Why is Italian olive oil more expensive at source than Spanish olive oil?

Olive Oil Prices in Spain and Italy: A Comparative Analysis

Extra virgin olive oil (EVOO) prices differ significantly between Spain (around €4/kg) and Italy (no less than €9/kg). Several factors contribute to this disparity:

Production and Demand:

• Spain: High production (estimated at 1.3 million tons), far exceeding domestic consumption (less than 500,000 tons), positions Spain as a net exporter. This abundant supply puts downward pressure on prices.
• Italy: Low production (around 200,000 tons), significantly lower than domestic demand and exports, creates a limited supply and high prices. Italy imports a large portion of its consumed oil. This scarcity, coupled with consistent demand, drives prices upward.

Product Valuation and “Country Brand”

• Italy: Italian consumers highly value “Made in Italy” products and are willing to pay a premium. There’s a strong association with Italian quality, tradition, and excellence. The “Italy” brand itself adds value.
• Spain: Spanish consumers generally don’t perceive the same value in Spanish olive oil and aren’t willing to pay such high prices. A lack of an effective promotion strategy and doubts about the work of Spanish producers damage the image of Spanish EVOO. The sector needs professionalization and emphasis on product quality.

Market Conditions

The 2024/25 season is marked by a poor harvest in Italy, exacerbating the price difference. In Spain, rapid harvesting and a large initial supply caused a sharp price drop in early December, along with price volatility and a lack of sector organization.

Production Costs and Policies

Production costs in Italy are generally higher than in Spain, influencing final prices. Differences in agricultural policies, subsidies, and regulations between the two countries also impact costs and prices.

Market Strategies

Italy has historically focused on communication centered around the “100% Italian Olive Oil” brand, differentiating itself globally. Spain should focus on the “Olive Oil from Spain” brand to highlight its product quality. Spain needs to shift from a volume-focused sector to one where consumers value olive oil for its quality, transparency, traceability, innovation, and sustainability.

Other Factors

Harvest forecasts in other Mediterranean countries, such as Tunisia and Turkey, also influence price decreases in Spain and Portugal. The price difference is specifically for 100% Italian EVOO; oils imported by Italy have prices more aligned with the global market. The fragmented nature of the Spanish production sector and individual sales decisions by farmers also contribute to price volatility.

In summary: The price difference between Spanish and Italian EVOO results from a combination of structural factors (production, demand, product valuation) and market conditions (low harvest in Italy, rapid harvesting in Spain).

The Spanish olive oil sector needs to improve its promotion strategy, focus on quality and differentiation, and achieve better organization to defend its product’s value. Learning from the Italian model regarding origin valorization and creating a strong country brand is essential.