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The Portuguese already consume 15% less fish and meat due to higher prices. Half of supermarket purchases are made on sales

With inflation, the war in Ukraine, the food crisis, and even the effects of the Covid-19 pandemic having an impact on the Portuguese wallet, there are many who are already forced to make choices when going shopping in supermarkets. Consumption habits are changing in light of the rising cost of living, for example, national consumers are already buying some products in smaller quantities.

To Multinews, Gonçalo Lobo Xavier, Director General of the Portuguese Association of Distribution Companies (APED), reports that the past year was one of two paradoxes: there was an increase in private consumption in the first half of the year, “as a result of a budget stagnation that households were experiencing and which was achieved in The hotel and restaurant sector, which contributed to an increase in employment and economic growth, “and then, as of September, “the scenario has been reversed, with a very significant decrease in private consumption in the field of food.”

The official notes that this decline in food consumption averaged 10% in October and November. In December, with the season of Christmas and New Year celebrations, “the month was already better,” although there are no official data, and APED member companies have not yet closed annual budgets for 2022.

Less meat and fish, more eggs. Consumers “hunt” for bargains
As stated by Gonçalo Lobo Xavier to Multinews, the consumption habits of the Portuguese are changing due to the price increase that has occurred in recent months. And the official stresses that “the available data show that there is a significant decrease in the consumption of basic necessities with high prices, such as certain categories of fish or meat, which record losses of 10 to 15% in some distinct regions.”

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Thus, the consumption of this type of protein was “shifted” to other types of lower value. The Director General of APED reported an increase in the demand for and consumption of eggs in supermarkets, in the face of a decrease in the consumption of meat and fish.

The Portuguese consumer is also increasingly “making very rational and prudent choices, trying to be very attentive to promotions”. In fact, according to data provided to Multinews by APED, currently 50% of all retail food purchases are made in promotional activities.

The so-called “white labels” are also increasingly sought after, and they already account for a combined weight of 35% of all purchases made by APED members.

Gonçalo Lobo Xavier explains: “This adjustment in consumption behavior in the face of social and economic emergency necessarily leads to less retailer loyalty and more demand for the best promotion”.

Increasing costs of transportation, logistics, raw materials, energy and packaging are difficulties
When asked about the main difficulties and obstacles faced by the retail and distribution sector in recent months, Gonzalo Lobo Xavier pointed out, “With a particular focus on the pressure of energy costs, in particular fossil fuels and electricity, and the increase in factors of production costs, transportation and logistics.”

“In addition to the perceived impacts in terms of cost, availability of raw materials and restrictions in terms of transportation, it is important to highlight the escalation in the cost of packaging (plastic, cardboard and glass) that continues to grow, putting strong pressure on the sector,” adds the official, who considers that the sector “has shown resilience and “efficiency” and “commitment to quality and consumer satisfaction.”

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On the other hand, the head of APED regrets the government’s decision to initiate a new tax on food distribution “unparalleled in the EU”, which is seen as “a sign in the opposite direction and unfair with regard to the effort that the industry is making to ensure the functioning of the supply chain”.

APED warns that prices could rise if high energy prices persist
Gonçalo Lobo Xavier notes that the distribution sector has made efforts to control prices, through efficiency and logistical capacity, to “cut and crush margins”, even “in an adverse context”.

The food vending business is a business with low profit margins, ranging between 2% and 3%. Not only in Portugal, but all over Europe. The growth in factor costs, specifically with pressure on the energy bill, has affected the entire value chain, from agricultural production, transformation, industry, logistics and transportation, driving up prices,” explains the Director-APED Overview.

Lobo Xavier warns that despite efforts to mitigate price increases, the situation is untenable, especially if associated costs continue to rise in the sector.

“If high energy factor prices persist, it will be difficult to sustain this mitigation capacity in the first quarter of 2023, especially in food retail,” concludes APED Director General in an interview with Multinews.