how to do business in the iberian market spain & portugal€¦ · growing the success of irish...

Growing the success of Irish food & horticulture

AIDAN COTTER

CHIEF EXECUTIVE

BORD BIA

28 JANUARY 2009


Marketplace International 2015

How to do business in the

Iberian Market

Spain & Portugal


Contents

• Spain - Market Facts

• Spain - Export Performance

• Spain - Retail Overview

• Spain - Foodservice Overview

• Portugal - Market Facts

• Portugal - Export Performance

• Portugal - Retail Overview

• Portugal - Foodservice Overview

• Sustainability

• Market Dynamics

• Product Suitability

• Pricing

• Routes to Market

• Challenges in the Market

• Targets for MP2015

• Bord Bia Madrid


2014 GDP: €1,086 billion

Real GDP growth forecast as 1.3% in 2014 and 1.7% in 2015

Population (2014e): 46M (including 5.5M non-nationals)

Low birth rate / aging Population: 75% over 25 years

Urban society: >70% living in towns over 20,000 inhabitants

Unemployment rate: 25% at 5.4M & 728,300 households with no income

Strong regional identities and administrations (17), diff eating habits/gastronomy, diff

purchasing power, regional nationalism/ local produce

Languages: Castellano, Catalan, Galician & Basque

VAT Rates: Basic food products 4%; Food 8%, Alcoholic 18%, Services 21%

Spain - Market Facts


Big into Fresh Produce: 50% of consumption

Huge Enhancement of the Mediterranean diet: Olive oil, Fruit & veg, fish, dairy products

Health/ obesity concern

Great interest in functional foods: Omega 3, folic acid, iron, cholesterol free…

Little GMO/ organic & environmental issues concern

63% of Spanish consumers believe in buying local products

Buying less more often- small packs

Knowledgeable and demanding but…

VERY PRICE SENSITIVE

Spanish Consumer


Spanish Market Relevance to Ireland

7th export market

3rd for Seafood

1st for Fresh Fish: 100% Irish megrims go to Spain

4th for Livestock

Irish Beef sold in 4 main retail chains


Spain – Irish Exports Performance

Irish Food and Drink Exports to Spain 2013: 198 mill €

Top Exports

Beef 62,935,744

Seafood 52,646,501

Dairy 49,710,837


Irish Presence in Spain

2 Meat companies with offices: AIBP, Dawn – another 3 represented

2 Seafood via agent

3 Dairy: IDB, Dairygold, Kerry

Alcoholic Drinks :

Baileys, Guinness, Murphy´s, Jameson…

8 Active Livestock Exporters

10 CFI companies exporting to Spain (with no market presence)

Irish Retail Presence: Musgraves España & Dunnes Stores (2)


Spain - Retail Overview

Grocery retail valued at €93.8 billion in 2014 (e) /consumer spent €1,894 per capita (-2.2%)

The market remains very price-sensitive. PL accounts for 36% of sales.

Supermarkets outperforms hypermarkets, as consumers seek convenience and proximity.

Daily supermarket openings via franchises (18,000)

Discounters are the only format growing sales together with internet

Retailers are investing extensively in their fresh ranges, counters and “price” image.

Costco and Poundland (Dealz) first openings

Regional retail chains outperforming national retailers

Source: IGD/Euromonitor 2014


Spain - Retail Overview

Retailer Grocery sales 2013

(€m)

% Change in

grocery sales 12-13

IGD grocery retail

market share 2013

Number of grocery

stores 2013

Mercadona 18,395.4 3.9% 19.6% 1,467

Carrefour 8,174.9 -2.5% 8.6% 456

Eroski 5,160.0 -0.9% 5.5% 1,564

Alcampo (Auchan) 4,396.7 0.2% 4.7% 349

DIA 4,378.1 1.4% 4.7% 3,004

El Corte Inglés 4,066.9 1.9% 4.3% 370

Lidl 2,646.5 6.2% 2.8% 526

Consum 1,840.3 4.3% 2.0% 625

AhorraMas 1,404.0 2.1% 1.5% 251

SPAR 1,306.0 4.6% 1.4% 1,133

Note: excludes Cash & Carry and Members Club operations

Top 10 Grocery Retailers 2013



Spain - Foodservice Overview

Foodservice sector valued at €73.6 billion in 2013. Forecasted to decrease to €72.2

billion in 2014 due to ongoing crisis, however showing some recovery lately

Very fragmented- Approx 295,200 foodservice establishments in Spain (-1% vs 2012).

