MATAWAN, N.J. -- Continued crop shortages will hoist olive oil prices 30% or more this year, according to the North American Olive Oil Association here.
Hikes of 6% to 15% occurred in January, and more are expected next month, retailers and suppliers said. "One [supplier] told me his list prices went up 15% in January and will go up another 25% in March," said Richard Sullivan, NAOOA president.
"The consumer demand is just very high, and the available supply is probably 25% below requirements," he explained.
Droughts in the Mediterranean region last spring have caused big olive crop declines for 1996, primarily in Spain, Tunisia and Morocco, Sullivan said. Spain, the world's largest producer of olive oil, is projected to have its crop drop to about 200,000 tons from a normal 600,000 to 700,000 tons.
"Italy will have a normal year in '96, but Spain will have a worse year than it had in '95," Sullivan said. "Spain provides 30% of the olive oil in the world. So when they go down a third, you really have reduced availability of olive oil."
Significant rainfall in recent months has provided a boost to olive oil producers, but that will only benefit 1997's crop, NAOOA reported.
"Because it is a commodity, the prices are basically balanced out among the supply of all the Mediterranean countries. And that's what really dictates supply," said William Monroe, president and chief executive officer of Bertolli USA, Secaucus, N.J. Bertolli olive oil comes from Italy.
From 1992 to 1994, olive oil prices were at their lowest in 15 years, but prices have escalated since crop shortfalls in 1995 and 1996, according to Monroe. Prices jumped from 25% to 30% last year -- some as much as 40% in the fourth quarter, he said.
"The two major brands both announced price increases in January 1996," said David Tourville, marketing director at Filippo Berio, Hackensack, N.J., the second-leading seller of olive oil, behind Bertolli. "The price increases generally are in the 10% to 15% range."
Several supermarket chains reported sizable price hikes last month. "I would say they were somewhere between 6% and 8%. They were pretty substantial," said Dave Renaldi, head buyer at Martin's Super Markets, South Bend, Ind.
"Prices are going through the roof again," said David DiGeronimo, head grocery buyer at Victory Super Markets, Leominster, Mass. "One of them just went up $3, from a $15 to an $18 unit cost."
Buyers at Randalls Food Markets, Houston, and Fleming Cos.' Massillon, Ohio, division reported unit increases of up to $6.
Bertolli's Monroe expects prices to stabilize after March. "Right now we feel the category [sales] will level off for a while. But we will continue to do advertising, public relations and make sure that we have supply and just-in-time delivery for supermarket operators so they're never out of stock," he said.
