Retail Market and Distribution
Competitors are always well represented at Portuguese agricultural fairs and food-related shows. Other nations advertise in Portugal's food magazines and on television, and join with hotels in weekly menu promotions, complete with food products, cooks, exhibits and decorations.
Competition also heats up among Portuguese and foreign firms over extremely expensive hypermarket shelf space. Suppliers fight to maintain and expand exposure of their products as the number of hypermarkets boomed since the 1990s. The struggle is getting even more intense as larger stores continue to carry more private label products, constricting shelf space even more for branded products. Modelo Continente, Jerónimo Martins, Lidl and Auchan are the biggest retailers.
Local manufacturers felt the squeeze on profit margins as big retailers preferred to cut costs by buying from neighboring countries. France and Spain dominate consumer-ready frozen and non-frozen food products. Spanish fruits and horticultural products are easily found all over Portugal's hypermarket and supermarket chains. The European Union, South America, the Middle East and China also compete with dried fruits, tree nuts, pulses and prepared product markets.
With a land area about the size of the North American state of Indiana, Portugal maintains quite a varied distribution network. The food distribution structure includes wholesalers, retailers (hypermarkets, supermarkets, cooperatives, small businesses, convenience stores), institutions and associations. Portuguese retailers generally make their purchases through a broker from the manufacturer or directly from a distributor, cash-and-carry store, traditional wholesaler or from retailer associations and cooperatives. The associations and cooperatives, made up mostly of small store owners, help members increase purchasing power, compete with larger stores and access training and trade seminars. But the role of import agents and traditional brokers declined, and retailers are becoming more adept at direct importing.
Hypermarkets and supermarkets, including joint ventures between the Portuguese and French, control over 50 percent of retail food sales. The Portuguese government put the brakes on the tremendous growth of hypermarkets in an effort to protect smaller retailers. With their high buying power, the hypermarkets can be more competitive in pricing and could easily squeeze smaller businesses out of the marketplace.
Read more about this topic: Agriculture In Portugal
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