Food containing olive oil can carry labels saying it may reduce the risk of coronary heart disease.
This claim, approved in 2004 by the US Food and Drug Administration (FDA), had a positive sales impact among American consumers and significantly improved their health perception of this type of oil.
Euromonitor International suggests that a combination of new strategies could pave the way for even further growth
Heart-friendly Mediterranean diet
Recent research has highlighted the purported heart benefits stemming from the so-called Mediterranean diet, which is traditionally high in unsaturated fats from vegetable oil, nuts and such fish as salmon and tuna.
The mortality rate dropped by more than 50% among elderly Europeans who stuck to such traditional diets and led healthy lifestyles, according to research published in the Journal of the American Medical Association in September.
In addition, there is a large body of clinical data showing that consumption of olive oil can provide heart-health benefits such as a favourable influence on cholesterol regulation and LDL cholesterol oxidation, and that it exerts anti-inflammatory, antithrombotic, antihypertensive as well as vasodilatory effects both in animals and humans.
As the least processed forms of olive oil, extra virgin or virgin olive oil have more monounsaturated fatty acids than other olive oil types. They also contain more polyphenols, which may have additional benefits for the heart.
Health trend drives olive oil sales in the US
Olive oil was the best performing oils and fats category in the US in 2010, achieving retail value growth of more than 2%. Retail volume sales also grew by 2% on 2009. Olive oil performed well because it meets consumer demand for both health and taste.
Many Americans believe olive oil to be the healthiest oil due to the FDA's November 2004 decision to allow olive oil to carry a qualified health claim, linking its monounsaturated fat content to a reduced risk of coronary heart disease.
US consumers are also moderately worried about trans fats and hydrogenated fats. As such, their desire for 'healthier' fats has driven growth of olive oil and functional spreadable oils and fats at the expense of margarine and regular spreadable oils and fats.
Mandatory trans fat labelling became effective in January 2006. This prompted many manufacturers to reformulate their products to remove trans fats from their margarine, spreadable oils and fats and cooking fats, so they could list a zero trans fat content on their packaging nutrition labels.
Despite the removal of trans fats from many products, margarine, regular spreadable oils and fats and cooking fats still suffer from a negative image – they are seen as “unnatural” and also not as tasty as butter. Demand for these products has continued to decline following the removal of trans fats.
Cholesterol reduction to justify higher prices
In the US, premium-positioned oils and fats typically feature health benefits such as cholesterol reduction in order to justify their higher than average price points. This is significant as many products in the category are considered to be commodities rather than added-value foodstuffs.
For example, while most butter sold in the US is standard, premium varieties exist in the form of organic and imported products.
Crucially, olive oil uses various upscale indicators and signifiers such as “cold-pressed” and “extra virgin” to justify higher prices, as well as an emphasis on terroir (growing region). Although some of the premium brands do offer higher quality, many are not sufficiently differentiated to justify consumers paying more for them.
Moreover, some American consumers do not understand the added-value concepts behind terms such as “cold-pressed” or “extra virgin” and therefore are not willing to pay more for products with these attributes or claims.
Nevertheless, olive oil is still expected to be the best performer within the American oils and fats market over the 2010-2015 period, with retail value sales expected to rise by 13% and retail volume sales by 9%.
Consumer perception of olive oil as the “healthiest” oil is expected to continue, thereby boosting demand and helping olive oil to take share from other varieties, particularly vegetable and seed oil.
This growth could, however, be pushed even further by combining different strategies aiming to increase the added-value attributes – and consumer perception - of current olive oil lines. One example could be the inclusion of ethical properties, a trend already present in other food categories such as chocolate confectionery and milk.
This could be done through the development of bottles featuring a carbon logo showing the commitment of the manufacturer to reducing energy and water use over a period of time. The addition of ethical properties could be particularly effective in organic olive oil, a product variety targeting the higher end of the consumer market.
Another potential strategy to increase demand for already established olive oil lines is the further segmentation of brands through labelling to highlight the provenance of the olives used. Linking one particular olive type to one region would encourage consumers to pay a premium as a way of supporting sustainable farming in close communities.
This is a strategy that is already proving to be quite effective in products like milk and cheese in some Western European countries.
Please visit Euromonitor International for more information
Analyst Insight by Francisco Redruello.