Is Extra Virgin Olive Oil too expensive?

Let's take a deep dive into the true cost of our liquid gold.

On Saturday, Mr. Rossi opens a 750 ml bottle of Prosecco with a couple of friends, and they polish off the bottle in under an hour. Cost of the bottle? $25.00. On Monday, Mr. Rossi buys a 500 ml bottle of high-quality extra virgin olive oil from a local retailer. Between drizzling, dipping, and dinner time, it will last him about twenty days. Cost of the bottle? $30.00. On Wednesday Mr. Rossi takes his car in for an oil change. Cost of a liter of engine oil? $30.00.

On Friday, Mr. Rossi gets a phone call from his bargain-hunting sister, telling him the supermarket has a special on extra virgin olive oil this week. Cost of the bottle? $8.99.

Something doesn’t add up — $25.00 for a bottle of bubbly is not outrageous, motor oil is a necessity to keep our engines running, but anyone who sells oil for $30.00/500ml must be a thief because it costs a fifth in the supermarket. Right?

WHAT IS THE RIGHT PRICE FOR EXTRA VIRGIN OLIVE OIL?

To figure out how much extra virgin olive oil should cost, let’s go back to the beginning – to the olive grove.

Signor Bianchi’s Extra Virgin Olive Oil Production

Signor Bianchi produces extra virgin olive oil in Sicily (although the story could be set in many other regions of Italy). His centuries-old trees, located on splendid terraces overlooking the Mediterranean Sea, number about 300 trees in one hectare.

Frost in winter, dryness in summer, parasites in spring and flies in autumn require constant attention. Adhering to integrated, biodynamic or organic cultivation makes production even more expensive and labor intensive. Pruning is done by hand, taking care to satisfy the needs of each plant.

When it’s time to harvest, Signor Bianchi and his workers spread tightly woven nets under the trees and gently detach the olives from the branches with soft combs or by hand. The olives are then gently moved into small crates and immediately taken to the oil mill, where the oil is extracted within few hours.

Señor Garcia’s Extra Virgin Olive Oil Production

Señor Garcia produces oil in Andalusia, in the south of Spain. The olive trees here are more like bushes and are planted in flat soil, slightly sloping towards the south. But unlike Signor Bianchi’s groves, the trees here are planted more densely — there are over 1,800 trees in one hectare.

The mild winter temperatures, artificial irrigation and the absence of flies significantly reduce the problems in the field. Pruning is done mechanically and is mainly used to reduce problems for the harvesting machines.

When it’s time to harvest, Señor Garcia’s uses large agricultural machines called straddlers. The straddlers suck in the olive trees like a car in an automatic car wash and mechanically strip the olives from the branches. In some cases, the trees are pre-treated with products that make the olives detach more easily from the trees. The olives are dumped on the back of a truck and unloaded in the yard of a huge oil mill. The extracted oil is stored in huge steel storage tanks waiting to be sold in tankers.

Production Shapes Price

Considering that the two elements with the greatest impact on the cost of the extra virgin olive oil are labor and packaging, it’s easy to understand the price disparity you find in the extra virgin olive oil market.

Signor Bianchi has to employ a lot of workers to prepare the soil, prune, harvest, mill and bottle the oil. Señor Garcia relies on the machines and sells the product wholesale to companies, who then bottle it under their own brand.

Signor Bianchi and Señor Garcia are very different producers, but their comparison is useful to understand price formation. In Italy, olive growing largely follows traditional methods. Like Signore Bianchi, small oil mills are often family-run, and play close attention to the relationship with the producer and his olives. Farms are small and yields are closer to 9% than 20%.

With these parameters in mind, we can say that extra virgin olive oil has baseline average national price of around $15–17 per liter. But this estimation has a purely statistical value and can double or triple based on the specific producer’s practices. Greater efforts and greater economic commitment on the part of the producers drives the price higher. The attention paid during cultivation, the specific needs of native olive varietals, the process of extracting characteristic aromas and tastes, and certifications of controlled origin like IGP, DOP, or organic production all impact the producer’s bottom line and thus the final price.

This is not to say that extra virgin olive oil must be astronomically priced to be good.

It’s also not a given that an $8.99/liter bottle is a scam. In large-scale distribution, extra virgin olive oil is frequently used as an attention-grabbing product and sold below cost to attract consumers. For this reason, the shelf price that you see can have a very indirect relationship with production cost.

Regardless, the price of a bottle of olive oil cannot be separated from the handiwork involved in the traditional practices of many Italian producers.

So what’s a conscientious consumer to do?

The most reliable way to strike a balance between price and quality in a bottle of extra virgin olive oil is to buy from retailers who know the olive groves themselves.

Claudio Vignoli