'Olive oil: the flavour and health boost for Australians'

One of the objectives of your association is to promote olive oil consumer education. Is it difficult to convince the Australian consumer of the benefits of this iconic vegetable fat? What are the results?

The Australian Olive Oil Association, or AOOA, is passionate about increasing consumption of olive oil in Australia, not only because it is a healthier choice of cooking fat, but because of the wonderful flavour boost it gives to any plate of food.  We are lucky that Australia is a multi-cultural country, that already has a large population of migrants from Mediterranean countries such as Italy and Greece, and more recently Turkey, Lebanon, Spain and other regions. This means these migrants and their next generations are sharing their cuisine with Australia, which, more often than not, has olive oil at its heart. From that perspective, it is not difficult to raise awareness about the health benefits or amazing flavour of the product, and naturally it will appear in many recipes by well-known chefs and influencers. To a certain extent there is some competition for olive oil, in that a strong Asian influence has encouraged consumers towards rice bran oil, coconut oil and other cooking oils, with some of those oils attempting to claim health benefits as well, but largely missing the primary selling point, which is taste.

Nevertheless, it is important that the industry communicates strongly to remind consumers that there is only one oil as good as olive oil, and that is olive oil.  For this reason, our Association launched a promotional campaign in 2023 entitled “Get Drizzling”, which focused on a simple message which is to add a drizzle of olive oil to finish a dish and to lift the taste of the dish from something ordinary to something extra-ordinary. Too often, consumers spend a lot of money buying ingredients and miss this simple  food hack that can really lift their final dish with a comparatively inexpensive drizzle of olive oil. For this reason, our campaign implicitly highlights extra virgin olive oil without suggesting that consumers cannot use milder categories such as olive oil, composed of refined olive oil and virgin olive oil, if they prefer.

The “Get Drizzling” campaign reached over 11% of the Australian consumers with a very modest budget, beating many benchmarks of marketing campaign performance, and  we are pleased to confirm the second season of the campaign will continue in early 2025.

What type or category of olive oil does the Australian consumer prefer?

70 years ago, when many Italians and Greeks started to arrive in Australia, olive oil was very expensive, and only 5-10% of all olive oil imported into Australia was Extra Virgin ; most was simply olive oil. Over time, consumers have become more interested in the flavour and health benefits of extra virgin olive oil.   Today, 70-75% of the olive oil sold in Australia is extra virgin grade, and approximately 30% of that is produced in Australia, with the local industry having grown significantly over the last 20 years. Nevertheless, there is still a significant market for “classic” or “pure” olive oil and “light taste” olive oil, being blends of refined olive oil with virgin olive oil.   Consumers use these blends for cooking where a strong taste is not wanted, or often in cooking with high temperatures such as roasting, baking, shallow-frying, stir-frying or deep-frying, where the intensity or flavour of extra virgin is not desired versus a higher temperature performance of the oil.

Is the higher price of olive oil, compared to other vegetable oils or animal fats, a deterrent and does it slow down the increase of its consumption among the population of your country?

Absolutely. The recent record prices of olive oil have seen volumes drop over nearly 30% versus 2-3 years ago, and we have seen also a decline in the number of households buying olive oil; from 67% of households down to nearly 60%. This may seem like a small change, but this is the lowest level in over 30 years. It has been a difficult time for olive oil brands, however we are optimistic that the sales remained as high as they did during such extreme pricing, which gives us confidence that volumes can return to the market once the price of olive oil returns to more normal levels.

Currently, what percentage of olive oil consumption in Australia is local and how much is imported, and of the latter, how much comes from Spain, the world's leading producer and exporter?

The percentage of Australian olive oil sold in Australia varies from year to year because of the variability of the Australian harvest. Also, depending on the international price of olive oil, some Australian producers will export high quality Australian extra virgin olive oil at a premium to countries such as China, Japan, and the USA. As a result, Australian producers will produce between 10-20kt per year, of which on average ~4kt is exported. Compared to a total consumption of olive oil in Australia of 45-50kt per year, this means the current imports to Australia fluctuate between 30-35kt per year, of which 75-80% (~25kt) come from Spain.

What is your Association's forecast for domestic olive oil production, after years of exponential growth?

The growth of Australian domestic olive farming occurred mostly in the years from 2000 to 2010.  Investment in groves at the time benefitted from a period of high global prices, a weak Australian dollar and government tax incentives that created a moment in time where olive grove investments appeared more attractive than they would have otherwise. Once these conditions changed, access to water became more expensive and government tax incentives were removed, new grove plantations have been less common, while some old groves (perhaps those that were not planted in the ideal place or with the ideal varieties) have been removed. As a result, since 2010, the annual production of olive oil has fluctuated generally between 10 – 20 kt/yr, being generally flat overall, increasing only slightly. 

That may be soon to change, as the high global price for olive oil in the last 3 years, combined with a more favourable price of water in Australia and better expertise and technology for super high-density grove planting has resulted in a more commercially viable equation for new projects. In some cases, the global oversupply of grapes for wine has encouraged some grape growers to convert part of their land to olive groves.  As a result, there are grove expansions and plantings being planned today that might create a new generation of growth once they begin to mature in 5-10 years. It is hard to say where this could end up, but our view is that considering Australia’s location in the Southern Hemisphere with many zones favourable to olive growing, there is a strong case for Australia to double its olive production in the long run, and continue growing from there.

Despite not covering the domestic consumption demand, Australia also exports its olive oil, where are these sales going and what is the evolution of the last years?

Australian generally exports only 2-5kt of olive oil per year.  The number one destination for Australian olive oil is the United States of America, which is not surprising considering Australia’s largest producer, Cobram Estate, has invested heavily in its US operations in the last 5 years. Other key export destinations include New Zealand, China, Japan, Taiwan and occasionally Europe. 

Export of Australian olive oil to Europe is rare and is usually packaged and/or blended before being re-exported. The reason for this is that Australian olive oil imports into the European Union are otherwise subjected to a 124.50 EUR per 100 kg tariff, which generally renders Australian olive oil too expensive for the European market.    

Due to strong demand for local product in Australia, the export of Australian oil is only likely to increase after a substantial rise in production. There is no doubt that there will be demand for Australian olive oil around the world, as there is for many high-quality Australian food products, especially in Asian countries that are geographically closer to Australia and are currently experiencing rapid growth in demand for olive oil.