Portugal bucks European trend with increase in consumer shopping basket

In 2023, the Portuguese market recorded growth in the food sector: sales increased by 8.2% compared to the previous year, driven by continuously high inflation, above 10.4%, which compensated for a small loss in volume of 2.4%. %, reveals the study by McKinsey & Company and EuroCommerce, “The State of Grocery Retail 2024: Europe – Signs of hope”. Consumers stopped opting for more economical products, however, real sales decreased by 2% and are 3.1% below 2019 levels.

According to Ana Paula Guimarães, partner at McKinsey & Company in Portugal, the dominant trend, in 2023, across Europe, was inflation, which captured the attention of the food sector. “In response to the increase in prices, consumers adjusted their spending again, as they had already done in the previous year, which led to a drop in volume and operations, although Portugal countered this trend with an increase of 0. 4% in consumers’ shopping basket.”

The expert also highlights that, “on top of the 8.2% growth in the food retail sector in Portugal, supermarkets grew by another 9.5% compared to 2022, a relatively fast increase. Own brands continued to grow, with an increase of 3.2 percentage points in 2023, which brings the market share to 45.4%”.

market share

Supermarkets were the main drivers of growth in value and gained market share, while the online segment had a stable performance and discounters were unable to keep up with the pace of market growth.

Supermarkets recorded relatively rapid growth of 9.5% compared to 2022 and gained market share, with an increase of 0.8 percentage points.

Online, there was a slight reduction in revenue in Portugal in 2023, with a decline of 0.4% compared to the previous year. Market share also decreased by 0.2 percentage points, reaching 2.3%.

In turn, discounters recorded growth of 4.7%. However, they did not keep up with market growth, resulting in a loss of share of 0.6 percentage points, now standing at 17.9%.

2024

At European level, growth in the food sector (8.6%) was significantly below food inflation (12.8%). But the report shows that consumers plan to reduce their purchase of more economical products in 2024, and some groups of customers even intend to start purchasing higher-value products. If this trend continues, McKinsey and EuroCommerce expect the total volume of food products in Europe to grow again in the second half of the year.

Nonetheless, food retailers will continue to feel pressure on margins, which is one of the top three priorities for 70% of CEOs surveyed. To continue to protect consumers against price increases, they will likely prioritize negotiations with suppliers, including participation in purchasing groups, as long as consolidation efforts persist into 2024.

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