Packaged Food in Portugal

Packaged Food in Portugal - Industry Overview

EXECUTIVE SUMMARY

Less purchasing power, worse performances of packaged food in 2010

New types of households and health concerns key drivers of growth

Position of private label products reinforced

Discounters and Internet retailing gain share

Modest value growth expected over forecast period

KEY TRENDS AND DEVELOPMENTS

Inferior disposable incomes unfavourable to packaged food

Urban and smaller households, greater demand for ready meals, chilled and frozen processed food

Growing ownership of some home appliances contributes to performance

Healthy products, positive performances and good prospects of growth

Main grocery retailers, an increasing determinant role in terms of supply

MARKET DATA

FOODSERVICE – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• Foodservice continued to be strongly affected by the bad performance of the Portuguese economy and its negative impact on consumers’ disposable incomes. In 2010 consumers were still obliged to control their expenses. Visits to foodservice establishments were the first to be reduced. Consumers continued to prefer to eat at home or to take something from home to eat in the office for lunch in order to save money.

Competitive Landscape

• The main brands of retail packaged food were also available through foodservice. Sometimes, manufacturers have their own sales team for this specific market, but in general brands are sold by regional and local distributors in order to cover small areas and a large number of foodservice establishments, their majority of which are still independent.

Prospects

• The slight improvement of the economic situation in the country will be favourable to the foodservice environment. However, as consumers continue to be careful with their expenses, volume sales are expected to register a timid recovery over the forecast period.

CATEGORY DATA

IMPULSE AND INDULGENCE PRODUCTS – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• In 2010 consumers continued to control their purchases of products not considered primary necessities due to their lower disposable incomes , including impulse and indulgence products. However, as they are used to snacking between breakfast and lunch and/or lunch and dinner, the category registered modest but positive value growth.

Competitive Landscape

• Unilever Jerónimo Martins Lda led impulse and indulgence products in 2009 with a value share of 13%. The company had a strong presence in ice cream due to the performances of several well-known brands, such as Olá. Immediately after ranked private label products with a value share of 13%. These economy brands cover almost all impulse and indulgence product niches and have an important presence in some categories. Nestlé held a value share of almost 7%, with its position due to its wide portfolio and presence in different areas of the impulse and indulgence products category.

Prospects

• The consumption of some categories of impulse and indulgence products which today are more seasonal is expected to become more regular throughout the year over the forecast period. This trend should be mainly observed within multi-pack and take-home ice cream, fruit snacks and nuts, where manufacturers have increased efforts in this sense through the launch of adapted products and advertising campaigns encouraging consumers to buy products more frequently.

CATEGORY DATA

NUTRITION/STAPLES – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• Without good prospects of change in the economic situation of the country, in 2010 consumers continued to be loyal to nutrition/staples products, as they allow them to eat at home at relatively low cost. Driven by their need to reduce expenditure, consumers did not hesitate to buy cheaper brands, which was favourable to private label products’ growth.

Competitive Landscape

• Private label products led nutrition/staples in 2009 with a value share of almost 18%. Private label products were present in almost all categories and had an important presence in some, such as pasta and oils and fats. They were followed by domestic player Lactogal SA, which accounted for 15% of sales. Thanks to its well-known brands Mimosa, Agros and Gresso, this player continued to lead dairy products. In third position were artisanal products with a value share of 14%.

Prospects

• Convenience, healthy and well-being, gourmet and exotic should be the most important areas of manufacturers’ investment in terms of new products developments in coming years. Packaging should also be an important issue in the future for manufacturers in order to adapt their products to single-person households and new requirements in terms of convenience of use and storage. Hence, packaging as well as the amount/quantity of product in a pack will also be relevant over the forecast period. A greater contrast in terms of quite large/familiar sizes versus smaller packaging is expected to become more apparent.

CATEGORY DATA

MEAL SOLUTIONS – KEY TRENDS AND DEVELOPMENTS

Headlines

Trends

• Meal solutions continued to increase in 2010, even if at a lower rate in comparison with the previous year. Despite greater saving concerns, which led consumers to be loyal to basic products at lower prices, meal solutions continued to represent a good alternative for those who reduced their spending and at the same time reduce meal preparation times in the home.

Competitive Landscape

• Private label products continued to lead meal solutions with a value share of 36%. They were present in almost all niches and had a strong presence in some, such as canned/preserved food, frozen processed food and ready meals. Behind by some distance were Unilever Jerónimo Martins Lda, followed by Iglo Portugal Lda and Nobre Alimentação SA, with value shares of 4-6%, all owners of well-recognised brands.

Prospects

• Meal solutions are expected to maintain stable growth over the forecast period. In the short term sales will continue to be inhibited by consumers’ low disposable incomes, however this will be balanced by growing demand from people who want to reduce the amount of time spent on meal preparation and with to save money. Innovation in terms of healthier and more convenient products will also represent an important factor contributing to future growth.

