How to turn Pura Vida into a reference in the healthy food business?

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A Work Project, presented as part of the requirements for the award of a Master’s Degree in Management from the NOVA School of Business and Economics

H

OW TO TURN

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URA

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IDA INTO A

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EFERENCE IN THE

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EALTHY

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OOD

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USINESS

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Angelia Rombach | Nr. 2387 Cláudia Santos | Nr. 2084

Joana Sousa | Nr. 2475

Maria Teresa Cyrne de Castro| Nr. 2136 Mariana Frazão| Nr. 2443

A Project carried out on the Management course, under the supervision of: Professor Jorge Velosa

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LIST OF ABBREVIATIONS ... V EXECUTIVE SUMMARY ... VI

1.MARKET TRENDS AND OVERVIEW ... 1

2.SITUATION ANALYSIS ... 5

2.1COMPANY ... 5

2.1.1PINGO DOCE ... 6

2.1.2PURA VIDA ... 7

2.2COMPETITION ... 8

2.2.1PRIVATE LABEL BRANDS ... 8

2.2.2MANUFACTURER BRANDS ... 10 2.3COLLABORATORS ... 11 2.4CUSTOMERS ... 13 2.5CONTEXT ... 16 2.5.1POLITICAL ... 16 2.5.2ECONOMIC ... 16 2.5.3SOCIAL ... 17 2.5.4TECHNOLOGICAL ... 18 2.5.5LEGAL... 18 2.5.6ENVIRONMENTAL ... 19 2.6SWOTANALYSIS ... 20 3.PRIMARY DATA... 22 3.1STORE-CHECKS ... 22

3.1.1PINGO DOCE STORES ... 22

3.1.2OTHER RETAIL STORES ... 22

3.1.3SPECIALITY STORES ... 24

3.2CONSUMER OBSERVATIONS ... 25

3.3QUALITATIVE RESEARCH -FOCUS GROUPS ... 26

3.3.1MARKETING RESEARCH PROBLEM ... 26

3.3.2RESEARCH DESIGN ... 27

3.3.3SAMPLE ... 27

3.3.4INSIGHTS ... 28

3.4QUALITATIVE RESEARCH -EXPERT INTERVIEWS ... 29

3.4.1MARKETING RESEARCH PROBLEM ... 29

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3.4.3SAMPLE ... 30

3.4.4INSIGHTS ... 30

3.5QUANTITATIVE RESEARCH –SURVEY ... 31

3.5.1MARKETING RESEARCH PROBLEM ... 31

3.5.2RESEARCH DESIGN ... 31

3.5.3SAMPLE ... 32

3.5.4INSIGHTS ... 33

4.KEY SUCCESS FACTORS ... 34

5.RETAILING AND CATEGORY MANAGEMENT ... 36

5.1RETAILING INDUSTRY ... 36

5.2RETAIL STRATEGY ... 37

5.3CATEGORY MANAGEMENT ... 39

6.SOLUTION FOR PURA VIDA ... 42

7.BRANDING ... 43

7.1SEGMENTATION AND TARGETING ... 43

7.2POSITIONING... 44 7.3BRAND IDENTITY ... 46 7.4BRAND ARCHITECTURE ... 47 7.5BRAND ELEMENTS ... 48 8.PRODUCT STRATEGY ... 50 8.1PRODUCT MIX WIDTH ... 51

8.2PRODUCT LINE LENGTH ... 53

8.3PRODUCT LINE DEPTH ... 53

9.COMMUNICATION STRATEGY ... 54

9.1MARKETING OBJECTIVES ... 54

9.2TARGET AUDIENCE SELECTION AND ACTION OBJECTIVES ... 55

9.3CAMPAIGN COMMUNICATION OBJECTIVES ... 56

9.4CAMPAIGN POSITIONING ... 56

9.5CREATIVE STRATEGY ... 57

9.6INTEGRATED MARKETING COMMUNICATIONS ... 60

9.7MEDIA STRATEGY PLAN ... 62

9.8CAMPAIGN TRACKING ... 64

10.PLACE STRATEGY ... 64

10.1STORE DESIGN ELEMENTS ... 65

IV

11.PRICING STRATEGY ... 68

11.1VALUE BREAKDOWN ... 70

12.FINANCIALS ... 71

13.IMPLEMENTATION AND CONTROL... 72

REFERENCES ... 74

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BFY Better-For-You

BL Brand Loyal

CBBE Customer-Based Brand Equity

COGS Cost Of Goods Sold

FBS Favorable Brand Switcher

FF Fortified/Functional

FG Focus Group

GMROI Gross Margin Return On Investment

JM Jerónimo Martins

KSF Key Success Factor

NCU New Category User

NH Naturally Healthy

OBL Other Brand Loyal

OBS Other Brand Switcher

PD Pingo Doce

PL Private Label

POD Point of Difference POP Point of Parity

POS Point of Sales

PV Pura Vida

SKU Stock Keeping Unit

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Taking into consideration the main goal of turning Pura Vida (PV) into a reference brand within the healthy food business, a general understanding of the market was gained through secondary data. Furthermore, primary research was conducted in order to have deeper insights of consumers’ perceptions on healthy food. With these sources of information, a SWOT analysis could be developed and key success factors (KSF) – namely the brand, brand experience and in-store presentation - could be determined. As a result of the vast analysis and by acknowledging the reality of a brand operating within a retailer, a three year action plan was defined in order to reach the desired outcomes.

