How to do business in the
Iberian Market
Spain & Portugal
Marketplace International 2015
Growing the success of Irish food & horticulture
AIDAN COTTER
Growing
the success
CHIEF
EXECUTIVE
BORD BIA
of Irish28food
& horticulture
JANUARY
2009
Contents
•
Spain - Market Facts
•
Market Dynamics
•
Spain - Export Performance
•
Product Suitability
•
Spain - Retail Overview
•
Pricing
•
Spain - Foodservice Overview
•
Routes to Market
•
Portugal - Market Facts
•
Challenges in the Market
•
Portugal - Export Performance
•
Targets for MP2015
•
Portugal - Retail Overview
•
Bord Bia Madrid
•
Portugal - Foodservice Overview
•
Sustainability
Growing the success of Irish food & horticulture
Spain - Market Facts
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%
Growing the success of Irish food & horticulture
Spanish Consumer
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
Growing the success of Irish food & horticulture
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
Growing the success of Irish food & horticulture
Spain – Irish Exports Performance
Irish Food and Drink Exports to Spain 2013: 198 mill €
Top Exports
Growing the success of Irish food & horticulture
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)
Growing the success of Irish food & horticulture
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
Growing the success of Irish food & horticulture
Spain - Retail Overview
Top 10 Grocery Retailers 2013
Retailer
Grocery sales 2013
% Change in
IGD grocery retail
(€m)
grocery sales 12-13 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
Source: IGD/Euromonitor 2014
Growing the success of Irish food & horticulture
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,
Pans & Company and Telepizza extending their
offerings of €1items) and attractive low cost menus.
Vouchers and loyalty cards to attract customers
Source: Euromonitor 2013
Growing the success of Irish food & horticulture
Burger King,
lines of €1
Spain - Foodservice Overview
Top 10 Foodservice Companies 2013
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
Source: Euromonitor 2013
Growing the success of Irish food & horticulture
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.
Growing the success of Irish food & horticulture
Portugal - Export Performance
Irish Food and Drink Exports to Portugal 2013: 23.7mill €
Top Exports
Beef
Growing the success of Irish food & horticulture
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
Source: IGD/Euromonitor 2014
Growing the success of Irish food & horticulture
Portugal - Retail Overview
Top 10 Grocery Retailers 2014
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
Auchan Portugal
(Jumbo)
17.3
3,261
429
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
Retailer
Source: IGD/Euromonitor 2014
Growing the success of Irish food & horticulture
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.
Source: Euromonitor 2013
Growing the success of Irish food & horticulture
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
Source: Euromonitor 2013
Growing the success of Irish food & horticulture
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…
Growing the success of Irish food & horticulture
Market Dynamics: 2 Different Markets in one
TOURIST
DOMESTIC
• National brands, few imported
products
• National brands + many international
brands
• Large retail chains
• Local and independent retailers
• More traditional Spanish/Portuguese
products
• More convenience products
• Lower margins
• Supply directly from manufacturers,
few distributors
• Higher margins
• Supply of imported products from
distributors and International Cash &
Carry/wholesalers
Growing the success of Irish food & horticulture
What are Retailers looking for?
DOMESTIC RETAILERS
TOURIST RETAILERS
• QPS (Quality, Price & Service)
• Leading brands from key markets
• Innovation
(UK,Germany, Russia…)
• Convenience food (chilled)
• To cover a good product selection
from several countries
• International cuisine's
• Private label products
• Differentiation from national retailers
and specialization.
• Competitive pricing
• Guarantee of regular supply
Growing the success of Irish food & horticulture
Routes to Market
RETAIL SECTOR
FOODSERVICE SECTOR
• National Retailers
• National Market
- negotiating directly with national buyers
-directly with foodservice chains
- national listings
-via national distributors/Cash & Carry’s
- via national distributors
• Tourist Market
• Tourist Retailers
- negotiating directly with local buyers
- via regional distributors
Growing the success of Irish food & horticulture
-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
Growing the success of Irish food & horticulture
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
Growing the success of Irish food & horticulture
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
Growing the success of Irish food & horticulture
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
Growing the success of Irish food & horticulture
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
Growing the success of Irish food & horticulture
For more information & services…
Cecilia Ruiz, Manager – Meat & Livestock – cecilia.ruiz@bordbia.ie
Roisin O’Sullivan, Consumer Foods – roisin.osullivan@bordbia.ie
Tel + 34 91 435 65 72
Growing the success of Irish food & horticulture