CATEGORY DATA

DEFINITIONS

• Summary 1 Research Sources

Packaged Food in Portugal - Company Profiles

Conserveira do Sul Lda - Packaged Food - Portugal

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

• Summary 3 Conserveira do Sul Lda: Competitive Position 2009

Dan Cake SA - Packaged Food - Portugal

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

• Summary 5 Dan Cake SA: Competitive Position 2009

Gelpeixe - Alimentos Congelados SA - Packaged Food - Portugal

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

• Summary 7 Gelpeixe – Alimentos Congelados SA: Production Statistics 2009

COMPETITIVE POSITIONING

• Summary 8 Gelpeixe – Alimentos Congelados SA: Competitive Position 2009

Martins & Costa SA - Packaged Food - Portugal

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

COMPETITIVE POSITIONING

• Summary 10 Martins & Costa SA: Competitive Position 2009

Sumol+Compal Marcas SA - Packaged Food - Portugal

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

• Summary 12 Sumol+Compal Marcas SA: Production Statistics 2009

COMPETITIVE POSITIONING

• Summary 13 Sumol+Compal Marcas SA: Competitive Position 2009

Valente Marques SA - Packaged Food - Portugal

STRATEGIC DIRECTION

KEY FACTS

COMPANY BACKGROUND

PRODUCTION

COMPETITIVE POSITIONING

• Summary 15 Valente Marques SA: Competitive Position 2009

Baby Food in Portugal - Category Analysis

HEADLINES

TRENDS

• Baby food in 2010 did not have not a great year. The economic recession caused some births to be postponed which reduced the number of potential buyers. Consumers also reduced their expenses with baby food products, some opted for more traditional ways to nourish their babies, such as to breastfeed longer or to prepare baby meals at home or prefer cheaper alternatives, such as for example liquid milk formula rather than powder milk formula. However, when they bought packaged baby food, they continued to prefer well-known brands.

COMPETITIVE LANDSCAPE

• Baby food is a concentrated segment where two leading players together have a 79% value-share of the total segment in 2009. Nestlé Portugal SA led with a value-share around 41%, followed by Milupa Comercial, SA, with a value-share of 38% in 2009. Both players have a longstanding presence in the country and enjoy a consumer image of being baby food specialists, largely because they offer a large range of brands and products in all the categories of this segment.

PROSPECTS

• The extension of products to older babies, in some cases to children more than 3 years old, is one of the most important trends expected over the forecast period. Branded manufacturers have already launched some products to target this segment but this strategy should be reinforced as it is a way to reduce the negative impact of the birth rate and to continue to grow. The obesity issue in the country should also lead manufacturers to offer products where there is an absence of sugar.

CATEGORY DATA

Baked Goods in Portugal - Category Analysis

HEADLINES

TRENDS

• Baked goods was affected by a range of different trends in 2010. For example, as a result of the economic crisis, a growing number of consumers are now having breakfast in the house in order to save money. On the other hand, the shift from unpackaged to packaged products continued to accelerate.

COMPETITIVE LANDSCAPE

• Panrico continued to lead baked goods sales during 2009, recording a retail value share of 8%. The company’s success can be attributed to large market presence, many years of know-how, and a high level of consumer loyalty. Furthermore, the company’s success can also be attributed to its presence within pastries where it offers Bolycao.

PROSPECTS

• Demand for healthier organic, wholemeal, and seed based baked goods products will continue to increase over the coming years. Whilst cheaper economy products will also continue to increase in popularity as a result of the economic downturn, the fact that consumers will prove reluctant to compromise on nutritional qualities and taste will represent a significant challenge to manufacturers.

CATEGORY DATA

Biscuits in Portugal - Category Analysis

HEADLINES

TRENDS

• Although biscuits are highly popular in Portugal, declining consumer purchasing power has resulted in a shift towards cheaper and private label brands. However, at the same time, rising consumer health awareness is resulting in increasing demand for healthier products.

COMPETITIVE LANDSCAPE

• Kraft continued to lead sales during 2009, recording a retail value share of 28% due to the popularity of its Triunfo, Oreo, Belgas, and Chipmix brands. The company’s success can also be attributed to its strong portfolio and investment in new innovative products such as Mattinais which was launched in 2009. Furthermore, the company also invests large sums in marketing campaigns such as “A brincar e a jogar, descobre como te alimentar” which aimed to promote healthy consumption habits amongst 8 to 12 year-old children within schools. Following its recent acquisition of LU, Kraft is set to further extend its portfolio and the diversity of its product offering over the coming years.

PROSPECTS

• In response to challenging market conditions, over the coming years manufacturers will look to introduce products specifically adapted to the needs of local consumers and to increase product innovation, quality, and differentiation. It is expected that the further development of indulgence products will drive biscuits growth over the forecast period. At the same time, new on-the-go biscuit formats are also expected to increase in popularity over the coming years.

CATEGORY DATA

Breakfast Cereals in Portugal - Category Analysis

HEADLINES

TRENDS

• During 2010, breakfast cereal producers focused on trying to convince consumers of the importance of starting the day with a healthy breakfast. In addition, producers also highlighted the fact that eating breakfast at home was significantly cheaper than purchasing a snack on-the-go. In order to promote its brands, Kellogg ran a consumer survey from which it concluded that people in Portugal were not aware of the benefits of a breakfast rich in fibre while Nestlé promoted its Fitness brand via a new website which features healthy eating information.