The main objectives and steps are to target both users and non-users of the category. Then a repositioning for PV as the only brand of affordable healthy food is suggested. Furthermore, it is proposed that PV becomes more independent as a brand but will be endorsed by Pingo Doce (PD). In regard to the product strategy, changes through leaving some and entering other sub-categories will take place, as well as the completion of sub-categories with new product launches, in order to offer a broad assortment overall. This will give consumers the chance to eat healthy every day. Furthermore, it is suggested to redesign the packaging to reflect consistency within the brand offering and increase brand awareness.

About the communication, a campaign will be launched and new channels will be used to intensify communication activities (in-store and out-of-store). The underlying communication objectives are to create category need, increase brand awareness, generate favorable brand attitude as well as to reinforce brand purchase intention. As a result, the expected action objectives would be trial, repeated purchase and post-purchase behaviors.

In relation to the placement, there have to be improvements in the store space as well as enhancements of the store elements, serving a cohesive and structured proposal to extend to small, medium and big stores. In addition, shelf management has to be taken into consideration, in order to assure visibility and easiness to find PV products.

Considering the pricing strategy, a neutral pricing approach by setting the majority of the product prices similar to the competitors is suggested. Yet, there should be products following penetration pricing, namely those that are saturated in the market, and others following a skimming pricing, specifically those that are differentiated and innovative, in order to keep high margings.

With these strategies, PV will become the preferred brand among consumers, multiplying its sales by more than six from €12,7 million to €78,8 million by the end of 2019.

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According to Euromonitor International (2015i), the health and wellness food market includes better-for-you, food intolerance, fortified/functional, naturally healthy and organic products, and it has been increasingly penetrating the Portuguese market, presenting an ever growing consumer base that is powering sales in the sum of these categories (Appendix 1). In fact, many Portuguese people are becoming more aware of the benefits of implementing a healthy diet, along with practicing sports.

The Portuguese scenario follows the same path as the one that is present in most developed countries, yet with lower growth than on average. Hence, on the consumer side and in accordance to their adjustments in expenses, this sector is affected mainly as a result of the higher prices when compared to standard products. On the other side and aligned with the economic downturn, most of the manufacturers and retailers in Portugal have been risk-averse towards investing more in the health and wellness sector. Consequently, a narrow number of new launches were made in the past years, due to the lack of spending on product development (Euromonitor International, 2015i).

However, the span of competitors present in the Portuguese health and wellness market is broad. These include many small companies that struggle to gain market share, as well as multinational companies that are well present and still manage to achieve market share (Euromonitor International, 2015i). Specifically, retailer channels kept on being the market leaders in the health and wellness sector in the year of 2014 (Appendix 2). This success owes to the vaster selling space, which allows a wider offer and variety of assortment, presenting products that serve a broader scope of choices.

Even though healthy lifestyles are increasingly popular in Portugal, the majority of people is still sedentary and does not follow a proper diet, yet intends on doing so (Jerónimo Martins, 2016b). Hence, a great portion of Portuguese people is struggling with overweight and other problems associated to it, such as diabetes, high cholesterol, and hypertension, among others (Jerónimo Martins, 2016b). Also, the Portuguese are increasingly becoming an aged population, which results in more concerns towards improving eating habits, especially in light of dealing with the risk of illnesses and other age-related problems. Therefore, this is a vast market to explore, especially for private label (PL) brands. In fact, these types of brands are the expected leaders of healthy food, as a result of the affordability and price promotions that they may offer to price sensitive consumers. Nevertheless, to secure this possibility it is vital to assure factors such as quality (Euromonitor International, 2015i).

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However, the several areas present in the health and wellness market perform differently, resulting in varying importance for producers and consumers.

• Naturally Healthy Products

The most important branch within the health and wellness sector refers to the naturally healthy (NH) products, which are classified as being the least processed possible, as for instance wholegrain products or oat flakes, since they present the highest sales of about €733 million among the ones mentioned (Euromonitor International, 2015i).

Accordingly in 2014, packaged food increased by 2% in current value terms up to €421 million. Especially, NH non-dairy products presented a growth of 74% in current value in 2014, as a result of several product launches. In addition, media has divulged studies that make a link between milk consumption and some health problems, which reinforces the interest of these products even for those who do not suffer from any disease. Additionally, NH high-fiber food is said to help people coping with weight gain, digestive function and the risk of bowel cancer. Particularly, NH high-fiber biscuits and bread presented volume growth in 2014. Also, vitamins and dietary supplements have positive prospects, supported by the medical associations who have been highlighting the importance of consuming these type of products to address the nutritional deficiencies caused by stressful lifestyles, poor diet, ageing and environmental pollutants. Furthermore, the heart health benefits associated with Omega-3 and plant sterols are becoming widely known among consumers, provoking a volume growth within NH oils and fats (Euromonitor International, 2015l).

