Following years of high profitability, European vegetable oils and their fatty acids (VOFA) companies should make a clear decision on whether they will focus on consumer foods or engage further with the VOFA sector, says Rabobank.

According to a new report – titled ‘European Vegetable Oil Applications’ – the European vegetable oil application industry has exhibited good profitability in recent years, averaging 8% while the global oilseed crushing industry had average profitability of only half that at 4%.

Most industry players had also reported growth in their sales over the past decade, added Rabobank.

“The volumes of vegetable oil applications in the EU market have increased in the last four years in feed, oleochemical and several B2B food applications. The speed of growth has ranged from 1% to 3% per year,” said Vito Martielli, senior analyst for grains and oilseeds at Rabobank.

As a result, consumer food companies active in VOFA should make a clear decision on whether they would divest their VOFA assets to focus on their core businesses or to further invest in expansion into VOFA.

“With the expansion option, there is a possibility of teaming up with EU VOFA manufacturers to further grow in emerging markets as these players have the know-how and experience in this business. All players should follow the demand drivers of sustainability and health, which are essential for this sector,” said Martielli.

These key consumer drivers impacted consumption and were critical for the demand for vegetable oils in the next decade, said Rabobank.

However, trends and market drivers were not the same across various outlets and countries in the EU, and they also differed for each vegetable oil.

With palm oil, for example, sustainability was a major driver in the EU vegetable oil market as the EU had become the most important region globally for the processing of sustainable palm oil, accounting for 38% of global certified sustainable palm oil (CSPO) sales.