An Expert's View about Sales in Portugal

Last updated: 14 Apr 2011

In 2010, Portugal’s agriculture, fish and forest product imports from the United States were valued at $264 million, up 53 percent from the previous year, but still far from the $375 million achieved in 2008. Fish and seafood, tree nuts and other consumer-oriented products continue to offer the best U.S. export opportunities in Portugal.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Date: 3/17/2011 GAIN Report Number: PT1101 Required Report - public distribution Portugal Post: Madrid EXPORTER GUIDE ANNUAL Approved By: Robert Hanson Agricultural Attaché Prepared By: Diogo Machado Mendes Agricultural Specialist Report Highlights: In 2010, Portugal?s agriculture, fish and forest product imports from the United States were valued at $264 million, up 53 percent from the previous year, but still far from the $375 million achieved in 2008. Fish and seafood, tree nuts and other consumer-oriented products continue to offer the best U.S. export opportunities in Portugal. This report provides guidance to U.S. companies interested in exporting consumer-oriented food products to Portugal and includes an overview of the country's economic situation, market structure, and export requirements. 1 SECTION I. MARKET OVERVIEW Portugal Economic Trends Portugal?s population is approximately 10.6 million. Due to a deficit in the trade balance of agricultural and food goods Portugal relies heavily on imports to supply its population. In 2010 imports of consumer oriented products fell by 3.8% from the previous year to 5.2 billion USD as a result of declines in both intra-EU trade and extra-EU trade. Portugal was affected by the international financial crisis in 2008 and is still struggling to recover. Unemployment is currently above 11%, the budget deficit is 9.3%, and the country has one of the highest levels of private and public debt in the EU. According to European Union forecasts, labor market conditions are expected to improve only towards the end of 2012 following the recovery in private investment activity. Portugal is a very good gateway into third markets as it keeps close business ties with countries and territories including Brazil, Macau, Angola, Mozambique, and other African countries, where Portuguese is spoken by over 250 million people. Portugal is also an excellent entry point into the EU market. English is widely spoken, the population is friendly toward Americans, and the country has one of the lower commercial cost business environments in Western Europe. Table 1: Selected Indicators 2009 2010 2011 2012 GDP growth (%, year-on-year) -2.6 1.3 -1.0 0.8 Inflation (%, year-on-year) -0.9 1.4 2.3 1.3 Unemployment (%) 9.6 10.5 11.1 11.2 Public budget balance (% of GDP) -9.3 -7.3 -4.9 -5.1 Current account balance (% of GDP) -10.4 -10.7 -8.0 -6.7 Source: European Commission ? European Economic Forecast autumn 2010 http://ec.europa.eu/economy_finance/eu/forecasts/2010_autumn_forecast_en.htm 2 Table 2: Advantages and Challenges of U.S. Agricultural Products in Portugal Advantages Challenges Portugal is a net importer of food and agricultural products. U.S. food and agricultural Competition from neighboring EU countries is fierce. products have a good reputation for quality. Good gateway to the Iberian Peninsula, Europe, U.S. exports face higher transportation costs and and Portuguese speaking countries. difficulties in shipping mixed or smaller container loads. Domestic distribution systems are efficient. Supermarkets and hypermarkets shelf space is expensive. Access the Portuguese market through High marketing costs (advertising, discounts, etc.) are multinational chains like SONAE, Jeronimo necessary. U.S. suppliers, determined to maintain market Martins, Auchan and El Corte Ingles. share, may need to conduct annual promotion activities. Consumers are more health conscious and demand has been growing for value-added Importers prefer to take delivery on short notice to avoid products, convenience foods and functional storage charges. foods. Favorable dollar exchange rate ? U.S. exports Household disposable income is getting lower as the are very competitive. economic crisis unfolds in the country. The following chart shows Portuguese imports of Agricultural, Fish and Forestry Products in the last 5 years. The overall