Big percentage made of family owned independent restaurants and bars.

Sector led by fast food chains and a couple of strong foodservice groups, followed by big

hotel chains.

Trend towards reduced-price items (ie. McDonald’s, Burger King,

Pans & Company and Telepizza extending their lines of €1

offerings of €1items) and attractive low cost menus.

Vouchers and loyalty cards to attract customers

Source: Euromonitor 2013


Spain - Foodservice Overview

Rank Company Gross Sales 2013

(€m)

1 Mc Donald’s España (Grupo) 999,00

2 Burger King España, S.L.U. 520,00

3 Telepizza – Foodco Pastries Spain, S.L. (Grupo) 500,00

4 Áreas, S.A. (Grupo) 420,00

5 Grupo Zena - Food Service Project, S.L. 375,00

6 Grupo Vips – Sigla, S.A. (Grupo) 293,77

7 The Eat Out Group, S.L. 290,00

8 Casual Beer & Food, S.A. 274,00

9 Restauravia Grupo Empresarial, S.L (Grupo) 210,00

10 Comess Group de Restauración, S.L. 193,00

Top 10 Foodservice Companies 2013



Portugal - Market Facts

Portuguese GDP 2014 – €194.9 billion

Population: 10,813,834 people

Unemployment rate: 16.8% (2013)

Age Structure: 0-14 years: 15.9% 15-24 years: 11.4% 25-54 years: 42.2%

55-64 years: 11.9% 65 years+: 18.4%

Languages: Portuguese (official), Mirandese (official, but locally used)

New VAT rates 2014: Foodstuffs 6%; Alcoholic 23% Wine – 13%, Services 23%.

*Special rates apply in the Azores and Madeira.


Portugal - Export Performance

Irish Food and Drink Exports to Portugal 2013: 23.7mill €

Top Exports

Beef 9,820,000

Beverages 4,410,000

Seafood 3,360,000

Dairy 2,290,000


Portugal - Retail Overview

Highly concentrated: top 5 retail chains have 60% of market share

Still strong hypermarket channel lead by Sonae and Auchan, however convenience stores

expected to grow

Highly competitive discount market: Aldi & Lidl expanding and DIA Minipreço

fighting to remain market leader

Consumers have become more frugal and cautious

Local economy support: local buying strategies, highlighting provenance

Fresh ranges will remain a key differentiator for retailers



Portugal - Retail Overview

Retailer IGD grocery retail

market share 2013

Grocery sales 2013

(€m)

Number of grocery

stores 2013

Sonae MC 21.9 4,142.9 378

Jerónimo Martins 17.3 3,261 429

Auchan Portugal

(Jumbo) 8.0 1,511.5 32

ITM 7.1 1,363 285

Lidl Portugal 5.5 1,039.1 259

Leclerc 4.8 917.8 20

DIA Portugal 4.0 882 576

Aldi Portugal 0.6 107 80

Coviran SCA 0.4 96 250

Grupo El Corte Inglés 0.3 80.6 8

Top 10 Grocery Retailers 2014



Portugal - Foodservice Overview

Foodservice sector valued at €6 billion in 2013

Over 80,000 foodservice establishments in Portugal.

Portuguese consumer foodservice dominated by independent players, but facing increasing

competition from leading brand chains

Foodservice VAT rate went from 13% to 23% in 2012, the majority of players directly passed

on the rise to end-consumers, resulting in a more expensive average ticket

Social media revolution playing a crucial role in consumer foodservice with operators

increasingly investing in digital marketing and solutions to engage consumers and improve

customer experience.



