Oil prices rise dramatically in 2022. It’s not just barrels of crude oil that are being widely tracked. The cost of olive oil, a more niche commodity, also rose. It’s a bike for Islington households looking for something to ride in the endive – and a sign of worry about what’s going on.
The price increase is clear. Last December, extra virgin oil – the most expensive type, made from cold-pressed olives – cost €5.5 per liter in Italy. That’s up 50 percent compared to the previous year, and about double the price in 2020. Other olive oils are increasing.
Olive oil is a staple in producing countries – nonna’s pasta sauce is swimming in the stuff. And the growing popularity of the Mediterranean diet has increased the consumption of olive oil worldwide: it has doubled since 1990.
But the spike is not driven by the liberal use of oil. Dried supplies. Juicy olives are a product of mild weather and some rain. A hot summer in Italy and Spain – the two biggest producers – caused European production to fall by 34 percent, according to European Commission estimates.
Price increases will be tight. This is not a problem for consumers in the UK and US, where olive oil is still a niche – and elite – product. Per capita consumption is only 1 liter per year there. However, the Spanish, Italians and Greeks drink 10 liters per head. According to this calculation, a family of four who like extra virgin olive oil can spend €220 per year. They now have a good incentive to switch to cheaper oils, if only for cooking.
Companies that sell olive oil may be squeezed, as they struggle to increase prices to consumers. CVC-controlled Deoleo, a world-renowned olive oil producer with brands including Carapelli and Bertolli, exits debt restructuring in 2020. Ebit margin is set to fall to 3.15 percent of profits in 2023, according to S&P Capital IQ estimates, down. in 2021 it changed to +5.4%.
The olive harvest has good years and bad years. But there are fears that hot Mediterranean summers could become more frequent due to climate change. That will add pricier olive oil to the list of consequences – and spell bad news for Islington salad days.
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