price spike of 2008 is reflected in a significantly higher value of imports in that year. The market share of the different export country groups has been relatively stable with the EU-27 accounting for around 75%, Latin America for 7% and the U.S. for 2.5% of the country?s imports. Chart 1: Portugal's Agricultural, Fish and Forestry Product Imports (Million USD) Source: GTA 3 In 2010 there was an overall 53% increase in the value of U.S. exports of agricultural, fish and forest products to Portugal (see chart below), which follows largely from the evolution of world prices. The Bulk group of products continues to be the most important with sales worth 135 million USD (51% of the total), followed by fish products worth 51.5 million USD (19%), forest products worth 43 million USD (16%), intermediate goods worth 21.5 million USD (8%) and consumer ready products worth 12.8 million USD (8%). Chart 2: U.S. Exports to Portugal of Agricultural, Fish and Forest Products (Million USD) Source: GTA SECTION II. EXPORTER BUSINESS TIPS Local Business Practices Success in introducing your product in the Portugal market depends on acquiring local representation and making personal contact. The advantages of local representation include market knowledge, up-to- date information and guidance on business practices and trade laws, sales contacts, and market development expertise. Good contacts are important for the exporter to be aware of future contracts and participate in tenders. Having a distributor that is appointed on an exclusive basis is ideal. While modern sales techniques are becoming more prevalent, many business people still prefer personal contact as a way of doing business rather than just via email, fax or phone. English is a widely spoken second language in Portugal, and U.S. exporters can expect to conduct their meetings with contacts in English. Large importers and wholesalers have branch sales offices and/or sub-agents or dealers in the principal cities and towns, with main offices concentrated in Porto and Lisbon. Typically, food products are 4 imported by an importer, broker and/or a distributor. General Consumer Tastes and Preferences The traditional Portugal diet is the co-called ?Mediterranean Diet?, which is based on seafood, meat, vegetables, salads, fresh fruits, olive oil and wine, is being challenged. As consumers have less time for food preparation, the Portugal market is increasingly characterized by a trend towards more novelties and specialties, less basic foodstuffs, more ?natural? and delicatessen foods, more prepared and ready to eat products favoring convenience. Consumers are also increasingly responding to high quality and attractive packaging. Influenced by constant advertising in the daily and weekly press and TV, consumers tend to follow fashionable trends, use new products and adopt new consumption habits. Increasing travel abroad by Portuguese, as well as a growing influx of foreign tourists into Portugal is also increasing demand for new products and an interest in ethnic foods, in particular. In addition, Portugal consumers are health conscious about food. Problems or potential problems concerning food safety are widely publicized and usually receive immediate attention from government agencies. Food Standards and Regulations For more information on food standards and regulations, please consult the Food and Agricultural Import Regulations and Standards Report (FAIRS) and the FAIRS Export Certificate Report for the EU at: http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp. Also, please check the U.S. Mission to the European Union web page at http://www.useu.be/agri/expguide.html for helpful information on exporting U.S. food and agricultural products into the EU. Import and Inspection Procedures Portugal uses the Harmonized Nomenclature and Classification System (HS) and applies import duties according to a maximum and minimum rate schedule. The minimum tariff rate is applied to goods originating in countries entitled to the benefits of most-favored nation treatment (that is, members of the World Trade Organization (WTO) and countries with which the EU has signed trade agreements) including the United States. However, the EU has negotiated free-trade agreements, providing in many cases tariff-free access to the European market, which can