World’s largest olive oil producer gives upbeat outlook after historic industry crisis

Deoleo, the world's largest olive oil producer, reports a significant market recovery following Spain's bumper 2024/25 harvest, which saw yields increase by 65% to 1.41 million metric tons. After two years of extreme volatility and high prices, this rebound has led to a 50% drop in raw material costs and falling retail prices, stimulating demand. CEO Cristóbal Valdés anticipates continued price normalization through H2 2025 and a more balanced market, prompting Deoleo to double its advertising investment to €10 million as it shifts from a scarcity-driven environment.

Analysis

The olive oil market is undergoing a significant normalization following a period of extreme price volatility and supply scarcity. This recovery is primarily driven by a substantial rebound in the 2024/2025 olive harvest in Spain, the world's benchmark producer, which yielded 1.41 million metric tons—a roughly 65% increase year-over-year. For Deoleo, the world's largest producer, this has translated directly into a 50% drop in raw material prices. This cost relief is enabling the company to lower retail prices, which is reportedly stimulating a recovery in consumer demand that had faltered during the price surge. Management's guidance is cautiously optimistic, anticipating that this trend of price stabilization will persist through the second half of 2025. In response to the improved market conditions, Deoleo is pivoting its strategy from supply chain management to demand generation, evidenced by its decision to double its advertising and promotion investment to €10 million. It is important to note, however, that the CEO's commentary was provided before the final agreement on a 15% EU-US tariff, which could introduce a new variable affecting export profitability.

Key Decisions for Investors

• The normalization of raw material costs and recovering consumer demand signal a positive inflection point for Deoleo's profitability and revenue, suggesting a favorable environment for the company through at least H2 2025.
• Investors should monitor the effectiveness of the company's doubled advertising spend (€10 million) as a key indicator of its ability to recapture market share and rebuild brand loyalty after a period of historically high prices.
• The recently agreed 15% EU-US tariff, which was not factored into the CEO's optimistic outlook, presents a potential headwind that warrants close monitoring for its impact on margins in key export markets.