increase and expansion of the market. Imports Importing is the only way for USA to cover the domestic need for olive oil and according to the previous indexes there is an expected increase on olive oil imports. We have to note that USA imports olive oil from much more countries covering the areas of Europe, North Africa, Middle East, South America and Australia. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 28

29 Fats & Oils Imported Values (,000,000 Euro) Animal,vegetable fats and oils, cleavage products, etc Value Share of Imports of Vegetable Oils 35% 30% 31.64% 32.68% 33.59% 31.91% 36.53% 34.87% 25% 27.48% 20% 15% 10% 5% 0% 19.54% 19.79% 14.41% 14.20% 17.90% 18.27% 18.66% 15.30% 14.10% 5.40% 5.50% 6.07% 4.64% 1.47% 1.85% 3.21% 3.81% 3.33% 2.09% 1.17% 1.57% 1.88% 0.81% 1.20% 0.38% Soya-bean Oils & Fractions Ground-nut Oils & Fractions Olive Oil & Fractions Palm Oil & Fractions 2.40% 12.72% 7.76% 1.92% 16.49% 15.27% 10.62% 1.85% 0.31% 0.67% 0.29% 0.46% % 19.56% 17.07% 15.49% 0.50% EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 29

30 2007 Share Value of Imports of Animal, Vegetable Fats & Oils 3,06% 17,07% 15,49% 19,56% 27,48% 5,73% 0,50% 3,25% 5,36% 0,46% 2,04% Soya-bean oil&its fractions Olive oil and its fractions Safflower,sunflower/cotton-seed oil&fractions Rape,colza or mustard oil & their fractions Fixed vegetable fats&oils & their fractions Other Ground-nut oil&its fractions Palm oil & its fraction Coconut (copra),palm kernel/babassu oil & their fractions Animal or veg fats, oils&fract, hydrogenated Margarine 2007 Imports of Animal, Vegetable Fats & Oils (,000 Euro) Olive oil and its fractions Rape,colza or mustard oil & their fractions Coconut (copra),palm kernel/babassu oil & their fractions Palm oil & its fraction Other Fixed vegetable fats&oils & their fractions Margarine Safflower,sunflower/cotton-seed oil&fractions Animal or veg fats, oils&fract, hydrogenated Ground-nut oil&its fractions Soya-bean oil&its fractions From 2001 to 2007, imports of Animal, vegetable fats and oils, cleavage products, etc have increased averagely by 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, which could explain why the USA imports are proportional to the consumption. Even after last year s decrease, olive oil is the dominant of the vegetable oils market. EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 30

31 Imported unit value (Euro/Ton) %Growth Exporters 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% Italy Spain Tunisia Argentina Turkey Greece Australia Morocco Portugal Syria Lebanon Egypt Israel France Other Chile Mexico 1,263 1,199 1, Imports of Olive Oil from Supplying Markets (Tonnes) 7,084 4,961 9,056 14,613 31,329 98, ,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90, ,000 EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 31

32 2007 Share of Imported Virgin Olive Oil 56.96% 18.19% 8.49% 0.49% 0.69% 0.73% 0.50% 0.70% 2.88% 4.11% 5.26% Italy Spain Tunisia Argentina Turkey Greece Australia Morocco Portugal Syria Lebanon The 79% of the USA olive oil imports comes from EU and more specifically from the 4 major producing countries, 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 the 57% 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 Australia contribute 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 Euro, which is more than the sum of French and UK markets. This underlines the size of USA market and how much 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 with increased certainty. The steady growth rate represents a mature behaviour of the market, which allows us to exaggerate 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 could possibly mean that here will be satisfactory profit margins to future sales of olive oil under the label of fair trade. Competitor Analysis EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 32

33 2008 US Market Major Suppliers 28.00% 21.50% 15.00% 5.00% 2.00% 9.00% 8.00% 6.00% 4.00% 3.00% 3.00% Unilever Salov Delmaine Trading Grupo SOS Borges Pont Rizzoli Emanuelli Fedeoliva Sapio Ron-Son Hojiblanca Other In contrast with the European markets,that we have examined, there is much competition in the US market. Unilever is the leader of the Category with a share of 28% and key subsidiary the brand Bertolli Lucca. Salov follows with 15%, Delmaine Trading with 9% and Grupo SOS with 8%. Several companies are coming after with lower shares. The majority of above companies import olive oil under Italian labels. Market Segmentation Demanded Value (,000,000 Euro) Demanded Volume (,000 Tonnes) ,2 127,4 117,6 Retail Foodservice Retail Foodservice Market Products Share Value 10,2 89,8 We can find another difference compared to European markets; the USA market is almost equally divided to retail and foodservice markets. In 2007, Retail had a share of 55.8% in volume and 48% in value of the total market, which says that prices are lower significantly lower in retail market. In the same year, the total demanded value was estimated to be around 1,088,200,000 Euro, distributed mainly to Branded and Own label (including various retail distributors brands) products. Unbranded and Artisan (craft sales; independent producers or sellers considered here to be a single competitive entity/company). This is another sign that US market supports product with known EUROMED Sustainable Connections: Evaluating EU & US Olive Oil Consumer Markets 33 Branded Own Label