COMPETITIVE LANDSCAPE

• Cereal Associados continued to lead sales during 2009, recording a retail value share of 36%. The company’s success can be attributed to the fact that it enjoys a high level of consumer brand loyalty, years of know-how, and innovative point-of-sale marketing.

PROSPECTS

• During the first half of the review period, consumers will mainly focus on price, with product segmentation consequently expected to slowdown. Already during 2009 and 2010, most Portuguese consumers could not afford to buy different breakfast cereals for different household members as a result of the impact of the economic downturn. In addition, producers of better-for-you products will struggle to convince consumers of the benefits of their products while value-for-money and naturally healthy products will continue to appear increasingly attractive for the whole family. However, as the economy recovers, in 2011 and 2012 there will be a return to product segmentation, with producers targeting certain products to different members of the family.

CATEGORY DATA

Canned/Preserved Food in Portugal - Category Analysis

HEADLINES

TRENDS

• Some categories, such as canned/preserved tuna and sausages continued to benefit from the trend for consumers to prepare economic meals at home as an economy measure. In order to save money, consumers were also inclined to buy cheaper brands, which favoured private label products. Meanwhile, branded manufacturers developed products targeting specific segments such as children, and/or launched new health-positioned items.

COMPETITIVE LANDSCAPE

• Canned/preserved food is a fragmented category in Portugal with more than 20 active players. Private label, which held a 45% share of retail value sales in 2009, was present in all categories except canned/preserved soup and pasta. Meanwhile, branded manufacturers tended to specialize in one or few categories, which partly explains the strong share held by private label. Among branded manufacturers, Nobre Alimentação SA and Cofaco - Comercial e Fabril de Conservas SA were the leading players with retail value shares of 13% and 8% respectively. Nobre Alimentação was the leading player in canned/preserved meat and meat products and it offered some products in canned/preserved ready meals, while Cofaco led canned/preserved fish/seafood through the Bom Petisco brand. According to the trade press, Bom Petisco is the top-of-mind canned/preserved tuna brand.

PROSPECTS

• Due to maturity and increasing competition from chilled and frozen processed food, but also fresh food, retail sales of canned/preserved food are likely to register moderate growth over the forecast period. As consumers continue to look for economic meals in the short term, the demand for canned/preserved tuna and sausages is expected to be unusually high. However, as the country’s economic climate improves, sales should stabilise, as higher purchasing power is expected to make consumers less price sensitive and encourage them to opt for higher-quality products.

CATEGORY DATA

Cheese in Portugal - Category Analysis

HEADLINES

TRENDS

• In 2010, cheese continued to be driven by the same similar trends of 2009. On the one hand there was the convenience trend with manufacturers innovating new and more convenient formats. Another trend impacting the industry was the development in gourmet cheese. Indeed, manufacturers tried to curb the pressure posed by private label products and develop new more premium cheese products. Related with this trend was also the emphasis of buying national and the great stress upon the tradition of good Portuguese cheese.

COMPETITIVE LANDSCAPE

• Fromagerie Bel Portugal SA led cheese with a 22% value-share in 2009 and increased its share one percentage point more than the result in 2008. Its leadership was maintained despite the current economic climate and ran a strong marketing campaign through 2009 highlighting that the brand Limiano was 50 years old and in 2010 with advertisements for A Vaca Que Ri and Terra Nostra. Furthermore the company innovates and the Terra Nostra brand saw the addition of Terra Nostra Slices Gourmet and Terra Nostra grated. These launches were supported by strong advertisement in television and with outdoor billboards as well as strong attention to the point of sale.

PROSPECTS

• The cheese market is expected to be full of developments as manufacturers are investing in new factories and expanding production. As such it is expected that the gourmet niche will further expand. However, the positioning it grants to producers and the added value it confers to both manufacturers is quite important. Low calorie and low versions fat will continue to appear, as the Portuguese are increasingly more worried about cholesterol but do not wish to give up cheese. However consumption is to remain stable at around growing by 1%.

CATEGORY DATA

Chilled Processed Food in Portugal - Category Analysis

HEADLINES

TRENDS

• Retail volume and value sales of chilled processed food continued to increase strongly in 2010 despite higher prices in comparison to other formats, such as frozen and canned/preserved. In comparison to these two formats, chilled processed food had lower household penetration and consequently more potential for growth. However, the advantage chilled versions offer in terms of meal preparation time, since they are ready to be consumed, best explains the growing preference for chilled processed food. The higher number of references in shelves offering improved quality and lower fat and salt content also boosted demand.

COMPETITIVE LANDSCAPE

• Private label led chilled processed food with a retail value share of 32% in 2009, largely due to its presence in all categories except chilled lunch kits. Indústrias de Carnes Nobre SA and Iberian Salads Agricultura SA were the leading branded manufacturers with retail value shares of 16% and 7% respectively. Indústrias de Carnes Nobre, the owner of the Nobre brand, was the leading company in chilled processed meat, the most valuable chilled processed food category, while Iberian Salads Agricultura led prepared salads.

