M&A Stirs Up Spain’s Olive Oil Sector

M&A Stirs Up Spain’s Olive Oil Sector

M&A Stirs Up Spain’s Olive Oil Sector

Spain’s olive oil sector has long been a source of national pride and a major contributor to the state coffers via exports of bottled olive oil and table olives. And like most industries in the last few years, it has been no stranger to M&A.

Many firms have pulled resources to beat the impact of the economic downturn,  taking advantages of economies of scale to grow their market share at home and overseas.

The merger approved earlier this year between Deoleo, the world leader in bottled olive oil sales, and cooperative Hojiblanca will strengthen Spain’s global dominance in the sector. Hojiblanca is the biggest producer in the world of extra virgin olive oil and table olives, and is itself a product of consolidation. Based in Andalusia in southern Spain – the heart of the country’s olive oil industry – Hojiblanca was formed from the union of 50,000 families working in all areas of the business.

Its tie-up with Deoleo, which already controls three of the world’s top four olive oil brands, will create a conglomerate with strong positioning throughout the whole production chain.

AGRO-TOURISM: A FUTURE GROWTH DRIVER

Last month, Juan Roig, chairman of Spain’s largest supermarket chain Mercadona, said agriculture and farming along with tourism have the potential to fuel an economic recovery. He seems to be right – Spain’s tourism industry is recovering its former glory as a key growth driver, and agro-tourism has become a highly developed sub-sector.

Over the last decade, many smaller farms and wineries have revamped their installations to increase output for export, as well as attract tourists and investors to learn more about their industries.

OVERSEAS MARKETING OFFENSIVE

While the demand for Spanish olive oil remains high, the first four months of the 2012/2013 season has seen production drop 62 per cent from the last one, when Spain set a record high in its harvest. The outlook for the coming seasons is brighter however, as heavy rains in early 2013 has been good for the land, auguring well for a recovery in olive flowering.

To boost olive oil exports and attract new investors,  Spanish organisation La Interprofesional de Aceite de Oliva has launched a marketing offensive in 13 countries, including China and IndiaIndia has become an important export market for Spanish table olives over the last two years. In 2012, India imported just over 1.1 million kilos of Spanish olives mainly of the Hojiblanca variety, valued at more than 1.6 million euros.

China is a key export market for Spanish olive oil producers. Around 50 per cent of all olive oil consumed in China is of Spanish origin. Hojiblanca is the top brand in that part of the world.

For information on Spain’s olive oil sector, contact corporate law firm Argali Abogados.

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