leave the U.S. exporter at a disadvantage. The local importer is the first responsible to the Portuguese Government of imported food products when they enter Portuguese territories. Therefore, the Portuguese agent/importer should guide you through the whole process to market your product in Portugal. The following documents are required for ocean or air cargo shipments of food products to 5 Portugal: Bill of Lading and/or Airway Bill Commercial Invoice Phytosanitary Certificate and/or Health Certificate when applicable Import Certificate Most food products require an Import Certificate issued by the competent Portuguese authority. However, the Import Certificate is obtained by the Portuguese importer and/or the agent involved in the business and is intended for tariff classification purposes. Please keep in mind that if the product you are exporting into Portugal does not comply with EU harmonized regulations, Portuguese customs or health authorities may not allow entry of the product. SECTION III. MARKET SECTOR STRUCTURE AND TRENDS Food Retail Sector The Portugal retail food market is diversified. Hypermarkets/supermarkets, convenience stores, major discount stores and specialized stores coexist with the traditional corner grocery stores and open-air markets, even though the total number of retail outlets has decreased significantly in the last decade: In Portugal, hyper and supermarkets account for 60 percent of total food sales. There has been consolidation in the sector with the five larger distribution companies having now an aggregated market share of 64%, which is about the EU average. There is increasing competition in the scope and range of product offerings, including ready-to- eat and/or ready-to-cook foods, take away meals, and home delivery and the prices and services retailers offer consumers. An increasing supply of imported products has intensified competition among suppliers and retailers. EU Member States are the first suppliers of imported consumer-ready products, including seafood. 6 Diagram 1: Retail Market Structure: For more information on the Portugal Retail Food Sector, please consult http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp for the latest retail sector reports for Portugal. HRI Sector The HRI sector expanded significantly during the mid 80?s and 90?s and into the 2000?s, as a result of the profound social and economic changes unleashed upon Portugal?s accession to the European Union (EU) in 1986. The expansion is not yet complete, nor has it slowed much over the years, so we expect that the sector will be of growing interest to some U.S. exporters. Synopsis of the HRI sector: Portugal is becoming one of the top tourism destinations in Europe with the number of tourists increasing every year, boosting demand for meals in the HRI sector; Restaurant chains, including ethnic and fast food, are gaining market share and are expected to continue growing; and, Consumption of ready-to-eat/take away food continues to grow as consumers substitute home-cooked for convenience and timesaving. Most hyper and supermarket chains now offer ready-to-eat/take away food, and there is an increasing number of food outlets specializing in take-away food, ranging from barbecue to more traditional meals. 7 Diagram 2: HRI Market Structure: For more information on the Portugal HRI Sector, please consult the HRI sector report for Portugal at http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp Food Processing Sector The Portugal food-processing sector has modernized and expanded significantly during the last couple of decades. With integration into the European Union in 1986, the Portugal food- processing sector began a profound modernization in order to adapt to new EU requirements. Portugal now has some of the most competitive food processing industries in Europe, which makes this sector an important target for U.S. food-ingredient exporters. The Portugal food-processing sector in summary: Modern, with special attention to the quality, safety, and traceability of the food products it produces. Generates about 16 percent of Portugal?s total industrial production, accounting for about 7.6 percent of the national gross domestic product. 