PROSPECTS

• Ready-to-eat chilled processed food products that help to reduce the meal preparation times will continue to drive sales over the forecast period. The demand for such products is expected to be driven by the growing number of people leading hectic lifestyles which reduce the time for household chores.

CATEGORY DATA

Chocolate Confectionery in Portugal - Category Analysis

HEADLINES

TRENDS

• During 2010, manufacturers looked to reduce the calorie content of their brands in response to rising consumer health awareness. In addition, there was a shift towards premium brands. These trends highlight the fact that chocolate confectionery remains a dynamic area that still has significant growth potential.

COMPETITIVE LANDSCAPE

• Nestlé led sales in 2010, recording a retail value share of 20%, and was followed by Ferrero (14%). These two companies are the largest and most dynamic players within chocolate confectionery. Nestlé has been competing within the area for many years, with its continuous investment in innovation and quality ensuring consumer loyalty. Ferrero is popular due to its innovativeness, with the success of the company being due to its well know Ferrero Rocher brand. In addition, Ferrero is focused on increasing distribution and introducing new innovative products over the coming years.

PROSPECTS

• Chocolate will remain a popular indulgence product over the coming years, with sales expected to be relatively unaffected by the economic downturn. Indeed, the area is expected to continue to grow, with the introduction of new innovative products helping to fuel sales. Manufacturers will therefore play an important role, both with regard to widening distribution as well as attracting consumers.

CATEGORY DATA

Dried Processed Food in Portugal - Category Analysis

HEADLINES

TRENDS

• Sales of dried processed food were largely stable in retail volume terms in 2010. With few prospects of an economic recovery in the short term, consumers remained loyal to basic products, such as rice and dried pasta, in part because they allow the preparation of economic meals at home. Besides, in order to save money, consumers did not hesitate to buy cheaper brands, which favoured private label growth.

COMPETITIVE LANDSCAPE

• Private label continued to lead dried processed food with a retail value share of 35% in 2009. Players offered private label products in most categories, with a strong presence in the most valuable ones: rice, dried pasta and dessert mixes. Cerealis - Produtos Alimentares SA was the leading branded player with a 16% share of retail value sales. The company maintained its strong leading position in dried pasta through the performances of the Nacional and Milaneza brands. Arrozerias Mundiarroz SA, the leading player in rice and owner of Cigala brand, held a 9% share of retail value sales in dried processed food.

PROSPECTS

• Further segmentation is expected in dried processed food over the forecast period, in particular within the most valuable categories of rice or dried pasta. In order to maintain positions threatened by the growing penetration of private label, branded manufacturers are forecast to invest increasingly in niches. Convenience, health and wellbeing, and gourmet and exotic offerings are likely to be the most important areas in terms of new product development. Within rice, for example, product packaging adapted to meet the needs of single-person households or that is easier to use and store should become increasingly available in retail stores. Rice manufacturers are also expected to invest more in products that need less preparation time or that can be used directly in the microwave and to extend their range of rice-based ready meals.

CATEGORY DATA

Drinking Milk Products in Portugal - Category Analysis

HEADLINES

TRENDS

• Drinking milk products had a difficult year in 2010. Despite the marketing efforts of the manufacturers, private label products were the most sought after by consumers due to its low price. The vast differentiation in private label products offering the same type of products as branded ones put pressure on the segment and brought down prices, especially for UHT milk.

COMPETITIVE LANDSCAPE

• In 2009, the leading player was unsurprisingly Lactogal which led with a 46% share of value sales. In milk, the company held a 55% share despite not being present in powder milk. The company leads the segment due to its longstanding tradition, based on the support of the union of producers in the north and to its adaptation to modern requirements. Lactogal has expanded its distribution channels and innovated in accordance with segment necessities. The varied portfolio and strong brands make it a powerful competitor in the milk segment. In addition to its more premium brand, Matinal and to the segment leader, Mimosa, the company also has value brands, such as Gresso which fared quite well. However, the associated quality played an important role for consumers to choose a branded product against private label products.

PROSPECTS

• The segment for drinking milk products looks quite grim. With the challenges faced by the European milk segment and the general price drop, the perspectives are not so bright. Furthermore there is the issue of the sales tax increase which will put added pressure on an unstable segment. Further segmentation and enriched milk is likely to continue increasing in importance and dairy producers will look to follow the success of organic, premium and any other kind of added-value milk.

CATEGORY DATA

Frozen Processed Food in Portugal - Category Analysis

HEADLINES

TRENDS

• Retail volume and value sales of frozen processed food continued to increase in 2010 largely because these products are perceived as very convenient. Frozen processed food can be stored in the freezer and used as required. These products help to reduce food preparation time and they allow people to consume seasonal products all-year-round. Moreover, as a result of the key innovations in 2010, their preparation time continued to diminish and packaging was improved in order to facilitate usage and reduce the potential for product waste.

