Oils: own-label oil beats brands as prices soar

Oils have seen another year of rampant price rises in the face of exchange rate fluctuations and supply shortages, with eight out of the top 10 brands more expensive than they were last year.

Shoppers have responded by abandoning brands in favour of cheaper own-label oils, which have bounced back into growth, with sales up by a sizzling £12.2m (8.1%) on volumes up 5.8%.

It’s a trend that is particularly noticeable in olive oil, where commodity prices reached record highs this year after the post-Brexit vote currency crash conspired with another poor harvest in Europe.

With around 20%-25% added to the cost of producing a bottle of olive oil, suppliers and supermarkets were left with no choice but to increase prices.

Own-label oils weren’t immune to price hikes, with Asda, Sainsbury’s and Tesco upping their price for extra virgin SKUs in January, following a similar move by Aldi and Lidl. However “supermarkets have increased the retail prices of brands by more than private label” as well as reducing the amount of space allocated to branded featured space promotions, says Walter Zanré, managing director at Filippo Berio UK.

Market leaders Filippo Berio and Napolina lost a combined £6.8m as average prices rose by 19.9% and 7.8% respectively - driving double digit volume losses.

“Higher average selling prices have resulted in some consumers trading down to alternative oil types and customer own label,” says Neil Brownbill, Princes marketing director.

Raw material price inflation has also left seed oil brands unable to “sustain deep promotions” says Brownbill, resulting in a similar exodus to own label. Crisp ’n Dry suffered a £20.7m sales loss despite brand owner Edible Oils - a joint venture between Princes and Archer Daniels Midland (ADM) - relabelling the brand as 100% rapeseed oil in a bid to boost its health appeal.

It wasn’t all bad news for oil brands, though. KTC, Pura and FryLight all enjoyed volume and value growth after capitalising on burgeoning demand for speciality oils by extending their repertoire to include coconut, avocado and cold-pressed rapeseed variants, with a focus on convenient spray formats. “Sprays are increasingly popular because they give portion control - if you’re pouring oil it is very difficult to regulate how much you’re using,” says Richard Davies, Frylight commercial director.

While these brands report strong growth from their coconut oil sprays, The Groovy Food Co and Vita Coco have seen value sales of their 100% organic coconut oils plummet. “As coconut oil has moved into a mainstream offering rather than a speciality oil over the last 12-month period, we have seen the introduction of own-label organic coconut oil,” says Rosie Hayward, founder of The Groovy Food Co.

In contrast to the wider oils category, there has also been a “reduction in the cost of organic coconut oil from source” adds Hayward. This has allowed lower priced ownlabel lines to steal share.

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