The market of oil: little production chain (the so-called filiera)

The market of olive oil shows a low level of industrial concetration for extravergine/vergine, where the first three firms collect less than 37% sales in volume, as regards the channel iper/super+superette. This trend is relevant, instead, as regards the big industries; Van den Bergh, Nestle’, Carapelli, Monini ,which get an amount of the 2/3 of the total sales in volume. It is also to be emphatized that because of the difference of rates for virgin/extra virgin oils, there are some local enterprisers that succeed in reaching competitive positions in their areas. As for example San Giuliano oil , which is leader in Sardinia. In this scenery, there is room for the introduction of firms endowed with strong distribution of the product, and which own economies which can enable them to fight competition as regards prices.
For example, in 1999, the competitor Archioni from Umbria achieved a high national rate (about 5% in volume) with the extra virgin, without investing in promotion. This doesn’t mean that investments in this sector are not needed, on the countrary, these are useful to get significant presence on the shelf. The distribution chains, on the other side, caught the opportunity to check directely the margin of prices through the development of trademarks, that have 15% weight today. In such a “fighting “ market, as regards convenience in prices, industries and distributive firms are trying to enlarge the margins of profit of oil–sales, lowered under continuous competive input , which is not likely to change in the short term.
One possible solution could be the product differentiation,i.g. differentiation on packages that render the products different on the shelf, with more-than-a-litre size; while today all the products seem very similar. The other possibility refers to the introduction of top-quality oils, definitely Dop and Igp, which allow to increase the rates, to improve services for consumers and to qualify the imagine of the distribution chain. Anyway, two relevant competitors as Bertolli and Salov are aiming at the segmentation of olive oil consumption (the first with Gentile and Robusto; the second with low acidity Sagra) strongly investing in promotion.
Another way to differentiation, in a sector where price fluctuations derive from promotion, make different products go into competition.