COMPETITIVE LANDSCAPE

• Private label, which accounted for a 44% share of retail value sales in 2009, held a strong position in all frozen processed food categories. Iglo Portugal Lda (Iglo, Capitão Igo, 4Salti and Marco Bellini brands), was the leading branded manufacturer with a 21% share of retail value sales value, followed by Pescanova (Portugal) - Produtos Alimentares followed with an 8% share.

PROSPECTS

• Convenient products that reduce food preparation time will continue to drive retail sales in frozen processed food over the forecast period. The demand for such products is expected to increase due to the rising number of consumers, especially working women, with less time for household chores due to increasingly hectic lifestyles.

CATEGORY DATA

Gum in Portugal - Category Analysis

HEADLINES

TRENDS

• Manufacturers increased their focus on gum in 2010, introducing a range of new innovative products in a bid to attract consumers. Leading manufacturer Cadbury used the 50th anniversary of Chiclets production to help increase awareness of the brand which had been somewhat neglected in previous years whilst the introduction of new Trident products proved popular with consumers.

COMPETITIVE LANDSCAPE

• Cadbury dominated sales during 2009, recording a retail value share of 63%. The company faces only limited competition from other players and the flavours, trendiness, and innovativeness of its brands continue to attract consumers. Many Portuguese consumers are looking to reduce sugar consumption and are consequently shifting towards sugar free brands. The success of Cadbury’s Trident brand can be attributed to strong marketing campaigns and a high level of consumer loyalty.

PROSPECTS

• Producers will focus on continuous product and packaging innovation over the coming years. Sugar-free brands are expected to continue driving sales over the forecast period as such products lead the way with regard to flavour and packaging innovation. A number of new exotic flavours and elegant packaging formats are expected to be introduced over the coming years.

CATEGORY DATA

Ice Cream in Portugal - Category Analysis

HEADLINES

TRENDS

• In 2010 consumers showed they were less impulsive in terms of ice cream purchases. Their lower disposable incomes were certainly a major factor behind this behaviour, as they preferred supermarkets, hypermarkets and discounters to buy ice cream and avoided more expensive ice creams that could be bought in other distribution channels.

COMPETITIVE LANDSCAPE

• Unilever Jerónimo Martins Lda was undeniably the leading player of ice cream in 2009 with a value-share of47%. The group led impulse and take-home categories with value-shares of 72% and 40%. This ice cream operator has several well-known brands including Ola brand within the impulse segment (with ice creams such as Cornetto, Magnum or Perna de Pau), Carte d’Or or Viennetta in take-home. All its brands and products were present in the segment for many years and are appreciated by Portuguese. The group also led ice cream parlours in terms of value-share, thanks to an important number of outlets (around 37) opened across the country under the brand Ola. Its capacity to cover all sorts of distribution channels and to innovate continued to be also key strengths to keep its leadership.

PROSPECTS

• In-house consumption is expected to be the key driver of ice cream over the forecast period. In the short term and until the economic situation of the country improves, low disposable incomes will cause consumers to purchase less expensive ice cream through choosing supermarket or discounter distribution channels and to reduce more impulsive purchases in distribution channels where in general ice cream is less cheap. A growing consumption in the less seasonal period of the year will in part be stimulated by branded manufacturers.

CATEGORY DATA

Meal Replacement in Portugal - Category Analysis

HEADLINES

TRENDS

• As a small niche area, distribution of meal replacement products continues to be dominated by more direct channels such as direct selling as opposed to traditional retail stores. However, the availability of meal replacement products within supermarkets is increasing and is helping to attract the attention of consumers that normally would not use such products.

COMPETITIVE LANDSCAPE

• PDP Produtos de Prestígio, the representative of Nutrition & Santé in Portugal, led sales during 2009 with a retail value share of 45%. Gerlinéa is the company’s star brand and the fact that it is available within other health related areas means that it enjoys a high level of consumer trust. Over the past few years, the company has managed to ensure a greater presence for its brands within grocery retailers such as major supermarkets/hypermarkets, thereby providing its products with greater visibility.

PROSPECTS

• Obesity, which the World Health Organisation has labelled “the epidemic of the 21st century”, is a major public health problem in Portugal. The most recent study conducted in Portugal on the incidence of obesity reveals that over half of the population is overweight and that some 14%, or 1.5 million, people are obese in the country.

CATEGORY DATA

Noodles in Portugal - Category Analysis

HEADLINES

TRENDS

• Portuguese consumers demonstrated greater receptivity to noodles in 2010, in particular to pouch instant noodles. Noodles offer consumers a cheap and quick meal solution. After initial purchases stimulated by curiosity, Portuguese consumers continued to include noodles in their diets, increasing consumption as they became more accustomed to the product. The fact that a growing number of pouch instant noodles with different flavours became available during 2010 also pushed demand for noodles.

COMPETITIVE LANDSCAPE

• Panegara II Distribuição Lda occupied first position in noodles in Portugal during 2009 with a value share of 24% thanks to solid performance of its Koka brand, the leading brand within pouch instant noodles. Martins & Costa SA followed in second position with a value share of 18%, while third position was held by A Colmeia do Minho Lda with a value share of 17%.

