Citation
(1999), "Oils & Fats: The International Market Report", British Food Journal, Vol. 101 No. 1. https://doi.org/10.1108/bfj.1999.070101aab.001
Publisher
:Emerald Group Publishing Limited
Copyright © 1999, MCB UP Limited
Oils & Fats: The International Market Report
Oils & Fats: The International Market Report
Strategic summary
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Consumption of oils and fats is in decline as consumers reduce their intake of fats, particularly saturated animal fats.
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Healthier and more hectic modern lifestyles have reduced the incidence of home cooking and thereby oils and fats consumption (see Table I for details).
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Innovations such as Unilever's Olivio spread represent the manufacturers' response to the need to adapt new product development to changing health demands.
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Taste has become a crucial factor in consumer choice, with many dairy spreads such as Unilever's I Can't Believe It's Not Butter! emphasising their ''butteriness''.
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Many of these products have taken on a commodity status, particularly oils, with high private label penetration evident.
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The market is also characterised by polarisation, with high-quality premium-priced brands such as speciality oils gaining sales.
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Olive oil has forged significant growth, with extra-virgin varieties prominent, on the back of highly popular Mediterranean-style diets.
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There has been a resurgence in sales of natural products such as butter, spurred by the introduction of easy-spreading varieties.
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Through its many subsidiaries, Unilever has the only truly global presence in the oils and fats market.
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The strength of private label penetration is reflected in the dominance of large-scale grocery retailers in terms of distribution.
Total market size: sectoral analysis
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In five of the eight major markets, fats is the dominant sector, accounting for as much as 88.9 per cent of total value sales in Germany in 1997 (see Table II). Higher unit prices mean that the sector's volume share is always slightly lower than the value share.
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Spain, Italy and Japan are the exceptions to the above rule, and in 1997 Spain's oils sector amounted to over 90 per cent of total oils and fats value sales. It is therefore little surprise that events in the oils sector, particularly the olive oil subsector in Spain, shape overall market performance.
| Country | US$ | ECU |
| million | million | |
| USA | 5,563 | 4,867 |
| Germany | 3,092 | 2,705 |
| Japan | 2,847 | 2,491 |
| France | 2,263 | 1,980 |
| Italy | 2,088 | 1,827 |
| UK | 1,809 | 1,581 |
| Spain | 1,558 | 1,363 |
| Canada | 638 | 558 |
Note: 1997 exchange ratesSource Euromonitor Market Direction
Table I Oils and fats: comparative market sizes, 1997
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The oils sector generally segments into vegetable/seed oils (of many varieties), olive oil and blended oils. Spain is the only major market where olive oil sales comprise the largest subsector of oils, in both value and volume terms. In value terms olive oil is the leading subsector in Italy. Elsewhere, vegetable and seed oils (notably sunflower in France) have the upper hand, although blended oils are significant in the UK and France. Speciality oils remain a niche subsector in most key markets.
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Fats segments between yellow fats and cooking fats with the former dominant in all key markets. Cooking fats, particularly those derived from animals, have become a relatively small sector of the wider fats sector as health worries over saturated fats impact and hectic lifestyles reduce the incidence of home cooking.
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The segmentation of the larger yellow fats sector tend to follow more diverse and individual lines. In France and Italy, butter is the largest subsector of yellow fats, ahead of margarine and spreads (including low-fat), reflecting the popularity of more natural products. In contrast, the USA, Germany, Spain and Canada, all exhibit higher value sales of margarine in the yellow fats sector, relegating butter and spreads. North America is the traditional home of margarine. The UK and Japan are unique in having a disproportionately high level of spreads sales. In the UK dairy spreads dominate the spreads segment ahead of low-fat and reduced-fat products, as taste has become a critical factor, and the ''butteriness'' of the spread is promoted above all else (see Table II.
Future outlook: trends to watch
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Lifestyle trends are unlikely to see a slowdown in pace and therefore the incidence of home cooking will continue to decline.
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Preoccupation with health issues will continue to shape consumer choice, as the reduction in saturated fat intake becomes a clear objective.
| Oils | Fats | Total | |||||
| Country | (percentage) | (percentage) | (percentage) | France | 32.2 | 67.7 | 100.0 |
| Italy | 72.9 | 27.1 | 100.0 | ||||
| UK | 17.3 | 82.7 | 100.0 | ||||
| USA | 36.5 | 63.5 | 100.0 | ||||
| Germany | 11.1 | 88.9 | 100.0 | ||||
| Spain | 90.1 | 9.9 | 100.0 | ||||
| Japan | 78.2 | 21.8 | 100.0 | ||||
| Canada | 19.5 | 80.5 | 100.0 |
Source Euromonitor Market Direction
Table II The oils and fats market by sector, 1997
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Innovation will therefore focus on traditional, natural, health-benefiting products which offer improved taste and greater convenience.
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The market will be characterised by polarisation, with trading up to premium-priced products such as speciality oils, and rising sales of private label oils and fats and cut-price brands.
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The fats sector is likely to show fluctuating growth rates in the key markets, with consumption impacted adversely by ongoing health trends, and value sales positively by the emergence of high-quality products.
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Olive oil, and particularly extra-virgin varieties, will drive sales opportunities in the oils sector.
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Proposed EU quota legislation relating to olive oil production is likely to have a stabilising impact on prices.
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North America should witness the expansion of sales of lighter oils such as canola oil, particularly as the base for other products such as margarine.
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Flavoured oils and opportunities for speciality products generally are likely growth areas.
These data were selected from Euromonitor's new report Oils & Fats: The International Market</IT>. The report costs ª2,250.00/US$4,500.00, and is available from Euromonitor: Tel: +44 (0)171 251 1105; Fax: +44 (0)171 608 3149; 60-61 Britton Street, London EC1M 5NA; E-mail: info@euromonitor.com; Internet: http://www.euromonitor.com