Key Points:

· Australian olive oil market becoming more competitive.

· Consumer spending on olive oil increases despite slight decline in volumes.

· Cost of imported oil increases as international olive oil prices hit record highs.

Australian olive oil producers say domestic demand is soaring as the international price of the product hits a record high.

Olive Australia chief executive Michael Southan said more competitively priced local olive oils had now been able to expand their market share.

"People buying Australian products value the origin of extra virgin olive oil and they are happy to pay a premium," he said.

"What we're seeing now is that lower-priced imports have been priced as well as, if not higher than, Australian products, so we're actually seeing some shift.

"People are saying, 'If I'm paying the same price, why wouldn't I buy an Australian product'."

Consumption down, spending up

The Olive Association said the positive trend came despite a three to five percent drop in overall national olive oil sales, most of which were non-extra virgin varieties.

However, Australians have also seen an increase in spending on olive oil due to the rising cost of oil.

"It's not going to have a negative impact on Australian products," Mr. Southam said.

"If anything, it's a slight decrease in overall consumption, with some people choosing not to buy olive oil ...... But what we're seeing is an increase in the overall value of what people are buying because of the price increases.

"It's a very positive position for the industry at the moment."

Accelerating trend

Consumers turning to Australian olive oil is part of a long-term trend, but recent developments have reinforced it.

"It's an ongoing trend, but it's certainly been quite dramatic this year," Mr. Southam said.

Sam Beaton, co-chief executive of Cobram Estate Olives, Australia's largest olive oil producer, said the company had been very busy in recent months.

"Certainly we're seeing stronger demand from our customers now," Mr. Beaton said.

"We're definitely benefiting from this environment ...... We are delighted with the support of Australian consumers."

Buying in bulk

Similarly, South Australia's Pendleton Olive Estate has seen a marked difference in demand in recent months.

Pendleton Olive executive director Nick Whiting said, "We're seeing significant growth across all of our products in all sectors."

The company sells olive oil in Australian supermarkets, restaurants and cafes and exports to South East Asia.

"Enquiries have increased dramatically and sales have certainly gone up," Mr. Whiting said.

"More people are asking if they want to buy the bigger 20-liter product than we usually see."

He said the Australian market was not the only one that had improved.

"Certainly some overseas markets are looking for quality products and have to look further than traditional markets," he said.

New customers

Mr Whiting said he hoped the trend of buying Australian olive oil would continue.

"Australian products can only really compete through high quality," he said.

"Once people actually consume it, they realize it may have more to offer than the average product."