PROSPECTS

• The appeal of noodles in Portugal is almost entirely based on its low price and high level of convenience. The penetration of noodles in Portugal remains low, and there is still high potential for solid growth over the forecast period. The growing curiosity among Portuguese consumers for foreign cuisine will be a key driver for growth in noodles during the forecast period. Furthermore, a high number of grocery retailers will stock more different varieties of noodles, thus pushing sales of noodles and helping noodles to post even higher growth.

CATEGORY DATA

Oils and Fats in Portugal - Category Analysis

HEADLINES

TRENDS

• In overall terms oils and fats continued the contraction from 2009, going from a –3% fall in 2009 to a -2% retail sales drop in 2010. In volume the performance was more positive although it stood at an unimpressive 1% growth in 2010. Among the most notable trends was that of healthy eating which forces consumers to choose carefully the type of fat they use. For example, sales of olive oil increased in volume terms, although the price drop still caused a contraction in value sales. The campaign “buy Portuguese” and “choose national products” favoured the sales of olive oil, Portuguese olive oil, thus becoming a reason for national pride. At the same time, health concerns established olive oil as a “good fat”.

COMPETITIVE LANDSCAPE

• The company that led sales in 2009 was Unilever Jerónimo Martins Lda with a 23% value-share. There are several reasons that underlie this strong performance. One is the fact that the company is present in several ranges with well-known brands that have gained consumer confidence over the years. This is the case for the olive oil Gallo and the brand Vaqueiro in vegetable oil and margarine. Furthermore the company invests in innovation and strong marketing and has hence strengthened its relations with customers, retaining their interest and confidence. Moreover, strong advertising is part of the strategy, especially in terms of olive oil.

PROSPECTS

• The trend is for a continuous premiumisation and segmentation in oils and fats. This is relevant for nearly all the areas that functional products play an important role. A good example comes once more from olive oil, where premium products are expected to start faring better. Added seeds and herbs, more functional, from specific origins are factors that will aid premiumisation. This trend is also valid for seed oil which is expected to fight back and get its place in cooking especially for frying which is still quite important in the Portuguese diet.

CATEGORY DATA

Other Dairy in Portugal - Category Analysis

HEADLINES

TRENDS

• The reduction of disposable income experienced by the Portuguese fostered by a sales tax increase as well as more severe measures taken by the Government in order to counter the deficit, have led consumers to spend more time in the house and thus has cut down on restaurant expenditure. As Portuguese do appreciate food and well cooked meals products such as desserts and cream experienced a good performance. Manufactures introduced new types of products, offered plenty of recipes that used their products, and developed websites with cooking tips.

COMPETITIVE LANDSCAPE

• The company leading sales is Nestlé Portugal SA with a 17% value-share in 2009. This is the result of the company’s strategy which has products in all areas of this category. Furthermore it is strong in terms of condensed milk. The company also provides plenty of recipes on line and even on the packaging.

PROSPECTS

• The future will be mostly dictated by the affect of the recession especially in the first part of the forecast period when consumers will be more prone to stay in and cook. Also, due to the busy pace of life this might help drive the growth in desserts. Another trend is healthy eating which has been fuelling the demand in soy-based desserts.

CATEGORY DATA

Pasta in Portugal - Category Analysis

HEADLINES

TRENDS

• Portuguese consumers remained loyal to their consumption habits in 2010, preferring potatoes and rice to pasta. When pasta was on the menu, it was less expensive products which were the most popular. Private label and cheaper varieties of pasta such as spaghetti preferred in general. However, this did not prevent manufacturers from engaging in innovation during 2010. Key players in pasta continued to launch more sophisticated products stimulated by the increasing space allocated to gourmet packaged food products in the outlets of major grocery retailers.

COMPETITIVE LANDSCAPE

• Cerealis - Produtos Alimentares SA maintained its leading position in pasta during 2009 with a value share of 48%. The company continued to offer a wide range of products through its brands Milaneza and Nacional, in particular in dried pasta, the largest and most dynamic pasta subcategory in Portugal.

PROSPECTS

• No major changes are expected to occur in pasta during the forecast period. The majority of consumers are expected to continue to prefer dried pasta, in particular spaghetti, in part because Portuguese consumers are accustomed to eating spaghetti, but also because, of all pasta varieties, dried spaghetti best facilitates the convenient and economic preparation of practical and nutritious meals. As price will continue to be an important criterion in terms of pasta purchasing decisions, private label pasta is expected to continue posting good results. Meanwhile, manufacturers of branded pasta are likely to continue investing in emerging categories such as chilled/fresh pasta or the healthy and gourmet segments of dried pasta, where the higher prices of their value added products will be justified.