On the other hand, NH beverages rose by 3% in current value in 2014 up to €312 million. This positive result is related to the growth of NH bottled water, which represented 62% of total retail value sales in 2014, showing a growth of 5%. Additionally, NH green tea presented a boost in current value of 6%, due to the high antioxidant and detoxification benefits it possesses that are increasingly valued by consumers. Within NH, some Portuguese manufacturers tried to launch products related to the super-fruit concept. Nonetheless, this concept is yet to be explored in Portugal, due to the lack of popularity. Furthermore, Portuguese consumers do not perceive NH beverages as helpful in relation to specific health problems, except the NH tea (Euromonitor International, 2015k).

• Better-for-You Products

The second most relevant branch refers to the better-for-you (BFY) products, which are classified as products with reduced fat, sugar or salt, as for example reduced fat cheese, reduced sugar drinks or reduced salt sausages, with total sales of about €684 million.

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However, in 2014, the sales of the packaged food decreased by 1% in current value terms, corresponding to €593 million, since the rising prices are taking consumers away. Still, there are positive prospects of growth until 2019, as to reach a value of €605 million (Euromonitor International, 2015i)

The most important category in this area continued to be BFY reduced fat packaged food, representing 91% of the total category value sales in 2014. BFY reduced sugar packaged food was the best performing category within BFY packaged food, showing a 1% value growth in 2014. Besides, the category offers a wide range of products, particularly in terms of sauces, dressings and condiments as well as sweet and savory snacks, which supports its visibility. Manufacturers tend to introduce several new products, since consumers are willing to try them, particularly in categories in which the price difference is low. Another trend product in BFY products is Stevia. This sweetener only became available in Portugal in 2011, but still Portuguese consumers do not know much about it and have to be educated about it. Moreover, in spite of their increasing awareness towards the benefits of reduced carbs and salt products, Portuguese consumers just have access to a small range of products. Nevertheless, since demand is also not high, some products have to be discontinued (Euromonitor International, 2015b).

On the other hand, BFY beverages kept on registering positive growth of about 3% in current value terms during 2014, reaching €91 million, mainly because of the rising popularity for BFY reduced sugar beverages labelled as “light”. The bad perception of sugared beverages, often linked to weight gain, continues to repress demand for sugared soft drinks. Nonetheless, this increase is expected not to be sustainable, since consumers are considering them as artificial and processed. As a consequence of the crisis, Portuguese consumers are determining different priorities and they only decide to buy BFY products if their prices are similar to the standard products (Euromonitor International, 2015a).

• Fortified/ Functional Products

The third most important branch within the health and wellness section refers to the fortified/functional (FF) products, which are classified as products with specific characteristics that address a certain purpose, as for instance fortified margarines that help coping with cholesterol or vitamin infused water, summing up €468 million (Euromonitor International, 2015i).

Yet, in 2014, the sales of the packaged food decreased by 3% in current value terms, down to €423 million. The category suffered from the economic crisis, but also from the consumer perception that these are not essential products. Moreover, better education about nutrition

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made people more skeptical about the benefits associated with FF products. Yet, protein bars presented a strong growth, rising to 7% in 2014. As opposed to other FF products, protein bars are linked to a very specific demand. Normally, they are consumed by sports people. Another important type of product within FF packaged food is the pro/pre biotic drinking yoghurt (Euromonitor International, 2015h).

In parallel to the packaged food, the sales of beverages also declined by 5% in current value terms, down to €45 million. This consumption was also highly influenced and limited by the economic downturn in Portugal. Yet, FF hot drinks and particularly FF flavored powder drinks had positive results in the past years. The main key benefits promoted by FF beverages are multivitamins or vitamins and minerals, which all can be found in standard juices products. When compared to other countries, FF beverages in Portugal are still very underdeveloped, and Portuguese consumers believe that these products will not help them to address any health conditions (Euromonitor International, 2015g).

• Food Intolerance Products

The fourth most important branch refers to the food intolerance products, which are classified as products that are processed to attenuate the allergic or intolerance effects caused by certain ingredients, such as gluten and lactose. Examples are gluten-free cookies and lactose-free cheese, and this category has increased by 2% in current value terms, rising to €26 million in 2014 (Euromonitor International, 2015i).

