THE UNILEVER OLIVE OIL WORLDTHE UNILEVER OLIVE OIL WORLD

Agriculture Milling Manufacturing& Distribution

Selection& Blending

Economic Values

Emotional and Service Values

BrandPersonality

Innovation&

Communication

“The industry role”

Olive Oil Value ChainOlive Oil Value Chain

Bertolli competitiveness is based on Bertolli competitiveness is based on managing the ‘integrated’ value chainmanaging the ‘integrated’ value chain

To support local market and exports, demand forecast, buying, blending, planning, production and customer service are managed for :

• Around 92 K tons in about 180 SKUs

• Delivered to more than 50 countries

• Shipped in about 2300 trans-ocean containers and 850 trucks to NE

• Management of the olive oil integrated process is complex and requires a high degree of specialization. Retention and training of key specialists is essential for the long term success of the business.

Characteristics of the Olive Oil MarketCharacteristics of the Olive Oil Market• The Olive Oil (O.O.) market is not a “classical open market”.• It is a market without official and universally acknowledged benchmark (ex. Chicago): there are only local and low-representative bulletins.

• Price is based on commodity value plus quality values (taste, chemicalspecifications, stability, etc.).

• It is a “physical market” without futures : it is possible to negotiate only “physical oil” and not “futures”.

• The buying activity covers the entire purchase cycle: buying lot, payment conditions, quality, logistics.

• Absence, in the raw material trading, of big and international traders.• Nearly 100% of the Olive Oil production comes from the Mediterranean area.• In all the producing countries we have only one crop / year, so the consequences of a positive or negative crop persist for 12 months or more.

Olive Oil Production trend ‘000 tons Key Countries

0200400600800

100012001400

Crop2001/02

Crop2002/03

Crop2003/04

Crop2004/05

Crop2005/06

est crop06/07

Spain Italy Greece Tunisia

Olive Oil Olive Oil -- 20052005

We are amongst the biggest buyers in the world.

Adding up Italy, Greece, Portugal , last year UL

bought:

TOTAL TOTAL 79 K EV 63 K Lamp 79 K EV 63 K Lamp

142 K tons = 6 % of World Production142 K tons = 6 % of World Production

From First Pressing

EXTRA VIRGINac. < 0.8 LAMPANTE POMACE

(residues of pulp and seed)

REFINING PROCESS EXTRACTION(with solvent)

VIRGIN CRUDE POMACE OIL

REFINED OLIVE OIL REFINING PROCESS

REFINED POMACE OIL

++

VIRGIN VIRGIN

OLIVE OIL POMACE OLIVE OIL

CONSUMPTION CONSUMPTION

+

Ac. 0.8 - 2.0

3 Different Products3 Different Products

CONSUMPTION

Factors affecting qualityFactors affecting quality

• Olive cultivar

• Climate

• Agronomic techniques

• Ripening of fruit

• Harvesting

• Quality of olive fruit

• Transport conditions

• Storage conditions of fruit

• Extraction system

• Process conditions

• Storage conditions of oil

Manufacturing sites in EuropeManufacturing sites in Europe

Production sites Total volume

INVERUNO 122

PIRAEUS 54

ABRANTES 37

OLIVE OIL PRODUCTIONOLIVE OIL PRODUCTION

Olive GrowingOlive Growing

• Olive native to the Middle East (Syria and Palestina)

• Spread to the Mediterranean basic some 5000 years ago

• Among the oldest known cultivated trees in the world

• The olive culture was spread by the Greeks and the Romans.

• The olive production is an integral part of economic and social activities (“tree of life”)

• Olive oil is a “fruit oil” and not a “vegetable oil”

Olive Oil Production Olive Oil Production

World production (average) : 2.700.000 Tonnes

EU production (average) : 2.400.000 Tonnes

EU consumption : 1.900.000 Tonnes

EU Nr. of holdings : 2 Million

EU Nr. of hectares : 6 Million

EU Nr. of olive trees : 677 Million

Intensive versus low input traditional plantationsIntensive versus low input traditional plantations

Intensive plantations have (potential) negative environmental impacts:

• Soil erosion / desertification

• Soil, nutrient and pesticide run-off

• Degradation of habitats and landscapes

• Exploitation of scarce water resources

Intensive versus low input traditional plantationsIntensive versus low input traditional plantations

Low input traditional plantations are the least viable in economic terms:

• Most vulnerable to abandonment

• Highest natural value (biodiversity and landscape)

• Most positive environmental effects: a rich floraand fauna (bird species)

• Problems with social capital and local economy

EU Olive Oil Market OrganisationEU Olive Oil Market Organisation

• EU Olive oil policy was created in 1966 in order tosupport the sector

• Budget for olive oil = 2.3 billion Euro annually

– is EU 1.322,5 per tonne (production aid) for 1.78 million tonnes

EU Olive Oil Market OrganisationEU Olive Oil Market Organisation

In 2004 the EU-Council decided to change the policy as per November 2005.

• Support will be decoupled from production for 60% (minimum)

• Member States shall fix olive grove payments for different olive grove categories (max. 5) for 40% (max.) of the budget

• “There is a certain risk of wide-spread disruption of olive treemaintenance, which would lead to degradation of land coverand landscape or have negative social impacts. A part of thesupport could therefore be linked to the maintenance of olivegroves of environmental or social value”.

Olive Farming in Europe: Olive Farming in Europe: Towards Sustainable ProductionTowards Sustainable Production

• Sustainability Assessments are needed for the intensive andthe extensive production methods.

• The implementation of the EU olive-oil measures offer a number of opportunities in the individual Member-States. The reform ofthe CMO is an important step in the right direction.

• Pilot projects in Spain, Italy and Greece could trigger co-operation between the stake-holders involved.

• Inter-professional collaboration with the partners in the supply chain has to be developed from scratch.

Project OliveroEU Research Project 2003-2006:

The Future of Olive Plantation systems on Sloping and Mountainous Land; scenarios for production and natural resource conservation.

Partners:

- Wageningen University, Department of Env. Sciences andSoil Erosion

- Instituto de Agricultura Sostenible Cordoba, Spain - NAGREF ISPOT - Chania, Greece- IFAPA CIFA - Granada, Spain- Agricultural University of Athens - University of Basilicata - University of Lisbon

Meeting in Cordoba:

Identification of projects for both intensive and extensiveolive growing for olive oil.

GAP-guidelines : work in partnership with experts and stakeholders

We value the work of:

The Sustainability Institute in Cordoba

IFAPA/CIFA Granada

Other Olivero partners

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