CATEGORY DATA

Ready Meals in Portugal - Category Analysis

HEADLINES

TRENDS

• Ready meals continued to develop and grow in Portugal in 2010. Apart from canned/preserved ready meals, all categories registered retail volume growth, ranging from 1-5%, in 2010. Despite the contraction of demand, explained by consumer budget concerns, ready meals continued to attract consumers, in part because they are a good alternative for people who wanted to eat at home without spending a lot of time preparing meals. The larger choice of products on retailers’ shelves, in particular one suitable for microwave ovens, also contributed to stimulate sales.

COMPETITIVE LANDSCAPE

• Ready meals is a fragmented category with more than 20 active players. Private label accounted for the highest retail value share of 35% in 2009. Private label is present in almost all ready meals categories, holding leading or strong positions in canned/preserved ready meals, chilled pizza, chilled ready meals, frozen pizza, frozen ready meals and prepared salads. Iglo Portugal Lda was the leading branded player with a retail value share of 12%. This company led frozen ready meals through three brands: Iglo, Marco Bellini and 4Salti. Iglo Portugal was followed by Iberian Salads Agricultura SA, the owner of the Vitacress brand, with a retail value share of 9%.

PROSPECTS

• Increasingly busy lifestyles due to rural-to-urban migration, has reduced the time available to consumers to prepare food and cook. In particular, the high number of working women is expected to remain the main driver of demand for ready meals over the forecast period. In the short term, many people will continue to prefer to cook, in part because this allows them to save money. However, consumers with higher purchasing power will increasingly look to ready meals because they are highly convenient to use and reduce the time required to prepare a full meal. In general, ready meals offer a more economic alternative to dining out.

CATEGORY DATA

Sauces, Dressings and Condiments in Portugal - Category Analysis

HEADLINES

TRENDS

• Sauces, dressings and condiments registered positive growth in both volume and value terms in 2010, with mayonnaise, ketchup, mustard and herbs and spices posting particularly positive performances. This growth was directly related to the increase in the number of meals which were prepared at home as a result of Portuguese consumers dining out less during the economic crisis. The adverse economic situation in Portugal and the negative impact that this exerted over disposable incomes continued to lead consumers to reduce their expenses on any kinds of luxuries, which included dining out in restaurants. Consequently, more were prepared at home, stimulating sales in many sauces, dressings and condiments subcategories.

COMPETITIVE LANDSCAPE

• In 2009, two leading players in sauces, dressings and condiments were private label and Unilever Jerónimo Martins Lda, which held value shares of 22% and 20% respectively. The success of private label can be explained by its presence in virtually all sauces, dressings and condiments subcategories and the strong value share it holds in key subsectors such as tomato pastes and purées, pickled products and vinaigrettes. Unilever Jerónimo Martins Lda, maintained a strong presence in several subcategories thanks to its highly recognised brands Calvé, which leads in ketchup and mayonnaise, and Knorr, the leading brand in stock cubes, dry sauces/powder mixes and wet/cooking sauces.

PROSPECTS

• The popularity of sauces, dressings and condiments which are healthier and more nutritious, for example those low in fat and salt, are expected to drive sales in sauces, dressings and condiments over the forecast period. Meanwhile, in response to the higher demand for these healthier products, manufacturers are expected to continue bringing out more products which are positioned as being healthy. Following the expected recovery of the economic situation in Portugal, products which are more convenient in terms of usage, but that also save time in the preparation of food, are also expected to perform well, stimulated by the demand coming from an increasingly urban population and growth in the number of single occupancy households.

CATEGORY DATA

Snack Bars in Portugal - Category Analysis

HEADLINES

TRENDS

• Snack bars recorded a severe decline in sales in 2010 due to the impact of the economic downturn on consumer disposable incomes and consequent decline in demand for non-essential products. Many consumers shifted towards cheaper snack option such as biscuits.

COMPETITIVE LANDSCAPE

• Nestlé recorded a slight decline in retail value share in 2009. However, the company is expected to regain this lost share over the coming years. Whilst Kellogg’s Special K and All Bran brands are performing well, Fitness sales growth is being limited by a lack of investment in advertising and lower consumer brand awareness.

PROSPECTS

• Recovery will prove difficult and challenging and producers will have to look to increasing advertising and point-of-sale promotional activity in order to increase volume sales. Price competition will remain strong as a result of the popularity and availability of private label brands and declining consumer disposable incomes, especially during the first part of the forecast period.

CATEGORY DATA

Soup in Portugal - Category Analysis

HEADLINES

TRENDS

• Portugal is a country in which soup is an important part of the diet and where the potential for growth in packaged food in general is still high. However, in 2010 an increasing number of Portuguese consumers opted to make soup at home rather than buy packaged soup through retail channels. Among the several reasons behind this, some stood out as being particularly significant. The first is the economic difficulties faced by many Portuguese households, which had an undeniably important influence on consumer spending in Portugal in 2010. For example, when consumers bought packaged soup, they were clearly more price sensitive, opting for cheaper brands and private label. Furthermore, the fact that there was less innovation in 2010 and that some soup lines were discontinued are two other important factors explaining the lack of dynamism in soup in 2010.

