3 Downsides To Californian Olive Oil As A Manufacturing Ingredient

Posted by Hannah Broaddus

Imported olive oil versus its domestic counterpart seems to be an ever growing debate in the olive oil industry here in the US.  

Many manufacturers wonder if they should be using a US-grown olive oil, or if they will need to rely on imported olive oil to fulfill their needs.  The answer lies in looking closely at domestic olive oil-- both the wonderful traits of the oil itself and the US olive oil industry as a whole.  

With the rise of gourmet olive oil retailers and the growing concern about oil adulteration, a turn towards domestic sources (read: high quality oil, from trusted suppliers close to home) is a natural one.  But for the manufacturing industry specifically, there are inherent challenges that would emerge by relying on only US sources for oil.

The Wonderful Traits of Domestic Olive Oil

For the most part, domestic olive oil refers to Californian-grown olive oil. California is the primary region where olives are grown, with Texas, Oregon and others bringing up the rear. Therefore, when we talk about domestic oil we will be primarily referring to Californian Extra Virgin Olive Oil.

Californian olive oil is definitely not to be overlooked. It is in fact a great source of Extra Virgin Olive Oil, including premium, mono-varietal, specialty and flavored oils. With the industry’s focus on high quality standards, the idea of “adulterated” Californian oil is almost unimaginable.

It goes without saying, if you are a retail buyer or you own a specialty gourmet store, this olive oil is for you. Even if you’re a manufacturer, Californian Extra Virgin Olive Oil may be a god fit if you’re looking for a specialty oil or you’re creating a food product made with US-grown ingredients.

The Challenges With Domestic Olive Oil

Americans Eat 46x More Olive Oil Than We Grow Domestically Infographic

The challenge of domestic oil, when you’re looking at it from a food manufacturer’s point of view, is mostly related to total production volume and therefore, pricing.

1. There Is Limited US Olive Oil

Between 2005-2013, US olive oil production made up 0.2% of the world’s total olive oil production, according to the International Olive Oil Council. On the other hand, the United States made up 9.2% of the world’s olive oil consumption in that same time period¹.

The reality is that Americans eat much more olive oil than we produce. This means that imported oil must be a viable source to supplement domestic olive oil already available.

Manufacturers like yourself make up a sizable portion of this US olive oil consumption. To get enough of these olive oil ingredients to support your day to day production needs, you must have a full and reliable supply chain at your disposal. This means that, unless you are a very small company, you’ll need to take advantage of imported oil sources simply to have enough ingredients to run production day in and day out, throughout the year.

blog27-ioc-production-infographic              blog27-ioc-consumption-infographic

2. The Cost of US Olive Oil Is Higher

These production levels also speak volumes about the prices of domestic vs. imported oil; it’s all comes down to the law of supply and demand. Because the availability of US oil is limited, this means that the cost is going to be higher. If there is a low supply, that’s what naturally occurs in an economic marketplace.

3. Extra Virgin Is The Primary Grade Available

For better or for worse, California produces delicious, premium Extra Virgin Olive Oil. For the most part, the lower grades like Pure or Olive Pomace Oil are non-existent. This has to do with the commitment to quality from Californian growers and the limited supply of olives (e.g., if you had only a small supply of olives, would you use them to make great oil that you can expect to make more money from or mediocre oil? Their choice is a fair one).

The issue for manufacturers is that you may not always want an Extra Virgin Olive Oil. Reasons like the flavor profile, color profile and price all play into your final decision when choosing the right grade of oil for your product. For example, if you’ve decided that you need a Refined Olive Oil (for particular reasons set forth by your R&D department), that would be more difficult to source domestically.

The availability of only a top quality grade also play into the price. If, as a manufacturer, you are comparing your average cost of Pure Olive Oil to Californian Extra Virgin Olive Oil, of course the Californian oil will look more expensive. If you want a true comparison it will be important to review these oils apples to apples-- look at the prices of imported and domestic oils that both meet IOC specs for Extra Virgin Olive Oil to get a real read-- and be aware that mislabeling and adulteration exists.

¹ International Olive Oil Council 

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