Portuguese consumers are becoming more aware about non-allergenic food, specifically in regard to gluten and lactose. Despite being positively affected by the growing population affected by coeliac disease, diabetes and lactose-intolerance problems, these products are also sought by those who do not suffer from any food intolerances as a result of media influence on those topics. Indeed, demand was sustained by an increased awareness. For instance, gluten-free pasta has performed a high development with value sales increasing by 7% in current terms. This product is very appreciated by coeliac consumers, since pasta is a product that is highly consumed in many meals. In addition, gluten-free bakery products are also popular, presenting a rise of 6% in current value terms in 2014. Moreover, around 30% of the population is lactose-intolerant in Portugal, promoting the good performance of lactose-free products in 2014. This trend has also been supported by growing media coverage of lactose-intolerance (Euromonitor International, 2015f).

• Organic Products

The fifth and least important branch in the health and wellness section refers to the organic products, which are classified as products that were produced without chemicals, as for

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instance organic tomato sauce or organic coffee, and they have reached almost a total of €59 million (Euromonitor International, 2015i).

On the one hand, the sales of packaged food have risen by 3% in current value terms in 2014, reaching €58 million. Portuguese consumers are searching for more organic products, both for health and environmental reasons. In fact, they have been trying to go away from standard products, as they are aware of the presence of artificial components, but also because they know that most of them are grown with chemicals. Although, a lot of consumers are still not willing to pay more for organic products, organic rice sales increased by 9% in current value terms in 2014, since it is a popular ingredient in traditional Portuguese cuisine. Nonetheless, the offered range of products is still narrowed, making this category a niche (Euromonitor International, 2015n).

On the other hand, the sales of beverages have also increased by 5% in current value terms up to €400.000. Portuguese consumers are paying more attention to the protection of the environment, which promotes the concept of the organic products and reflects their concerns towards the “green” trend. Nevertheless, organic beverages also have a very limited supply, despite its growth of 5% in retail value in 2014. Generally, there were four main categories in Portugal during 2014: organic fresh coffee, organic green tea, organic 100% juice and organic nectars (25-99% juice). Another popular trend is “superfood”, such as goji berries, acai palm, and products done out of them and other healthy fruit products, such as detox juices (Euromonitor International, 2015m).

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In order to develop a marketing strategy for PV, it is essential to conduct a situation analysis for a deep understanding of the market. For this purpose and in respect to the “five C’s analysis” the following aspects were studied in greater detail: the customer, company, collaborators, competition and context (Dolan, 2014).

2.1

C

Jerónimo Martins (JM) is a globally operating Portuguese corporation with more than 200 years of history and today it is doing business in the following sectors with a strong focus and expertise on the last one:

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• Agro Business: This is a sector of the group since 2014. It constitutes an attempt to serve the group’s needs on strategic products by accessing them directly from producers.

• Services: This including marketing and representation services for international brands (e.g. Kellog’s, Heinz), restaurant services (e.g. Jeronymo kiosks and coffee shops, or Olá stores) and specialist retail businesses (e.g. Hussel confectionery stores).

• Manufacturing: The group is Portugal’s biggest and leading manufacturer of fast moving consumer goods (FMCG). This is due mainly to JM’s stakes in Unilever Jerónimo Martins as well as in Gallo worldwide.

• Food distribution by JM: It operates in Portugal (with PD and Recheio1), where it is the leader in this business, in Poland2 (with Biedronka) and in Columbia (with Ara). Figures like 89.027 employees, more than 3.000 stores, €13.728 million in annual sales and €800 million in EBITDA for 2015, illustrate that JM is a big and important player in its businesses (Jerónimo Martins, 2016a).

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Looking closer at the food distribution business, JM tries to deliver a unique value proposition to its customers by positioning itself as a provider of “food solutions which are consumer-trends oriented, competitive prices, proximity locations, focus on the excellence of fresh produce [as well as] private brands and quality” (Jerónimo Martins, n.d. [a]).

PD in particular, as being the scope of this report, closely adapted its own value proposition to the group’s by stating they offer an “assortment of high quality perishables, competitive prices with the opportunity for immediate savings, pleasant store environment recreating the atmosphere of traditional markets, great service [and] a long-lasting relationship of trust with its customers” (Jerónimo Martins, n.d. [d]).

With 399 stores across Portugal and €3.407 million in sales in 2015, it is the leading supermarket chain in the country. It differentiates itself from its competitors through a wide range of high-quality perishables, its high-value-for-money PL Pingo Doce, the many meal solutions including take-away options, attractive and competitive prices, an incomparable

1 _{Note: Recently Amanhecer, a chain of franchised supermarkets as well as, was introduced by JM (Euromonitor} International, 2016e)

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Note: Since 2011 JM also owns a drugstore chain (called HEBE) including a pharmacy network (Apteka Na Zdrowie) in Poland (Jerónimo Martins, n.d. [c])

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store environment and its proximity to customers through its extensive store network (Jerónimo Martins, n.d. [d]; Jerónimo Martins, 2016a).