8 Comprises around 11,000 companies that employ an estimated 111,000 people; Is dominated by medium and small companies?only 2.8 percent of the companies employ more than 50 people and 80 percent employ less than 10 people. Diagram 3: Food Processing Market Structure: For more information on the Portugal food processing sector, please consult the food processing sector report for Portugal at http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp 9 SECTION IV. BEST CONSUMER ORIENTED PRODUCT PROSPECTS 2010 2010 5 Year HS Market Portuguese Average Import Product C Size Imports Import Tariff Key Constraints Attraction for U.S. Exporters ode Category (US$ (US$ Growth Rate Million) Million) (%) Portugal is a net importer of 1001 Wheat 352 338 -7% * Price sensitivity. grains. Portugal is a net importer of grains 1005 Corn 486 339 6% * GM legislation and oilseeds for feed consumption. Price sensitivity and volatility. 120100 Soybeans 364 375 -17% * C Portugal is a net importer of grains ompetition from B and oilseeds for feed consumption. razil. GM legislation. Price sensitivity and volatility. Soybean Portugal is a net importer of feed 120810 M 1 5 40% * Competition from eal B raw materials. razil and Argentina. Price sensitivity and volatility. Soybean 1507 O 56 116 656% * Competition from Food and Biodiesel Market. il Brazil and Argentina. Competition from Sunflower Good reputation of U.S. produced 120600 151 67 131% * Israel, Argentina Seeds confectionary sunflower seeds. and China. Sunflower 1512 Oil and 116 75 60% * others Domestic consumption of pulses is high in Portugal, particularly for Strong competition dry edible beans, an important 713 Pulses 42 59 -6% * from Canada and A component of the Portuguese diet. rgentina. Portuguese companies also process and re-export dry edible beans. Domestic consumption of tree nuts 802 Nuts 236 42 -6% * Aflatoxin controls. is increasing due to their utilization in the confection industry. Heavy competition Good reputation and reliability of from other EU 303 Frozen Fish 526 413 -25% * M U.S. producers. New market ember States and opening up for re-exports to Brazil domestic after processing in Portugal. suppliers. * Please see 2011 EU Common Customs Tariff for the conventional rate of duties (%) and the WTO tariff quotas to be opened by the competent Community authorities (Annex 7). 10 SECTION V. KEY CONTACTS AND FURTHER INFORMATION If you have any questions or comments regarding this report or need assistance exporting to Portugal, please contact the Office of Agricultural Affairs in Madrid at the following address: Foreign Agricultural Service American Embassy, Madrid American Embassy, Madrid PSC 61, Box 20 C/ Serrano, 75 APO AE 09642 28006 Madrid Tel. 34-91 587 2555 Spain Fax: 34-91 587 2556 Email: AgMadrid@usda.gov http://spanish.madrid.usembassy.gov/ Please consult our home page for more information on exporting U.S. food products to Portugal. Importer lists are also available from our office to exporters of U.S. food products. A list of trade associations and useful government agencies is provided below: PORTUGAL Trade Associations APED-Associação Portuguesa de Empresas de Distribuição (Portuguese Association of Distribution Companies) Campo Grande, 285-5º 1700-096 Lisboa Tel: 351-21-751-0920 Fax: 351-21-757-1952 www.aped.pt ARESP-Associação da Restauração e Similares de Portugal (Portuguese Associations for HRIs Sector) Av. Duque d?Avila, 75 1000 Lisboa Tel. 351-21-352-7060 Fax: 351-21-354-9428 Email: aresp@aresp.pt www.aresp.pt FIPA-Federação das Indústrias Portuguesas Agro-Alimentares (Federation of the Agro-Food Portuguese Industries) Av. António José de Almeida, 7-2º 1000-042 Lisboa Tel: 351-21-793-8679 11 Fax: 351-21-793-8537 Email: info@fipa.pt www.fipa.pt Government Agencies ASAE - Autoridade da Segurança Alimentar e Económica (Food Safety and Economic Authority) Av. Conde de Valbom, 98 1069-185 Lisboa Tel. 217 983 600 Fax: 217 983 654 Email: correio.asae@asae.pt www.asae.pt Direcção Geral da Alfandega e Dos Impostos Especiais sobre o Consumo (General Directorate for Customs and Special Taxation on Consumption) Rua da Alfandega, No. 5 r/c 1149-006 Lisboa Tel. 351-218813700 Fax: 351-218813990 Email: dgaiec@dgaiec.min-financas.pt www.dgaiec.min-financas.pt Direcção Geral da Alfandega e Dos Impostos Especiais sobre o Consumo (General Directorate for Customs and Special Taxation on Consumption) Direcção de Serviços do Licenciamentos (Import