ECONOMY

Why Greek olive oil lags in the US market

Greek olive oil has been unable to capitalize on the considerable prospects it has in the US market due to its high price and the lack of standardization and differentiation, which means that the Greek product has to compete not only with its Italian and Spanish counterparts but also with imports to the US from Tunisia, Morocco and even Argentina.

Data from a report by the Office for Economic and Commercial Affairs at the Embassy of Greece in Washington are quite revealing about Greek olive oil imports in the US. A total of 306,800 tons of olive oil was imported by the US in 2012, of which 155,000 tons came from Italy, 81,600 tons was from Spain and 39,600 tons from Tunisia.

Greece was the seventh-biggest supplier of olive oil to the US with just 4,800 tons in 2012 – i.e. a 1.56 percent share, below Morocco, Argentina and Chile, which made their first appearance as olive oil suppliers to the US market in 2000 and have since strengthened their presence.

One of the main problems that has limited Greek olive oil’s penetration of the US market has been its high price. According to the above report, the price per ton of the Greek product was the highest in 2012, at $3,426, with Italian olive oil costing $3,352/ton and the average price standing at $3,059/ton. The high price of Greek olive oil is related both to its quality and the high cost of production due to the lack of economies of scale.

The well-known problem of the limited standardization of olive oil in Greece has resulted in quantities being exported without any differentiation regarding their quality or packaging, unlike the Italian producers. In fact, a large portion of the Greek product is exported in bulk to Italy and is packaged there before being sent to the US by Italian corporations.

In a country with a cultural absence of olive oil consumption such as the US, where the miximum packaging size is 3 liters, consumers choose the product with the most attractive price. Olive oil may have made its way into half of US households in the last five years, but the average annual consumption is particularly low, at 1 liter per capita, when in Greece it exceeds 24 liters.

It is the rising profile of olive oil in US nutritional habits combined with the margin for more per capita consumption that demonstrate the potential Greek exports have in that market, given also the presence of the strong Greek community there. The report concludes that delicatessens could prove to be a crucial distribution channel, provided there is an adequate standardization of the Greek product. That is the case because in the context of the hype for Mediterranean food, certain US consumers are willing to pay up to $60 per liter to get top-quality extra-virgin olive oil.