The mentioned PLs at the PD stores are crucial to its success. The well-known store label

Pingo Doce was introduced in 1992 and since then has evolved to become a trusted brand in terms of quality,worth about US$ 807 million and thus the most valued Portuguese retailer label (Euromonitor International, 2016e). Besides, other PLs in PD are “Ultra” (detergents), “ActivePet” (pet supplies), “Skino” and “Essentya” (personal and hair care products), “ElectricCo” (consumer appliance), “Office 7”,”Home 7”, “Brico 7”, “Auto 7” (products for office/home/house and garden/cars, respectively) and its newest PL Pura Vida (healthy food), which is the special focus of this report. As a fact, the PLs represented 35,6% of the purchases realized in the PD supermarkets in 2015 (Appendix 3).

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JM has formulated a strategic positioning applying to all its businesses. The result is a corporate responsibility with strong emphasis on value creation and sustainable development based on five pillars. One of those is to “promot[e] good health through food” (Jerónimo Martins, n.d. [a]). In order to meet this stipulation, JM took several actions, for instance regarding the reformulation of its products and its communication. Furthermore, in 2011 PD launched a new PL, Pura Vida, specifically dedicated to meet the needs of consumers who desire to eat on a special diet.PD build a team of experts supported by nutritionists in order to develop a range of high-quality products with more pure ingredients and fewer additives (Jerónimo Martins, n.d. [h]). Currently3, the PV brand comprises 87 stock keeping units (SKU), accounting for roughly 2% of PD’s total sales and it is growing on an immense rate (62%). With an average margin of 34% in 2015, the brand is very attractive as a PL in terms of profitability. PV products are present in two sub-categories within the healthy food category, namely non-specialized perishables (dairy/meat products/frozen food) and groceries. Furthermore, its product portfolio is divided into “free-from” (including lactose-, gluten-, and allergen-free food), “whole or super food (including wholegrain and diabetes control products) and “functional food” (including products intended for weight loss, sports or other specific consumer needs) (Jerónimo Martins, n.d. [g]).

For PV’s full assortment as by February 2016 see Appendix 4.

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2.2

C

Identifying who are the current competitors and who they are likely to be in the future is needed for a realistic assessment of the competition (Dolan, 2014).

Regarding the healthy food competitive landscape in supermarkets, Continente is the leader with 31.7% market share in grocery, 38.5% in non-specialized perishable considering just milk products (soy drinks) and 39.3% in non-specialized perishable regarding other dairy products (soy yoghurts and soy desserts).

PD is the second player with 27.2% market share in grocery, 20.7% in non-specialized perishable considering just milk products and 20.2% in non-specialized perishable regarding other dairy products (Jerónimo Martins, n.d. [b]) (Appendix 5).

Additionally, Intermarché represents the best overall results in terms of growth (+1.7% market share variation) and it is the only retailer with positive growth in all categories (Jerónimo Martins, n.d. [g]) (Appendix 6).

For PV, which represents around 2% of the total PD sales in 2015 and about 14% of the sales in value in the categories where it is present (Jerónimo Martins, n.d. [g]), direct competitors are both, healthy food PL brand products (from retailers and specialty stores) and healthy food manufacturer brand products (Levy et al., 2014).

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In Western Europe the share of PL packaged food is about 25% with many markets having a share exceeding 30%. PL strategies are essential tools for retailers to maintain margins and boost customer loyalty by helping shifting consumer attitudes from “loyalty to branded food products” to “loyalty to retailer brands”. PLs are becoming more sophisticated and more focused on lifestyle trends (Euromonitor International, 2015o). In the Portuguese market, PL competitors for healthy food products are the following:

• Continente from Sonae Modelo Continente - Hipermercados SA, which is part of the Sonae SGPS group and operates exclusively in grocery retailing. It is having a growth in its PL sales in Portugal, namely approximately 30% of all fast moving consumer goods sold in Continente outlets in 2013 were PL products (Euromonitor International, 2015q). Continente has an area dedicated to healthy food products where three healthy food product PLs can be found:

- Área Viva, which includes food intolerance and BFY products

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- Continente Biológico, which includes organic products

• Intermarché, which is part of the retail group Os Mosqueteiros (in English “The Musketeers Group”). It currently has a vast range of PL products in grocery and non-grocery items, representing 25% to 30% of its billings. Healthy food PL products are:

- Reva for functional food products - Pâturages for dairy products

- Chabrior for light food products (Euromonitor International, 2016h).

• Jumbo, from Auchan Hipermercados Portugal SA’s, followed the directives of Auchan Group and remains engaged in partnerships with local producers in order to meet consumer demand for quality products at affordable prices (Sabores de Portugal is the PL brand of packaged and fresh food with local products). It also has an area, Dietética, dedicated to healthy food products with several brands including Jumbo’s PL brand

Vida Auchan/ Viver Melhor which includes environmental-friendly, gluten-free and BFY products(Euromonitor International, 2016a).

• Minipreço, from Dia – Distribuidora International de Alimentación, has partnerships with approximately 50 local suppliers and is following a strategy that results in very competitive selling prices (Euromonitor International, 2016e). Minipreço has no specific PL for healthy food products, but its PL brand Dia has several healthy products analog to the current PV assortment (for instance, rice and corn cakes, oat flakes, seeds, wholegrain rice or soy milk).