COMPETITIVE LANDSCAPE

• Unilever Jerónimo Martins led soup in 2009 with a 66% value share, largely thanks to the excellent performance of its Knorr brand. Knorr offers a wide range of products across almost every soup subcategory. Private label ranked second in 2009 with a value share of 16%, while Nestlé Portugal SA occupied third position with a value share of 5% through its brand Maggi.

PROSPECTS

• The ability of packaged soup to be an adequate substitute to homemade soup in terms of quality while offering convenience is expected to be the key driver in soup over the forecast period. Portuguese consumers are expected to maintain their current soup consumption, in part because soup consumption is a longstanding tradition in Portugal, but also because soup is perceived as being nutritious and healthy, and this is an issue which has been gaining importance in Portugal for a while. As a result, more Portuguese consumers will be tempted to buy packaged soup during the forecast period.

CATEGORY DATA

Spreads in Portugal - Category Analysis

HEADLINES

TRENDS

• Spreads growth has been hit hard by rising consumer price sensitivity as a result of the economic downturn and consequent decline in disposable incomes.

COMPETITIVE LANDSCAPE

• Private label brands led sales during 2009, recording a retail value share of 20% and overtaking previous sales leader Nutrexpa which produces the Granja San Francisco brand.

PROSPECTS

• Spreads is expected to recover slightly over the coming years as the economy recovers and has a projected forecast period constant retail value CAGR of 1%.

CATEGORY DATA

Sugar Confectionery in Portugal - Category Analysis

HEADLINES

TRENDS

• Investment within sugar confectionary was very limited during 2010, with most manufacturers deciding to focus on other areas. As a result, no new innovative products or packaging formats were introduced within the area.

COMPETITIVE LANDSCAPE

• Sugar confectionary is lead by domestic producer Lusiteca which has been competing in Portugal for many years and Perfetti Van Melle Group which produces leading brands like Chupa Chups and Mentos and continues to increase its retail value share due to the growing availability of its products in stores.

PROSPECTS

• New product ranges and rising consumer health awareness will continue to influence sales within sugar confectionery over the coming years. Manufacturers are expected to focus on making their products appealing for health-conscious consumers over the coming years and the availability of not only sugar-free but also preservative-free and additive-free brands with natural flavourings will increase significantly.

CATEGORY DATA

Sweet and Savoury Snacks in Portugal - Category Analysis

HEADLINES

TRENDS

• Despite some contraction in demand due to lower disposable incomes in Portugal, sweet and savoury snacks continued to increase in 2010. Two different trends were behind this growth. The first is that consumer receptivity for sweet and savoury snacks which are perceived as more nutritious and less harmful to the consumer’s health increased, and this was particularly the case in popcorn and fruit snacks. Secondly, the popularity of less familiar products such as extruded snacks and tortilla/corn chips also increased.

COMPETITIVE LANDSCAPE

• Private label led sweet and savoury snacks with a value share of 24% in 2009. Private label offered products in virtually every subcategory and maintained a strong presence in general. Among branded manufacturers, Matutano SA - Sociedade de Produtos Alimentares was the largest player with a value share of 21% through its several highly recognised brands such as Lay’s, Ruffles, Cheetos, Doritos and Fritos while Ramazzotti SA ranked second with a value share 14%.

PROSPECTS

• Two major trends are expected to drive sales of sweet and savoury snacks in Portugal over the forecast period. The first is higher demand for healthier sweet and savoury snacks is expected. Health concerns about nutrition and diet have been growing recently in Portugal and consumers are expected to adopt even healthier eating habits during the forecast period. Furthermore, Portuguese consumers are expected to be less focused on price during the forecast period than they have been recently since the economic situation in the country will soon recover. Sales of healthier sweet and savoury snacks will be also stimulated by manufacturer investment in this area. The second major trend expected to define sweet and savoury snacks over the forecast period, is an increased receptivity for less common products, which is also expected to drive sales in sweet and savoury snacks. This demand for more unusual snacks will largely be stimulated by further segmentation in chips/crisps, which is paving the way for consumers to accept other, more unusual sweet and savoury snacks.

CATEGORY DATA

Yoghurt in Portugal - Category Analysis

HEADLINES

TRENDS

• In 2010 there was a trend to go back to basics in terms of yoghurt consumption. Consumers shifted their purchases to lower priced and “simpler” products in an opposition trend. Another important shift is the growing importance of drinking yoghurt due to its practicality and convenience.

COMPETITIVE LANDSCAPE

• In 20101, Danone Portugal SA remained the leading player in yoghurt. Danone managed to retain a strong presence in the Portuguese segment not only for the quality of its products but also because it has sustained high levels of innovation backed by strong advertising campaigns. Furthermore, its strong position is also related to its wide product portfolio which covers all types of yoghurt but above all, a special relation with taste.

PROSPECTS

• The trends towards added fruit, more natural organic and healthy yoghurts will continue. Nevertheless, the stress on flavour and the ‘indulgence’ moment will continue to be a major driver of the segment. Increasingly more consumers will demand something that is healthy as well as tasty, while other added ingredients, such as calcium and fibre, will also continue to proliferate.

CATEGORY DATA