Packaged Food in Portugal

Upmarket shift in demand

Although the Portuguese population continues to decline as a result of low birth rates and a strong tradition of emigration, the packaged food market is seeing growth driven by a number of factors, including: improving economic conditions: diminishing household sizes; hectic work and social lives; rising consumer health-consciousness; and increasing exposure to foreign culinary traditions. All of these factors are serving to drive consumer demand upmarket across packaged food categories, generating interest in products offering high levels of convenience, a strong health and wellness positioning or an image of high-quality, artisanal authenticity.

Health and convenience drive growth

In 2018, the Portuguese packaged food market maintained a trend of year-on-year improvement in performance in current value terms that persisted throughout the review period. A more positive macroeconomic environment allowed consumers to increasingly prioritise factors other than price in purchasing decisions, bolstering the importance of qualities such as nutritional value and convenience and spurring demand for added-value products.

Private label remains strong but loses share

Retailers continued to play a prominent role in the fragmented Portuguese packaged food market in 2018, with private labels from Sonae Modelo Continente Hipermercados, Jerónimo Martins - Distribuição de Produtos de Consumo, Lidl & Cia, and Auchan Hipermercados Portugal occupying four of the top five brand rankings during the year. However, while retailers worked to adapt their offer to an upmarket shift in consumer demand driven by rising purchasing power, increasing health-consciousness, a greater emphasis on convenience and more cosmopolitan tastes, the overall share of the private label segment continued its trend of year-on-year decline in 2018.

Modern grocery retailing sees share eroded

Modern grocery retailing continued to dominate Portuguese packaged food value sales in 2018, but experienced a second consecutive year of share decline during the year. Convenience stores was the only modern grocery retailing channel to see its share increase in 2018, reflecting consumers’ growing demand for shopping that is embedded in the general flow of their hectic lifestyles and the expanding product offer of convenience store operators as they target this demand.

Positive outlook

Packaged food sales are expected to continue to increase at constant 2018 prices across most categories during the forecast period, despite ongoing population decline, as growth is driven by improving economic conditions and the impact of factors such as long working hours and the increase in single-person households on demand. The squeeze on consumer time and the erosion of more formal traditional eating habits resulting from work and social commitments and the increasing number of people living alone will continue to spur demand for higher-value convenient meal solutions, smaller portions and snack-orientated products.

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