• Discounters have already realized that consumers’ purchasing habits are changing to a focus on quality and freshness of products and a higher demand for national production (Euromonitor International, 2016e).

Lidl, from Schwarz Beteiligungs GmbH, with 20 years of experience in Portugal, was losing share in 2015 and has invested in store openings and refurbishment to convince consumers that it is no longer a pure discounter. Lidl has a vast range of PL products on offer but there is none specifically dedicated to healthy food products. Lidl’s aggressive price strategy (PL branded products are up to 70% cheaper than the branded equivalents) and its adaptation to Portuguese consumer trends, for instance by investing in partnerships with local producers to have “made in Portugal” products, contributes to the success of this chain in Portugal (Euromonitor International, 2016i).

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• Specialty health food stores in Portugal, such as Celeiro, Miosótis and Brio, are dealing with the fact that PL players introduce healthy food products within several healthy categories, gaining share and increasing demand (Euromonitor International, 2015l). On the other hand, as demand for health and wellness products continues to increase in Portugal, a high number of specialty health food stores are expected to appear in the country. Even though the presence of such shops in Portugal is still limited due to the rather high prices and the limited availability of their specialized products throughout the country, their service demand is rising among Portuguese consumers (for example providing customers with professional advice regarding a balanced nutrition) (Euromonitor International, 2015i).

Celeiro, from Dietimport SA, is one of the most popular operators of healthy food stores in Portugal. Thus, it can be considered as PV’s main competitor regarding healthy food products from specialty stores. In general, products in Celeiro are priced high but it offers a large assortment. VidaCeleiro is Celeiro’s PL which contributes to its innovative concept of healthy eating in order to achieve a healthy and balanced lifestyle (Celeiro Official Website, n.d.).

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Considering both the healthy food market division (Euromonitor International, 2015i) and PD’s healthy food categories division (Jerónimo Martins, n.d. [g]) a hierarchical partitioning (Percy & Elliott, 2012) of healthy food product categories was done (Appendix 7) in order to define the manufacturer brands seen as PV direct main competitors

• Cem Porcento, from Ignoramus - Produtos Naturais Lda, is a benchmark healthy food brand present in several categories within packaged food products and hot drinks (for instance, tea accounted for a 9% value share in 2015) with a healthy claim (Ignoramus Official Website, n.d.). It can be found at a large number of points of sale (POS), including hypermarkets and supermarkets (Euromonitor International, 2016f). It is especially strong in the wholegrain, ready-meals and condiments sub-categories.

• Gullón, from Bolachas Gullon Lda, has become a byword essentially for “healthy biscuits” with brand share in BFY packaged food of 0,2% in 2014 (Euromonitor International, 2015b). Gullón has a full range of healthy product offer: wholegrain, high in fiber, low-calorie, organic, egg-free products, etc. (Gullon Official Website, n.d.). Recently is has also entered the gluten-free category.

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• Alpro, from Ecotrading SA, has been present in Portugal since 2013 and its market share in packaged food was 2,6% in 2014 (Euromonitor International, 2015l). It is well-known in the lactose-free category. There it offers flavored soy drinks and desserts, alternatives to yogurts based on plants as well as a large variety of drinks made from plants as soy, almond, coconut, hazelnuts, rice and oats (Alpro Official Website, n.d.).

• Schär, from the Dr. Schär company, is Europe’s strongest brand in the gluten-free category and thus offers a large assortment of different gluten-free products such as breads, frozen products, pasta, cookies, crackers, pizzas and other goods (Schär Official Website, n.d.).

• Bicentury is heavily trying to launch products that are aligned with consumers’ opinions and trends, as for instance, cakes with several different flavors, flavored biscuits, protein and multigrain bars, different types of meal substitutes, nutritional supplements and wholegrain products, namely croissants, biscuits and magdalenas (Bicentury Official Website, n.d.), which is contributing to its current growth with a company share of 0.4% in packaged food in 2014 (Euromonitor International, 2015l).

• Salutem, from A Centazzi Lda., is a brand which offers a wide selection of healthy food products in different sub-categories, such as breakfast cereals, cookies, supplements, teas, seeds, wholegrain rice and pasta, among others (Salutem Official Website, n.d.).

• Diese was bought by F Lima SA in 2000 and by then it started focusing on and investing in diversity and flavor and so it has established a good position in the healthy food market. It has a very complete assortment including: seeds, nutrition bars, flours, cookies, biscuits, supplements, chocolate, soy products, vinegars and substitute products (Diese Official Website, n.d.). Its company share of packaged food in 2014 was 0,8% (Euromonitor International, 2015l).

2.3

C

In order to identify PV’s collaborators, the set of external assets that complement those of Jerónimo Martins were analyzed. The PV brand has several collaborators with different goals and capabilities which are effectively managed (Dolan, 2014).

