Despite growth in value sales, the European olive oil market faced declining volumes last year as consumers focused more on product quality rather than price, a new market study finds.

The study by data and technology analyst IRI found that in six of the seven countries analysed – France, Germany, Greece, Italy, the Netherlands, Spain and the UK – value sales grew by approximately 6% year-on-year (y-o-y).

But due to higher material costs and price inflation across Europe, all markets experienced a decline in sold volumes, averaging 4.3% across all countries, IRI said on 18 July.

“Olive oil prices have risen substantially, as poor harvests and challenging economic conditions have impacted the price of raw materials and production costs by as much as 13% and 14% in countries like Greece and Italy,” said IRI senior regional insights manager Olly Abotorabi.

The largest drop in volumes was in Spain (-6.8%), followed by Germany (-6.7%) and Greece (-6.0%), while the lowest falls in volume were registered in the Netherlands and Italy at -0.4% and -0.6%, respectively.

“High shelf prices are starting to act as a deterrent, prompting consumers to try other cooking oils. In Germany, for example, we see high volume growth for linseed oils at 18% y-o-y albeit from a smaller base, while lower prices for sunflower oil appear to be bolstering its fortunes, with volumes up 10% y-o-y,” Abotorabi said.

Overall, the European olive oil market was worth €3bn (US$3.5bn), with extra virgin olive oil (EVOO) holding the largest portion of the market at €1.2bn (US$1.4bn), followed by standard olive oil at approximately €750M (US$878M).

The EVOO segment managed to avoid a decrease on volumes y-o-y, possibly due to lower price inflation rates compared with those experienced by the other olive segments, said IRI.

The organic olive oil segment grew 37.4% in value and 17.5% in volume y-o-y in the UK market, boosted by an increased consumer perception about it being beneficial for health. However, overall sales in the segment remained low.

“Looking to the future, a better harvest and production will help re-stimulate growth prospects. However, olive oil will continue to face increased competition from alternative oil types like sesame, rapeseed and coconut oils,” said Abotorabi.

IRI also forecast that olive oil manufacturers would increasingly come under fire about their packaging, with the plastic bottles used in key European markets drawing the ire of environmental groups, consumers and retailers.

The table olives market showed a pattern similar to olive oil, with six out of seven countries registering value growth of 6% y-o-y, but all markets showing volume declines.

EU producing countries accounted for 70-75% of world olive oil and more than one-third of table olive production, IRI noted quoting the European Parliament Think Tank.