A pressing issue

THE French government once scuttled a possible foreign bid for Danone, a big dairy firm, on the ground that it was a national industrial “jewel”. If yogurt is strategic for the French, olive oil has the same exalted status in Spain. Four savings banks wanted to sell their combined 31% stake in Deoleo, the country’s largest producer, and under Spain’s stockmarket rules anyone buying such a large stake has to bid for the whole company. Earlier this month, when it emerged that all the bidders were foreign, ministers said they would prefer that it remained in Spanish hands, and raised the possibility of the state taking a stake in the firm.

On April 10th a British private-equity firm, CVC Capital, won the backing of Deoleo’s board after making the highest offer, valuing it at €439m ($607m). But given the controversy over selling to foreigners, two of the four would-be sellers now look like keeping their stakes. CVC will end up owning 30% of Deoleo but will later seek to buy the rest.

Olive oil accounts for a mere 0.8% of Spain’s exports. Yet it is an extra-sensitive matter. The country is the world’s largest producer of the oil, but one-third of its exports are sent in bulk to Italy where it is bottled and sold, often for a significant markup, under Italian labels. Some of the oil sold with the Bertolli brand, one of Italy’s and America’s favourites, is in fact pressed by Deoleo from the fruits of Spanish olive groves.

It is a similar story for wine. Spain has overtaken France and Italy to become the world’s largest producer, but sells almost half of its exports in bulk to markets like France, some of which is retailed under French labels. French- and Italian-labelled wines typically fetch higher prices than Spanish-labelled ones, though the gap is narrowing. And despite the global success of Spanish fashion retailers such as Inditex and Mango, the fancy handbags turned out by artisans in the small Andalusian town of Ubrique are sold under French and Italian labels. Stuart Weitzman, an American shoe designer who makes his products in Spain, says the country produces the world’s best footwear, but its domestic labels have barely left a footprint on the world stage.

Spain has come a long way, compared with the relatively closed economy it had before joining the European Union in 1986. More recently, rising exports have helped pull the country out of a deep recession, with the economy returning to growth in the third quarter of 2013. Exports are now 34% of Spain’s GDP, up from 24% in 2009. Its olive oil is winning new customers in places like China and Mexico. Prominent chefs like Ferran Adrià have raised the profile of Spanish cuisine and attracted foodie tourists. But the country clearly has some way to go in raising the prestige of the “Made in Spain” label.