PV’s downstream collaborator, which makes the brand products easily accessible to customers, is the PD chain. JM operates within modern grocery retailing in Portugal through

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its PD stores. PD’s supermarkets benefit from a wide presence and flexibility in terms of their location across Portugal (Euromonitor International, 2015j).

JM also has internal collaboratorswhich are the ones within the company that participate in the development process of the PV brand. They are:

• Commercial Management: The responsible of the project is the category manager that has to identify the product to launch regarding its characteristics, positioning and commercial conditions.

• Quality Control Management: Responsible for the technical specifications, for the quality and nutritional balance of the product.

• Private Label Management: Responsible for the packaging and communication development.

(N. Jesus (Jerónimo Martins), personal communication, March 18, 2016)

On the other hand, the upstream collaborators are all the different suppliers and other external collaborators that participate in the development and production of PV’s products. Those are: • Suppliers: PV works with a wide range of suppliers (more than 50) in Portugal and

abroad. However, due to confidentiality issues, they cannot be listed in detail.

• Creative agencies: PV works with two different creative agencies that are chosen depending on the specific project on hand (M. Pritchard (Jerónimo Martins), personal communication, March 30, 2016). Those are:

- PAZ DESIGN: It is a creative agency providing comprehensive services to clients, such as PD, that seek for integrated marketing solutions (PAZ DESIGN Official Website, n.d.). PV uses this agency for complex works that imply a bigger creativity such as lactose-free yogurts and cream spinach packaging.

- DIL BRANDS: PV works with it for simpler work, such as the creation of seed package labels, for instance.

In addition to that, during the development process, external entities are used as “intermediates”, meaning that they look for the ideal supplier for each product according to quality standards and other requirements JM has concerning its products. These companies represent PD and, not only establish relationships with suppliers, but are responsible in solving questions related to contractual, commercial and logistics as well as quality and

13

packaging issues (M. Pritchard (Jerónimo Martins), March 30, 2016). Those intermediates are:

• Foodibérica: It is in the market since February 2005 and basically operates in the commercialization of products and raw materials, for the processing, trading, imports and exports industries (Foodibérica Official Website, n.d.). Regarding PV, it is its main development process partner and makes the link with selected suppliers.

• Daymon: It has a long history and experience in retail solution partnerships globally with more than 100 leading retailers and a supplier network of 6.000 companies. It has produced more than 1.700 brands and 165.000 products, in different 14 trade channels (Daymon Official Website, n.d.). Daymon works only within PV’s soy products.

Other PV collaborators are the ones resulting from alliances, which contribute to other aspects of PV’s brand:

• Poupa Mais card (in English: “Save More” card): It results from a partnership with BP Portugal. The Poupa Mais card is PD’s loyalty card, which has become one of the pillars of loyalty for the company. The campaign applies to any purchase of more than €30 at PD supermarkets, which allows Portuguese consumers to accumulate €2 on their

Poupa Mais card and to then use it on fuel purchases at BP Portugal stations (Euromonitor International, 2015j).

• APC - Associação Portuguesa de Celíacos (in English: Portuguese Celiac Association): The partnership with PD was created to evaluate and certify the gluten-free products of PV. The APC logo, included in the product packaging since 2012, is recognized by celiac people as a guarantee for alimentary safety (Jerónimo Martins, n.d. [h]). Through this relation PD’s product quality was developed and improved, taking advantage of APC’s deep knowledge regarding products that fit celiac peoples’ needs (APC Official Website, n.d.).

2.4

C

Since 2013 Portugal has been recovering from the economic crisis that started in 2008. As a consequence of this crisis, Portuguese consumers cut expenses on health, among others, as in health insurances and visits to the doctor (Euromonitor International, 2015c).

Nevertheless, due to the slight recovery in 2013, the unemployment rate decreased resulting in an improving Portuguese confidence towards the future, which in turn led consumer behavior

14

in such a way that the Portuguese started to return to their previous consumption patterns (Euromonitor International, 2015c). Therefore, health concerns began to rise, such as improving their healthy eating habits and practicing more sports, thereby increasing the demand for the healthy food category (Euromonitor International, 2015i).

Due to the crisis as well as busy lifestyles, self-medication is an ongoing trend among Portuguese consumers, which means following recommendations from pharmacists and personal experience. As a consequence, the main sources of information in Portugal concerning health are personal experience, advice from family and friends, and advice from pharmacists. However, also the internet is a frequently used source of information and plays a significant role in the Portuguese population when it comes to health (Euromonitor International, 2015c).

Analgesics, weight management and sports nutrition are the categories that Portuguese customers search the most for. This can be explained by the fact that consumers, especially older ones, increasingly try to improve their health habits due to the growing problems of an ageing population (more than 20% of the Portuguese population are elderly) and obesity (forecasts predict that by 2020 22% of women and 21% of men will suffer from obesity) (Euromonitor International, 2015i).

Portuguese consumers increasingly seek for this healthy category, in order to have a better lifestyle, due to the awareness of health issues, such as food allergies and food intolerances. (Euromonitor International, 2015c). Since the demand for healthy food products is constantly rising, consumers increasingly demand these products in supermarkets and specialty stores (Euromonitor International, 2015i).

