Have we reached peak olive oil?

Olive oil prices have skyrocketed this year as unfavourable weather conditions and persistent droughts have restricted supply, while demand has been rapidly growing in emerging economies such as Brazil and China.

The 2016 / 2017 harvest is forecast to be the second poorest in two years due to the erratic weather in Spain and Italy, two of the world's largest olive oil producing nations.

Parts of Italy saw temperatures hit 43°C in early August, which is substantially higher than the seasonal average of 30°C. This is bad news for olive trees and for price conscious consumers as the wholesale price of extra virgin olive oil has soared to more than $4,200/tn in 2017 from $3,000/tn in 2016.

Olive oil has always been an important staple of the Mediterranean diet and has become increasingly popular in other parts of the world, especially in developing countries due to its flavour, versatility, and health benefits.

Health is one of the most important attributes of olive oil. According to GlobalData’s 2017 Q1 consumer survey, 76% of global consumers believe that olive oil has a positive effect on their health.

The growing popularity of the Mediterranean diet across the world will ensure that demand for olive oil remains high, despite the high price fluctuations.

Overall, health conscious consumers will have to become accustomed to ever higher olive oil prices in the long term as global weather patterns are expected to become more severe and unpredictable due to climate change.