Why is olive oil so expensive?

Why is olive oil so expensive right now?

Spain, Italy and Greece produce more than 60% of all the olive oil in the world – anything that affects prices in these countries will have a knock-on effect across the globe. For example, when the cost of extra virgin olive oil (EVOO) in Spain hit an unprecedented €902.5 per 100kg in January, the repercussions were felt worldwide.

Shoppers in the UK are now paying £7.80 for a litre of ‘white label’ EVOO (such as Tesco or Sainsbury's own brand) with premium brands fetching up to £16 a litre. Normal or ‘classic’ olive oil prices aren’t much lower; the Office of National Statistics found they have more than doubled since 2018 and look set to keep rising.

In America, prices have risen by around 18% but the North American Olive Association says this may be because US markets are “largely insulated” from the higher prices seen in Europe, due to less demand. Even so, shoppers have seen a 750ml bottle of EVOO go from roughly $9 to $11 in just one year.

The main reason for these price increases is a decline in global production. According to industry publication Olive Oil Times, just under 2 million tonnes are expected to be produced this year, 23% below the average of the past four years. In Spain, the world’s largest producer of olive oil, only 664,000 tonnes were produced last year, the second consecutive year of low production.

This dramatic drop has been firmly blamed on extreme weather events across Europe, such as warmer winters and heatwaves caused by climate change. If olive trees flower too early in the year, they can be damaged by sudden frosts, while spring heatwaves may also kill off young blossoms. Years of drought, wildfires and diseases including Xylella fastidiosa – a bacterium that destroys olive trees – have also taken their toll.

The impact of these dwindling harvests and rising prices on olive oil producers depends mainly on their size. Larger producers may have reserves they can use to maintain supply (although some industry insiders say these are also running low) or they can import olive oil from other countries such as Argentina or Chile.

But smaller producers have seen demand for their olive oil drop off as costs rise and consumers look elsewhere for cheaper alternatives. Some Spanish farmers have even accused supermarkets of inflating prices, increasing profits at the expense of shoppers, while they’re left struggling.

What does this mean for consumers?

Bottom line – you’ll be paying a lot more for olive oil until prices return to normal. British olive oil fans are also dealing with the double whammy of rising prices and the impact of Brexit. A year after the UK left the European Union, olive oil prices rose by an average of 20%, and economists say post-Brexit border tariffs mean we’ll have to pay an extra £2billion on goods brought in from the EU, including olive oil.

Consumers also need to be on the look-out for fake olive oil, as sky-high prices have led to a rise in black-market liquid gold. Criminal gangs have now started selling lower grade olive oils mixed with different plant oils, such as sunflower or rapeseed oil, colourings and other ingredients, then labelled as EVOO.

In November 2023, Spanish and Italian police seized over 260,000 litres of fake EVOO. This was found to contain ‘lampante oil’ – literally, lamp oil in Italian – a very low-grade olive oil that’s not considered fit for human consumption. Other gangs have been shoplifting olive oil en masse, leading to the unusual sight of bottles being fitted with security tags or larger bottles chained together and padlocked to shelves.

Will olive oil prices drop?

Things are looking up for farmers, which means prices should start to come down for consumers. In September 2024, The Grocer reported that more favourable weather this summer means a ‘bumper harvest’ across the Mediterranean. Spanish olive oil production is expected to hit 1.4 million tonnes, putting it back up to normal, while global production is set to reach 3.13 million tonnes.

However, this new olive oil won’t be on our shelves until January 2025 (at least) so prices will remain above average until then. And it’s unlikely that the UK government will follow Spain’s example and cut the sales tax on olive oil to entice shoppers. But there are plenty more oils you can use in the meantime.

It’s also unlikely that prices will drop significantly for US customers - in 2023, America imported over $2 billion worth of olive oil. The US is responsible for 35% of all global olive oil imports, so States-side shoppers are still subject to European market forces. But there are plenty more oils you can use to keep costs down.

What to do if you can’t afford olive oil

Olive oil may be a kitchen storecupboard staple but it’s not the only cooking oil available. Rapeseed oil and sunflower oil are ideal for baking, grilling and sautéing, while peanut oil is great for stir-fry dishes, and sesame oil is best when added as a finishing touch to salads, noodles and stir fries due to its delicate flavour.

To help olive oil stocks stretch further, you can now buy it blended with other plant oils. For example, you might see sunflower or vegetable oil mixed with a low percentage of olive oil. These oils generally have a wide range of uses but the taste may vary according to the ratios used, so try a few to find one you like.

When it comes to cost, plain vegetable oil may be the cheapest. This contains a blend of plant oils, including rapeseed, grapeseed, soy and corn, but it may not be the healthiest option. ‘Speciality’ oils like walnut, almond, and avocado oil often come with a hefty price tag, so save these for delicate dishes rather than roast potatoes.

Buying in bulk (i.e. 5l bottles) works out much cheaper per use but check you’ve got the space to store this amount of oil. Keep an eye on expiration dates too – cooking oils can go rancid once opened and unused for a long time. Why not team up with a friend to split the cost and volume of any oil you buy?

What’s the future of olive oil?

Although the olive harvest has increased for 2024/25, the future of olive oil is far from stable. Experts agree that climate change is making it harder for olive trees to survive in hotter, drier conditions, while research shows the number of ‘bad years’ look set to become more frequent in future.

Farmers are trying a number of ways to adapt to harsher conditions, such as growing more resilient olive crops or bringing back ancient traditions like planting different crops between trees to stop water draining away. Sadly, this doesn’t guarantee olive oil production will completely recover or tackle climate change, the root cause of the problems.

But you can do your bit to help. Find out how to reduce your carbon footprint and start including more sustainable foods in your diet. And keep an eye on the price of liquid gold – if it ever overtakes real gold, the cost to the planet could be much greater.

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Rosalind Ryan is a journalist and editor specialising in health, lifestyle and environmental issues. She has nearly 20 years’ experience writing for publications including The Guardian, The Independent, Healthy magazine and Women’s Health.