Portugal - Foodservice Overview Top 10 Foodservice Companies 2013

Brand Global Brand Owner Outlets

Lojas Tangerina Galp Energia, SGPS SA 251

McDonald’s McDonald's Corp 135

TelePizza Telepizza SAU 112

Bom Bocado Sonae SGPS SA 98

Pizza Hut Yum! Brands Inc 96

Pans & Co Agrolimen SA 57

Vitaminas Multifood Lda 55

Eurest Compass Group Plc 54

Loja Das Sopas Starfoods SA 48

Companhia das Sandes Starfoods SA 44

Happy Grill Grill store Portugal 41



Sustainability

Private initiatives: Instituto para la producción sostenible: increasing

consumption of products derived from renewable, recyclable and

biodegradable raw materials

Marketing tool: energy efficient outlets, recycling, reusable bags…

Known due to “small fish” protection campaigns

CSR Departments becoming more relevant as the consumer is starting to hear

about it…


Market Dynamics: 2 Different Markets in one

DOMESTIC

• National brands, few imported

products

• Large retail chains

• More traditional Spanish/Portuguese

products

• Lower margins

• Supply directly from manufacturers,

few distributors

TOURIST

• National brands + many international

brands

• Local and independent retailers

• More convenience products

• Higher margins

• Supply of imported products from

distributors and International Cash &

Carry/wholesalers


What are Retailers looking for?

DOMESTIC RETAILERS

• QPS (Quality, Price & Service)

• Innovation

• Convenience food (chilled)

• International cuisine's

• Private label products

• Competitive pricing

TOURIST RETAILERS

• Leading brands from key markets

(UK,Germany, Russia…)

• To cover a good product selection

from several countries

• Differentiation from national retailers

and specialization.

• Guarantee of regular supply


RETAIL SECTOR

• National Retailers

- negotiating directly with national buyers

- national listings

- via national distributors

• Tourist Retailers

- negotiating directly with local buyers

- via regional distributors

Routes to Market

FOODSERVICE SECTOR

• National Market

-directly with foodservice chains

-via national distributors/Cash & Carry’s

• Tourist Market

-via regional distributors

-Cash & Carry’s


Retail- the cost of doing business

Margins:

• Vary from 20-50% depending on product & retailer

• New supplier needs to be 10-15% cheaper than current supplier

Listing fees:

• Depend on margins, product & retailer.

• All expect a % of sales to be reinvested in promotional activities.

Promotions:

• BOGOF or free gifts are common

• % discount of next purchase


Things to know for the Iberian market

Best time to pitch to buyers: February - March; (when the Christmas Campaign

is over & they can start to make the plans for the rest of the year)

Existing supplier negotiations: contracts are normally from Jan to Dec (legal

requirement)

“Seasonality” - Summer/Hot V´s Winter/Cold & its affect on Menus,

Gastronomy, Consumer demand.

Long lead times to get a listing (12-18 months)

Branded products need local salesforce to visit all stores as planogrammes are

rarely enforced


Potential Hurdles In Spain & Portugal

Fragmented & expensive logistics in both markets – lack of centralised

distribution for certain products

Strong national food industry & preferences for national/local products

Strong competition from other imported products

Pricing – Irish products not always priced competitively for the market

High listing fees and promotional activity expected

Products with short shelf-life can be problematic due to transport times

Spain & Portugal are unfamiliar with leading Irish brands


Recommendations for Doing Business in Iberia

Research the market/analyse the category and competition

Find the right partner/distributor

Logistics solution in place before meeting the buyers and delivered price to

market incl. agent /importers margin when required

If direct business, a Spanish/Portuguese speaking person to deal with the

customer

Patience: long lead times and small first orders

Payment terms longer in Iberia (over 60 days, cash flow flexibility key)

Personal contact important - develop relationship: visit market/ invite to Ireland

Need to invest behind the product: positioning, promotions, tastings, etc


Targets for MP 2015

Over 50 buyers will be targeted in Spain/Portugal:

Importers/Distributors: Tourist Areas & Mainland Spain

Key Retailer buyers in your categories

Key foodservice players

Gourmet/Fine food retailers

Organic/Speciality Distributors


For more information & services…

Cecilia Ruiz, Manager – Meat & Livestock – [email protected]

Roisin O’Sullivan, Consumer Foods – [email protected]

Tel + 34 91 435 65 72

mailto:[email protected]

mailto:[email protected]

how to do business in the iberian market spain & portugal€¦ · growing the success of irish...

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