Abstract
Olive oil markets, both traditional and new ones, are changing rapidly with vertical as well as horizontal differentiation that increasingly play a role in featuring demand and supply. The paper explores the role and effectiveness of different quality clues in the creation of value in high segments of the Italian olive oil market by applying a hedonic price model. Data come from one of the oldest and most reputed Italian guides Flos Olei which reviews around 250 Italian producers and their products. The study covers three production years (from 2012 to 2014) so that, besides the OLS estimations, a panel data analysis is also conducted. Main results indicate that consumers give value to features directly related to the product, as well as to the raw material used and to the production process; also, the kind of producer and the production area affect price. Moreover, the analysis shows the emerging role of experts in releasing valuable information about quality. On the contrary, European quality schemes, such as those for product origin and for organic production, do not bring additional value to consumers in the explored high market segments.
Highlights
Europe produces about two thirds of the worldwide olive oil production with a high share of the remaining volumes coming from the other countries of the Mediterranean basin (IOOC: International Olive Oil Council 2016)
About two thirds of total Italian production is represented by extra virgin olive oil (EVOO)
The theoretical development of the hedonic price model is based on the work of Rosen (1974), who affirms that the price of any product can be described as a function of its characteristics
Summary
Europe produces about two thirds of the worldwide olive oil production with a high share of the remaining volumes coming from the other countries of the Mediterranean basin (IOOC: International Olive Oil Council 2016). Follows Spain, the first world producer in terms of volumes, with an average 20% of the total European olive oil production. About two thirds of total Italian production is represented by extra virgin olive oil (EVOO). In many traditionally producing countries, the cultivation of olive trees is widespread almost all over the country and involves the majority of the farms. Olive mills are often small and technologically simple processing units with a local basin of olive suppliers and clients. Larger and more technological processing plants, both private and cooperative, are active in the market and supply different demand segments
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