Oil producers have to cook up something

By: Szalai László Date: 2024. 03. 08. 11:58

The Hungarian oil market is going through a period of change, partly because of external factors and partly owing to domestic rules.

This article is available for reading in Trade magazin 2024/2-3

Dr. Imre Tímár
managing director
Tanner Trade

“Last year’s high inflation reduced demand, especially for higher priced products. Demand shifted towards lower prices and lower quality”, says Dr Imre Tímár, managing director of Tanner Trade Kft.

The hectic nature of 2023 has hit the entire food market, says Marianna Pinczés, managing director of Virgin Oil Press Kft., who adds:

Marianna Pinczés
managing director
Virgin Oil Press

“This is especially true for cooking oil production, as the most important raw materials have all been affected by the war situation and the resulting restrictions and concessions”.

At global level adverse drought conditions have been a major price driver for olive oil for two years now, and the 2023-2024 harvest is expected to be below average yields once again. Between the end of 2022 and January 2024, the price of extra virgin olive oil grew by around 200% in international markets.

Consumers have been tolerant – so far

Despite the difficulties, the picture is more positive on the demand side. Although prices have been rising, consumption dynamics haven’t slowed down yet, which means the markets are accepting higher prices. Dr Imre Tímár believes this trend is likely to continue in the coming years, with consumption expected to increase by 3.5-5% a year. The big question is for how long consumers will accept high prices. One thing is sure: the characteristics and nutritional value of olive oil and its beneficial health effects keep it among the top vegetable oils.

High inflation over the past year has dampened demand, especially for higher-priced products

Blended products are becoming trendy

At product level, in the short to medium term high prices are likely to generate more attention to various blended products, which represent a new category. In addition to this, manufacturers are trying to increase sales with smaller sizes and cheaper packaging materials. In the past few years one of the biggest innovations by Tanner Trade Kft. has been the launch of 200ml Abaco extra virgin spray, while the Abaco Pomace Blend olive oil has made a return – this combines olive oil and sunflower oil, offering the positive health effects of olive oil and availability to a wider range of consumers thanks to the addition of sunflower oil.

Consumer awareness in the alternative oil market can only be raised if all producers join forces to this end

Educating consumers pays off

Virgin Oil Press Kft.’s firm belief is that natural, additive-free foods are the future, so they invest a lot of energy in consumer education. This work pays off: the products marketed under the Grapoila brand are increasingly popular in the domestic market. The company’s cold-pressed pumpkin seed, linseed, walnut and grapeseed oils are still the most popular, as their health benefits are well-known. This year the are launching a new cosmetics range that is unique not only because of its upcycled raw material (creating value from waste from other industries) and zero waste production, but also because oil pressed from raspberry, sour cherry or apple seeds is rare not only in Hungary but also worldwide. In 2024 Virgin Oil Press Kft. continues the renewal it started last year, and with the help of our brand ambassadors (dietitian, chef) they are focusing on educating consumers. //

Alternative oils: the heavenly manna of the rich?

2022 – and it is even truer for 2023 – didn’t spare the market of alternative oils (these are considered healthier than sunflower oil) such as olive oil, coconut oil (also known as coconut fat) and various seed oils.

Guest writer:
Dorottya Csenge Brenner
analyst
Consumer Panel Services

The average per litre price of olive oil was almost 40% higher in MAT November 2023 than in MAT November 2022. But anyone buying seed oils (pumpkin seed, walnut, grape seed, etc.) should also be prepared to dig deep into their pockets, as the average price of these is around HUF 8,300/litre.

The question is how many Hungarian households are affected by these price rises? Well, not a large proportion. Olive oil, which has been in the market for a long time and is easy to find in practically every store, was purchased by just 27.5% of households in November 2023. Typically households with higher incomes buy healthy oils, for instance there are 9 percentage points more higher-income families among coconut oil buyers than in the general population. But the difference is also striking for olive oil and seed oils. Age-wise olive oil buyers are similar to the population as a whole, young people are over-represented among coconut oil purchasers and older people are over-represented among seed oil buyers. //