How restaurants and consumers adapt

A summer of extremely high temperatures followed by irregular rains affected the quantity and quality of the olive oil harvest in Spain, the world’s largest producer of the input. Crops were also affected by pests, such as the olive fly, which caused damage to plantations and, therefore, a sharp drop in production. Climate change also affected Italy, known for its high-quality production, and Portugal, with a lack of water in some regions, affecting the development of olive trees.

The result is the already faced increase in the price of olive oil. In Brazil, the second largest consumer market on the planet (demand is close to 100 million liters), calculations by the Getúlio Vargas Foundation (FGV) reveal that the price of olive oil rose 20%, on average, between September 2022 and the same month this year. The value is four times more than the accumulated inflation in the period measured by the IPCA (Extended Consumer Price Index), of 5.2%. The rise was also helped by the high value of the dollar and rising domestic consumption.

With higher prices both at imports and on the supermarket shelves, restaurants and individual users need to adapt. If suspending consumption is not an option, the reduction in profit margins for two establishments interviewed by Good Gourmetand the search for smaller packaging by the end consumer, appear among the alternatives.

From Arabic to Italian

“In Arabic cuisine, olive oil does not play a supporting role, it is the main character, it actually acts as a seasoning”, explains Yasmin Zippin Nasser, owner of Restaurante Nayme. The input is a fundamental part in finishing dishes such as raw kibbeh, bread and salads, for example. Therefore, the businesswoman believes that it is impossible to reduce the quality of the olive oil used.

Some suppliers have already signaled to Yasmin a 15% increase in the product, while others must reduce packaging, which has the same effect as the price adjustment, he explains. “I can’t reduce the amount of olive oil in the dishes, because it will impact the quality of what I serve, or even mix it with a lower quality olive oil. It’s impossible to do this in a way that the customer doesn’t notice,” he informs.

Thus, the alternative found by Nayme will be, at least at the end of the year, to absorb the impact of the price rise by reducing profit margin. With events scheduled since the middle of the year, with prices already set, Yasmin understands that it is not possible to pass on part of the increase in the price of the product to the customer.

Reduction in profit margin is also the perspective of Lellis Trattoria. Since, like Nayme, the Italian restaurant does not intend to pass on the adjustment in the price of olive oil to the consumer, the solution, explains partner Heitor Ramos Sousa, is to reduce costs wherever possible. “An alternative at this time is to save on other products and cut unnecessary expenses to compensate for the rise in the price of other foods and inputs.”

Also like the Arabic restaurant, the trattoria did not reduce the use of olive oil precisely so as not to affect the final quality of the dishes served. “All recipes and dishes that use olive oil remain unchanged”, guarantees Sousa.

Perspectives

“We will have, for two or three years, an irregular price, with a very strong growth trend”, projects Pedro Corrêa de Oliveira, director of the import company Porto a Porto. The businessman remembers that the price of olive oil had already been rising in the last five years – around 4% to 5% per year. But at this time of crop failure due to weather conditions, in some cases, depending on the quality and type of olive oil, the price can double.

One of the main regions in Spain that suffered from the problem was Seville. According to Oliveira, on site losses in tonnage and fat could have reached 50%. “A good olive contains up to 28% olive oil. With 4kg, you can make a book. This has changed, you need 5kg to make a book”, he explains.

Even so, the businessman believes that, within four years, the tendency is for prices to align at a lower level, which should not, however, reach those practiced previously.

Oliveira understands that the restaurant and hotel market – the so-called on trade, which uses olive oil as a raw material for recipes – will adapt to the moment. For example, establishments can replace traditional 3 or 5 liter containers with 2 or 3 liter containers, so that their stocks are not so expensive. The final consumer – the trade market – adapts consumption to its budget. Reduces the use of olive oil, without necessarily discarding it from the shopping list. “In recent months, we have seen a huge growth in 250 ml packaging,” he notes.

This impact on the end user may be more felt, Oliveira projects, during Lent, when cod consumption increases. In 2024, the period representing Christ’s forty days of fasting and prayer, before the resurrection on Easter Sunday, runs from Ash Wednesday, February 14th to March 28th. “And cod is olive oil’s biggest brother”, he jokes.

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