Olive Oil Prices Skyrocket, Private Equity Takes Notice

PE Takes Notice as Olive Oil Prices go Kalamata!

It seems that olive oil has become the new gold in Spain and Portugal, as private equity firms are eyeing olive farms that use new agricultural techniques to boost production.

The surge in olive oil prices has doubled since the start of 2023, reaching an all-time high of $8,500 per metric ton, which is about 125% higher than the 2000-2020 average.

As a result, olive oil producers are drawing private equity interest, as firms see big profits in this lucrative industry.

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Photo by Roberta Sorge

The current state of the olive oil industry in Europe is a slippery slope, with prices soaring and the industry in crisis due to extreme weather conditions.

The heatwave in Europe is threatening another harvest in Spain, which could lead to a shortage of olive oil. In the UK, the retail price of olive oil has increased by 47% year on year to an average of £6.16 for 500ml in May, according to the latest figures from the Office for National Statistics.

This has led to a surge in cooking oil thefts globally, with olive oil being the prime target due to its high value.

Despite the challenges facing the industry, private equity firms are seeing the potential for big profits in olive oil production. With the use of new agricultural techniques, olive farms in Spain and Portugal are boosting production and drawing private equity interest.

It seems that olive oil is the new gold rush in Europe, with private equity firms eager to invest in this lucrative industry.

The Olive Oil Market and Its Rising Prices

Olive oil prices have been surging lately, and it’s not just foodies who are taking notice. Private equity firms are also showing interest in the industry.

But what’s driving the price increase?

The Global Demand and Consumption

First, let’s take a look at the global demand and consumption of olive oil. According to Fortune Business Insights, the global olive oil market was valued at $14.2 billion in 2022 and is projected to grow to $18.4 billion by 2030.

This increase in demand is due to the growing popularity of the Mediterranean diet, which includes olive oil as a staple ingredient.

The Role of Supermarkets

Another factor contributing to the rising prices of olive oil is the role of supermarkets. As The Guardian reports, supermarkets often use olive oil as a loss leader, selling it at a lower price to attract customers.

This puts pressure on producers to keep prices low, which can be difficult when the cost of production is rising.

The Impact of Weather Conditions

Finally, weather conditions also play a role in the price of olive oil. As Marketplace reports, drought and extreme temperatures in the Mediterranean have led to lower yields and higher prices for olive oil.

This has been particularly problematic in Spain, which produces almost half of the world’s olive oil.

In conclusion, the rising prices of olive oil can be attributed to a variety of factors, including global demand, the role of supermarkets, and weather conditions. While private equity firms may be interested in investing in the industry, consumers may need to prepare for higher prices at the grocery store.

The Role of the EU and Major Olive Oil Producers

The olive oil industry is a significant contributor to the economy of the European Union, with Spain, Italy, Greece, and Portugal being the major olive oil producers. The recent surge in olive oil prices has affected these countries’ production and export capabilities, leading to a decline in the industry’s overall growth.

Spain’s Olive Oil Production

Spain is the world’s largest producer and exporter of olive oil, accounting for approximately 50% of the global supply. However, the country’s olive oil production has been severely affected by the heatwaves and droughts caused by climate change. The lack of rainfall has led to a decline in the olive harvest, causing prices to increase by more than 50%.

Portugal’s Olive Oil Production

Portugal is a significant olive oil producer, with an estimated production of 100,000 tons in 2023. However, the country’s olive oil industry has been affected by the same heatwaves and droughts that have affected Spain. The lack of rainfall has led to a decline in the olive harvest, which has resulted in a decline in production and export capabilities.

Italy’s Olive Oil Production

Italy is the second-largest producer of olive oil in the world, accounting for approximately 20% of the global supply. The country’s olive oil industry has also been affected by the heatwaves and droughts caused by climate change, leading to a decline in production and export capabilities. The decline in production has led to an increase in prices, affecting the country’s overall economy.

Greece’s Olive Oil Production

Greece is the third-largest producer of olive oil in the world, accounting for approximately 10% of the global supply. The country’s olive oil industry has also been affected by the heatwaves and droughts caused by climate change, leading to a decline in production and export capabilities. The decline in production has led to an increase in prices, affecting the country’s overall economy.

In conclusion, the olive oil industry is a significant contributor to the economy of the European Union, with Spain, Italy, Greece, and Portugal being the major olive oil producers. However, the recent surge in olive oil prices has affected these countries’ production and export capabilities, leading to a decline in the industry’s overall growth. The lack of rainfall caused by climate change has led to a decline in the olive harvest, causing prices to increase by more than 50%.

The Interest of Private Equity Firms

Private-equity firms are showing interest in Iberian olive oil producers as prices soar. The firms are eyeing olive farms in Spain and Portugal that use new agricultural techniques to boost production as they see big profits after prices doubled since the start of 2023.

Investment Opportunities

The surge in olive oil prices has created investment opportunities for private-equity firms. It has become a secure investment option for investors who are looking for long-term returns. The olive oil industry in Spain and Portugal has been growing rapidly, and the demand for high-quality olive oil is increasing worldwide.

The Case of Beka Finance and Bolschare

Beka Finance, a Portuguese industrial partner, and Bolschare, a Spanish investment firm, recently announced a share purchase agreement with Cibus Capital to acquire Innoliva, a leading olive oil producer in Spain. The acquisition is expected to boost the production of high-quality olive oil and create new investment opportunities for private-equity firms.

The Involvement of Canadian Fund Fiera Comox

Canadian fund Fiera Comox has also shown interest in the olive oil industry in Spain and Portugal. The fund recently invested in a Spanish olive oil producer, and it is planning to expand its investment portfolio in the region. The involvement of Fiera Comox in the olive oil industry is expected to create new investment opportunities for private-equity firms.

Private-equity firms are investing in the olive oil industry in Spain and Portugal because of the high returns and growth potential. The surge in olive oil prices has created new investment opportunities, and private-equity firms are taking advantage of this opportunity to expand their investment portfolio.

The Impact on Small Producers and Consumers

The recent surge in olive oil prices has left small producers and consumers in a sticky situation. The price of extra virgin olive oil has hit an all-time high, with some reports suggesting that it has increased by more than 100% in recent months. This has led to concerns about the impact on small producers and consumers, who may struggle to afford the higher prices.

One of the largest olive oil producers in the world, Deoleo, has also been affected by the surge in prices. The company, which owns brands such as Bertolli and Carbonell, has seen its profits hit by the higher costs of raw materials. Deoleo has responded by increasing its prices, which could have a knock-on effect on consumers.

The Effect on the United States Market

The surge in olive oil prices is also having an impact on the United States market. The US is one of the largest importers of olive oil in the world, and is heavily reliant on imports from Europe. The higher prices are likely to be passed on to US consumers, who may be forced to pay more for their favourite brands.

Despite the higher prices, some US consumers are still willing to pay a premium for high-quality olive oil. This has led to an increase in demand for artisanal and small-batch olive oils, which are often produced by small-scale producers. These producers may be able to benefit from the higher prices, but only if they are able to compete with larger producers.

Overall, the surge in olive oil prices is likely to have a significant impact on small producers and consumers. While some may be able to weather the storm, others may be forced out of the market altogether. The situation is likely to remain uncertain for some time, and it will be interesting to see how it develops in the coming months.


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