All bad things come to an end, which is good news for olive oil aficionados and grocery buyers alike, who are rejoicing over a bumper olive oil crop and better prices this year.
"We've been told that the crop is much better and stronger. The yield is better, and we should see a softening in pricing," said Joe Cunnane, senior grocery buyer, Genuardi's Family Markets, Norristown, Pa. "We're expecting increased supply, in conjunction with more aggressive promotional activity."
Droughts in the Mediterranean in the spring of 1995 caused big olive crop declines last year. The crop shortages hoisted prices between 6% to 15% in early 1996, and up to as much as 30% as the year progressed.
While some buyers said they heard prices will be coming down, others said nothing is certain. A buyer from a West Coast chain, who did not want to be identified, speculated that prices would be kept somewhat high, despite the olive windfall.
"I hear it's going down early [this year], but not a lot," the buyer said, saying that manufacturers will probably keep their prices high.
But Bill Monroe, president, Bertolli USA, Secaucus, N.J., said retailers will begin seeing lower prices beginning in April.
"We anticipate that prices will go even lower by the summer," Monroe added.
In addition to good weather, "modifications to irrigation systems" have created a bountiful crop for 1996-1997, according to Monroe. The only country that has a shortfall is Italy, since its crop was damaged by a mite infestation, said Monroe.
Other oil-producing countries are Spain, Morocco, Tunisia, Turkey, and Greece. "Our oil comes from Italy, but like other companies, if there are shortages, we'll buy from other farmers," Monroe explained.
Colavita USA, Linden, N.J., will be affected by the Italian shortfall more than other companies, since its extra virgin olive oil is 100 percent Italian, said Joseph Profaci, vice-president and general counsel.
"Prices will come down, but we are cautious as to whether they will come down as much as our competitors," he said.
Still, retailers are looking forward to any relief they can get. Several told SN that the huge price hikes have leveled off in the past two to three months.
"The price has stabilized," said Pat Redmond, grocery merchandiser for Rosauers Supermarkets, Spokane, Wash.
"There were at least two price hikes over a six-month period, and it was substantial. Sales were off 25% or 30%," he added.
Some customers have coped with high prices by purchasing smaller 8- and 17-ounce sizes, according to retailers.
"It seemed like [customers] went to smaller sizes; not drastically, but smaller sizes picked up volume," said Neil Romenesko, category manager for Copps Corp., Stevens Point, Wis. Romenesko said manufacturers helped by offering allowances per case, which enabled him to give better deals to customers.
Cunnane of Genuardi's agreed that the 8-ounce size has gotten much more popular in the climate of escalating prices. "Heavy users have noticed price increases," he said.
Kevin Dale, buyer at H.G. Hill Stores in Nashville, Tenn., also sells the smaller sizes, but claimed that the price hikes "didn't slow sales down a bit." Said Dale: "Loyal customers use olive oil, regardless."
Supermarket olive oil sales were $319.2 million, a 27.8 percent increase for the 52 weeks ended Nov. 3, 1996, according to Information Resources Inc., Chicago.
But some retailers said the price hikes have adversely impacted sales. Charles Jones, senior buyer at Scolari's Food & Drug, Sparks, Nev., said there was a significant decline in unit sales and speculated that people may have switched to other oils.
"Canola and soy oil have picked up through the year period," he said.
At Genuardi's, there's also been "a little drop off" in units, but "dollar sales are still there," Cunnane said. "Olive oil is a strong category for us and always has been," he said. Genuardi's plans to offer its own store-brand olive oil early this year.
Specialty olive oil prices have remained very high, but retailers said sales have remained stable. "When you're paying $13 or $14 for a bottle, it's not a price item," said Redmond of Rosauers.
While sales of pure olive oil, or the "plain vanilla flavor", continues to be strong, specialty and flavored oils are winning over the hearts and taste buds of discerning consumers. Extra virgin, always the olive oil of choice for Europeans, is rapidly gaining ground in the United States. That's because people who become serious olive oil users soon come to prefer its stronger taste, according to Profaci of Colavita.
"People will enter the category with the lighter flavor, and as they become accustomed to it, the graduate to extra virgin," he explained.
ACNielsen, Schaumburg, Ill., reports a 37.4% increase in extra virgin sales to about $105.8 million for the 52-week period ended Sept. 7, 1996. Extra light oil, which can be used for baking, experienced a 23.8% increase to almost $42.9 million in the same period. Many of the flavored oils have also experienced increases, although their overall sales figures, in comparison to pure, extra virgin, and extra light (the most popular kinds of olive oil), remain modest.
"Flavored olive oil for dipping is an area that's really coming back," said Redmond of Rosauers. His stores cross merchandise the flavored oils with baked breads on wagons. Genuardi's flavored oils include grapeseed leavened with bay leaves, chili peppers, garlic and juniper.
"Our goal is to [cross merchandise] on a daily basis," he explained. "We're thinking outside the box in terms of how we might cross merchandise. [We feature the flavored oils] in our bakery department with our own signature Genuardi breads."
Some of the flavors gaining popularity, according to ACNielsen, include basil, rosemary, pepper, garlic, lemon, lime, or chili pepper.