Certificates) R. Terreiro do Trigo Edif. Alfândega 1149-060 Lisboa Tel. 351-218814262 Fax 351-218814261 Email: dsl@dgaiec.min-financas.pt www.dgaiec.min-financas.pt For more information on exporting U.S. agricultural products to other countries, please visit the Foreign Agricultural Service home page at www.fas.usda.gov 12 APPENDIX - STATISTICS A. KEY TRADE & DEMOGRAPHIC INFORMATION Agricultural Imports From All Countries ($Mil) / U.S. Market Share 1) (% () - 2010 $8,634/1.96% Consumer Food Imports From All Countries($Mil)/U.S. Market Share (% (1)) 2010 $5,183/0.25% Edible Fishery Imports From All Countries ($Mil) / U.S. Market Share (% (1)) - 2010 $1,749/2.95% Total Population (Millions) / Annual Growth Rate (%) - 2010 10.7/0.3% Urban Population (Millions) / Annual Growth Rate (%) ? 2010 5.8/0.4% Number of Major Metropolitan (2) Areas 2 Per Capita Gross Domestic Product (PPP) - 2010 $21,700 Unemployment Rate (%) - 2010 10.50% Per Capita Food Expenditures (Euros) - 2010 1300 Percent of Female Population Employed - 2010 48% Exchange Rate (US$1 = 1 Euro) - March 2011 0.72 (1) GTA (2) Population in excess of 1,000,000 13 B. CONSUMER FOOD & EDIBLE FISHERY PRODUCT IMPORTS Portugal Imports Imports from the World Imports from the U.S. U.S Market Share % (In Millions of Dollars) 2008 2009 2010 2008 2009 2010 2008 2009 2010 CONSUMER-ORIENTED AGRICULTURAL TOTAL 5,709 5,390 5,183 12.7 14.5 12.8 0.22 0.27 0.25 Snack Foods (Excl. Nuts) 419 397 375 0.5 0.6 0.6 0.13 0.16 0.16 Breakfast Cereals & Pancake Mix 101 93 81 0.0 0.0 0.0 0.04 0.03 0.05 Red Meats Fresh/Chilled/Frozen 927 928 864 0.0 0.0 0.0 0.00 0.00 0.00 Red Meats Prepared/Preserved 198 194 184 0.0 0.0 0.0 0.00 0.00 0.00 Poultry Meat 105 108 109 0.0 0.0 0.0 0.00 0.00 0.00 Dairy Products (Excl. Cheese) 652 571 514 0.0 0.1 0.0 0.00 0.01 0.01 Cheese 219 192 187 0.0 0.0 0.0 0.00 0.00 0.00 Eggs & Products 35 44 34 0.0 0.1 0.0 0.00 0.21 0.00 Fresh Fruit 662 569 602 0.0 0.0 0.0 0.00 0.00 0.00 Fresh Vegetables 268 232 251 0.0 0.0 0.0 0.00 0.00 0.02 Processed Fruit & Vegetables 379 364 349 0.5 0.8 0.7 0.14 0.23 0.20 Fruit & Vegetable Juices 91 74 91 0.1 0.1 0.2 0.08 0.09 0.21 Tree Nuts 53 51 49 5.5 4.7 4.9 10.46 9.25 10.07 Wine & Beer 196 187 159 0.0 0.4 0.0 0.00 0.19 0.03 Nursery Products & Cut Flowers 166 111 110 0.1 0.1 0.0 0.04 0.12 0.01 Pet Foods (Dog & Cat Food) 150 156 141 1.3 0.6 0.5 0.87 0.36 0.35 Other Consumer-Oriented Products 1,090 1,120 1,084 4.5 7.0 5.7 0.42 0.62 0.53 FISH & SEAFOOD PRODUCTS 2,020 1,725 1,749 111.9 29.5 51.5 5.54 1.71 2.95 Salmon 38 45 61 0.6 1.5 1.7 1.49 3.28 2.83 Surimi 0 0 0 0.0 0.0 0.0 0.00 0.00 0.00 Crustaceans 262 246 243 0.4 0.2 0.0 0.16 0.08 0.02 Groundfish & Flatfish 552 366 368 17.8 3.0 2.5 3.23 0.83 0.67 Molluscs 215 220 237 0.2 0.1 0.5 0.10 0.05 0.19 Other Fishery Products 952 848 839 92.9 24.7 46.8 9.76 2.91 5.58 AGRICULTURAL PRODUCTS TOTAL 10,072 8,792 8,634 200.5 104.4 169.7 1.99 1.19 1.96 AGRICULTURAL, FISH & FORESTRY TOTAL 13,092 11,210 11,156 374.6 172.9 264.2 2.86 1.54 2.37 Source: GTA 14 C. TOP 15 SUPPLIERS OF CONSUMER FOODS & EDIBLE FISHERY PRODUCTS Portugal - Top 15 Suppliers CONSUMER-ORIENTED AGRICULTURAL PRODUCTS FISH & SEAFOOD PRODUCTS $1,000 2008 2009 2010 $1,000 2008 2009 2010 Spain 3,027,508 2,803,986 2,669,583 Spain 925,389 827,666 768,480 France 635,869 630,844 605,766 Sweden 165,628 128,907 215,072 Germany 486,005 479,341 442,338 Netherlands 127,587 131,813 103,436 Netherlands 402,574 352,517 350,732 China 43,662 55,980 79,213 Italy 203,620 214,038 204,315 United States 111,943 29,518 51,525 Belgium 175,121 178,737 172,250 Denmark 57,756 29,276 43,883 Ireland 96,529 104,564 82,138 Vietnam 23,919 35,761 39,343 Brazil 68,092 62,139 67,475 France 45,893 35,134 37,416 Costa Rica 70,318 64,960 67,203 India 27,914 41,383 35,728 Switzerland 45,395 58,827 66,251 Greece 31,020 30,093 34,764 United United Kingdom 83,529 74,409 62,834 Kingdom 20,832 26,116 31,370 Denmark 68,645 60,590 59,317 Russia 84,457 45,889 28,474 Poland 23,293 38,250 47,393 Germany 24,000 34,900 28,017 South Africa 36,794 20,451 44,996 Namibia 18,725 22,520 24,534 Argentina 34,921 27,201 24,547 South Africa 24,815 18,126 20,073 World 5,708,674 5,390,348 5,183,247 World 2,020,135 1,725,336 1,748,707 Source: GTA 15
Posted: 14 April 2011, last updated 14 April 2011

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