Abstract: With the increasing global health awareness and the increasing consumer demand for natural and organic foods, olive oil has been favored by more and more people as a food rich in unsaturated fatty acids and beneficial to cardiovascular health. In the Chinese market, olive oil is also gradually becoming popular with consumers, and consumption and retail sales are increasing year by year. According to the USDA, global olive oil production and consumption fell further in 2023, with production falling to 2.29 million tons and consumption to 2.34 million tons, mainly due to months of drought and high temperatures that affected the global olive growing industry, resulting in a decline in olive oil production. The Chinese olive oil market is very competitive. At present, China's olive oil market is mainly divided into two categories: domestic and imported. In the future, the market demand of the mainland olive oil industry will continue to grow, the products will gradually diversify, and at the same time, domestic brands will further replace imported brands.
1. Definitions and Classification
Olive oil is a woody vegetable oil that is made directly from fresh olive fruits, which are not heated and chemically treated, and retain their natural nutrients, and olive oil is considered to be the most suitable for human nutrition among the oils discovered so far. According to GB/T23347-2021 "Olive Oil and Olea Europaea Pomace Oil", olive oil can be divided into three categories according to the processing technology, namely virgin olive oil, refined olive oil and blended olive oil.
Second, the business model
1. Procurement mode
The main raw materials purchased by olive oil production enterprises are oleos, and the procurement mode is mainly centralized procurement and cooperative procurement mode. Set up a special purchasing department or team to be responsible for the procurement of raw materials for the entire enterprise. The purchasing department formulates a detailed procurement plan according to the company's production plan and sales forecast, and negotiates and cooperates with suppliers. Centralized procurement helps to reduce procurement costs, improve procurement efficiency, and ensure the quality and stability of raw material supply. In order to ensure the stable supply and quality of raw materials, enterprises often establish long-term cooperative relationships with suppliers. Sign a long-term supply contract with the supplier to ensure that the supplier supplies raw materials in accordance with the agreed quality and quantity, and enjoys certain price concessions. Under this model, companies can form close supply chain partnerships with suppliers to jointly address market risks.
2. Production mode
The production model of olive oil production enterprises is mainly a combination of "sales and production" and "planned production". The "sales-based" model emphasizes determining the production plan and scale according to market demand. Through in-depth analysis of market trends, consumer needs and competitive situations, enterprises formulate sales plans that meet market demand, and arrange production activities accordingly. This model helps businesses reduce inventory overstock, reduce market risk, and respond quickly to market changes. The "planned production" model emphasizes the development of production plans based on the company's long-term strategy, resource conditions, and production capacity. Enterprises will plan the production tasks in a certain period of time in advance, including product types, production quantities and production cycles, etc., to ensure the stability and continuity of the production process. This model helps enterprises optimize resource allocation, improve production efficiency, and reduce production costs. The combination of "sales-based production" and "planned production" allows enterprises to maintain the relative stability and continuity of production plans while meeting market demand. By flexibly adjusting production schedules, companies can respond to market changes while ensuring a smooth production process.
3. Sales model
Olive oil production enterprises mainly sell products based on the distribution model, supplemented by the direct sales model. The distribution model allows olive oil to quickly reach multiple markets and retail outlets by establishing an extensive distribution network, increasing the market coverage of the product. Distributors often contract with olive oil producers to be responsible for the promotion, sales and logistics of their products, which reduces the cost and complexity of direct marketing. The direct sales model is mainly achieved through e-commerce platforms, self-built sales networks or specialty stores. The direct sales model is conducive to enterprises to better grasp market demand and consumer feedback, and adjust product strategies and services in a timely manner. At the same time, the direct sales model can also reduce intermediate links, reduce the cost of sales, and improve profit margins.
3. Industry policy
1. Competent departments and regulatory systems
Authorities in charge of the olive oil industry include the National Development and Reform Commission, the State Administration for Market Regulation, the Ministry of Agriculture and Rural Affairs, and the National Health Commission. The National Development and Reform Commission (NDRC) is mainly responsible for comprehensively studying and formulating economic and social development policies, balancing aggregate volumes, and guiding macroeconomic regulation and control in the overall economic structural reform. One of the main responsibilities of the National Development and Reform Commission is to undertake the total balance and macroeconomic regulation and control of important commodities, to prepare and supervise the implementation of the total import and export plan of important agricultural products, industrial products and raw materials, to adjust the total import and export plan according to the economic operation, to draw up the national strategic material reserve plan, to organize the collection, storage, use, rotation and management of the national strategic materials, and to manage the national grain, cotton and sugar reserves in conjunction with relevant departments. The main responsibilities of the State Administration for Market Regulation are to be responsible for the comprehensive supervision and management of the market, the unified registration of market entities and the establishment of an information publicity and sharing mechanism, the organization of comprehensive law enforcement of market supervision, the undertaking of unified anti-monopoly law enforcement, the regulation and maintenance of olive oil market order, the organization and implementation of the quality of the national strategy, responsible for the quality and safety of industrial products, olive oil and other food safety, special equipment safety supervision, unified management of measurement standards, inspection and testing, certification and accreditation, etc. The Ministry of Agriculture and Rural Affairs is responsible for the overall research and organization of the implementation of the "three rural" work strategies, plans and policies, supervision and management of planting, animal husbandry, fishery, agricultural reclamation, agricultural mechanization, agricultural product quality and safety, and agricultural investment management. Responsible for the formulation and implementation of agricultural production policies, including planting guidance and quality control of oil crops.
The self-regulatory organizations of the olive oil industry mainly include the China Vegetable Oil Industry Association and the China Food Industry Association. China Vegetable Oil Industry Association is mainly responsible for investigating the basic situation of olive oil and other vegetable oil industries, understanding the development trends and trends of oil production, circulation, processing, scientific research and consumption at home and abroad, studying the theoretical and practical problems of vegetable oil industry in the development direction and strategic objectives, and providing basis and suggestions for government departments to formulate development strategies, guidelines and policies for the mainland vegetable oil industry. Assist the competent government departments to strengthen the industry management of the olive oil and other vegetable oil industry and the administrative management of the olive oil and other vegetable oil market; organize enterprises and institutions to correctly implement the state's guidelines and policies, market regulations, regulations and charters, and supervise the market behavior of enterprises and institutions; study the problems of olive oil and other vegetable oil enterprises and institutions in the implementation of national policies and production and operation, reflect the reasonable opinions and legitimate requirements of enterprises to the relevant government departments, and safeguard the legitimate rights and interests of enterprises.
2. Relevant policies
In recent years, the mainland government has introduced many relevant policies to promote the development of the mainland olive oil industry. For example, the "Opinions on the Scientific Utilization of Forest Land Resources to Promote the High-quality Development of Woody Grain and Oil and Understory Economy" proposes to guide the formation of industrial agglomeration and development characteristics, which will promote the development of the olive oil industry in the direction of specialization and scale, and form an industrial agglomeration effect and enhance the competitiveness of the entire industry through the construction of a number of distinctive olive oil industry bases. "Measures on the Recovery and Expansion of Consumption" advocates healthy catering consumption, olive oil as a healthy edible oil, which is rich in monounsaturated fatty acids and antioxidants, in line with the trend of healthy diet, the introduction of the "pro-consumption" policy will help to increase the market demand for olive oil and promote the expansion of the market scale of the olive oil industry. The "Catalogue for the Guidance of Industrial Structure Adjustment (2024 Edition)" clearly includes the construction of woody grain and oil bases such as olive as an encouraged industry, encourages the construction of woody grain and oil bases, and provides strong policy support for the development of the olive oil industry.
Fourth, the development process
The mainland olive oil industry started from 1964-1997. On March 3, 1964, Premier Zhou Enlai personally planted an olive seedling imported from Albania in the Haikou Forest Farm in Kunming, Yunnan Province, which opened the prelude to the large-scale introduction, testing and planting of olive in the mainland. This marked the beginning of the continental olive oil industry. The rapid development stage is from 1998 to 2009. In 1998, the International Olive Council officially recognized China as the world's olive distribution area, and the mainland changed from an introduction country to a producing country. This transformation not only reflects the progress and development of the mainland's agricultural sector, but also lays a solid foundation for the rise of the mainland's olive oil industry. In addition, at the beginning of the 21st century, the mainland began to grow olive trees on a large scale, forming an important olive producing area. The stage of steady development is from 2010 to the present. Since 2010, domestic olive oil brands have gradually emerged in the market, increasing their popularity through advertising and brand promotion, so as to break the market pattern of mainland olive oil that has long relied on imports.
Fifth, industry barriers
1. Technical barriers
The production process of olive oil is relatively complex and involves many technical links, such as planting technology, harvesting technology, processing technology, quality control, etc. These technical links require professional knowledge and experience, and new entrants often lack these technical accumulation, and need to spend a lot of time and energy to learn and master. Cultivation techniques affect the yield and quality of olive oil, while oil extraction techniques are directly related to the quality and taste of olive oil. Refining and storage techniques determine whether olive oil can maintain its excellent quality for a long time. In addition, with the continuous advancement of science and technology, the olive oil industry is also constantly innovating, and the application of new technologies has also increased the technical barriers of the industry.
2. Financial barriers
Capital is the blood of business operations, because olive oil production involves planting, harvesting, processing, packaging, transportation and other links, each link requires a large amount of capital investment. Especially in the initial stage, enterprises need to purchase land, plant olive trees, build processing plants, purchase equipment, etc., which require a lot of financial support. In addition, the production cycle of olive oil is long, and it takes several years from planting to harvesting to the final product to market, during which companies need to bear greater financial pressure. Funding poses a certain barrier to new entrants in the industry.
3. Brand barriers
Brand barriers are an important feature of the olive oil sector. In the olive oil market, many well-known brands already exist, and these brands have formed a good reputation and image in the hearts of consumers after years of accumulation and promotion. New entrants need to invest a lot of money and time in brand building and promotion if they want to break this brand barrier, which is a huge challenge for new entrants in the industry. At the same time, the establishment of a brand requires long-term persistence and efforts, and it is difficult to be replaced once it is established, so the existence of brand barriers makes new entrants face greater market challenges and competitive pressure.
4. Channel barriers
A well-developed sales channel is essential for olive oil producers, as it is related to the sales of products and the acquisition of market share. Sales channels are an important way for enterprises to enter the market, and a good sales channel can help enterprises expand market share and increase sales. In the olive oil market, the construction and maintenance of sales channels requires a lot of resources and effort. Businesses that already exist tend to have established stable sales channels and customer relationships, and it's not easy for new entrants to enter these channels. In addition, the construction of sales channels needs to take into account various factors such as geography, culture, and consumer habits, which also increases the difficulty of new entrants.
Sixth, the industrial chain
1. Analysis of the industry chain
The upstream of the industrial chain of the olive oil industry is mainly raw materials and processing equipment. The main raw material is olive, and the processing equipment is oil press and other equipment. The middle of the industrial chain is the refining and processing of olive oil. The downstream of the industrial chain is used in catering, food processing and household consumption. The industrial chain of China's olive oil industry is shown in the figure below:
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