Within the healthy food category, customers can be described as frequent buyers since 55% of them purchase category products every week and constantly look out for products that help them having a good nutrition (Appendix 8). However, currently only 35% of customers buy healthy products due to health restrictions. Furthermore, quality is the main purchase driver, followed by price (Jerónimo Martins, n.d. [g]).

Special consumer behavior can be described in the existing sub-categories of healthy food products:

• Naturally healthy products: Portuguese customers that do follow a healthy diet are more encouraged to buy these healthy products, in order to improve not only eating habits, but also to protect themselves from weakness and the risk of illnesses. Moreover, these products are often bought by people who want to control and lose weight (Euromonitor International, 2015l).

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• Better-for-you products: Portuguese customers establish priorities regarding groceries and are quite price-sensitive. Thus, they tend to only buy BFY products when the price difference from standard products is not too big (Euromonitor International, 2015b). • Fortified/functional products: FF products are perceived as expensive and

non-essential products for Portuguese consumers. Instead, they prefer to buy non-essential healthy food products such as intolerance products (Euromonitor International, 2015h). • Food intolerance products: Portuguese consumers are increasingly aware and

informed about food allergy issues and thus are willing to pay the price for special products for those allergies. However, even some consumers that do not suffer from these conditions choose to buy these products in order to improve their healthy lifestyle (Euromonitor International, 2015f).

• Organic products: Portuguese consumers are not particularly aware of organic products. Consumers that purchase organic products, tend to come from urban areas and tend to be more educated, with incomes above average being concerned about healthy eating habits. In addition, customers try to avoid standard packaged food, because they are aware of the additives, colorings and other artificial ingredients inside these products but also for environmental reasons (Euromonitor International, 2015n).

Among all healthy categories products, the most popular ones for consumers are wholegrain, low-fat, low-calorie and sugar-free products (Jerónimo Martins, n.d. [g]) (Appendix 9).

Regarding supermarkets, PD is one of the most popular supermarkets in Portugal, offering high quality food products, having its own PL called also PD. Consumers associate the PL with good quality and perceive it as a trustable brand (Euromonitor: Jerónimo Martins- Distribuição de cosumo LDS in Packaged Food (Portugal), 2015). PD has its own PL for healthy food products called PV. PV is well evaluated, and customers associate it with health benefits, offering healthier nourishment with quality and affordable prices. Nevertheless, consumers want PV to improve their assortment (Jerónimo Martins, n.d. [g]).

According to a Nielsen study from 2014, this category has a high penetration with 83% of PD households in Portugal being buyers of the healthy food category in general. PV customers are young or medium aged households, from medium or high class, and residents of urban areas. The category is bought mostly by housewives between 36 to 54 years old, which are professional active. On average the buying frequency of the healthy food category is 6,9 times a year, and the average spending per purchase is €2,1. Consumers normally prefer to buy this

16

category in hypermarkets (50%) and in supermarkets (62%). PV represents 34% of the sales of the households regarding the healthy food category (Jerónimo Martins, n.d. [f]).

2.5

C

In order to have a deeper understanding of the environment in which PV is operating, it is necessary to conduct a PESTLE Analysis. The PESTLE Analysis is a tool recommended for identifying internal and external factors that influence PV.

2.5.1

P

Portugal has observed an increase of dissatisfaction and distrust towards the government, mostly as a result of the economic crisis and the austerity plans. The high levels of private and public debt, the weak bank profitability, the difficulty of organizations to credit and the high level of unemployment also brought turbulences to the country (Euromonitor International, 2016b). Furthermore, compared to other European countries, the Portuguese VAT of 23% is considerably high. In some cases, the VAT is lower, as the intermediate VAT of 13% applied to fruits and vegetables, as well as to pre-prepared meals. Still, the lowest VAT of 6% includes food as cereals, milk, rice or others (Autoridade Tributária e Aduaneira, n.d.). Thus, Portugal’s competitive advantage was reduced since it has brought difficulty to companies to support their costs. The profitability also decreased and, consequently, the willingness to invest was affected (PWC, 2014).

2.5.2

E

Portugal’s total GDP of €173 billion in 2014 made it the EU’s 15th largest economy. However, the average annual real GDP contracted by 0,9% from 2009 to 2014 versus the European average growth of 1% within the same period. Yet, in 2015 and 2016, the annual real GDP was expected to accelerate to 1,7% and 1,8% respectively (Euromonitor International, 2015e). After the financial collapse in 2008, Europe started to present high values of debt. Specifically, Portugal was seen as a country with high risk to invest, and due to the cost of loans and incapacity of paying debt, the country was obliged to negotiate a deal in 2011. This deal imposed austerity measures that led to a recession, thus making the Portuguese population struggle with an economic crisis. The Portuguese’s savings decreased from €12.598 million to €11.116 million in 2013, with expectations to continue to fall in the future. Regarding the annual deflation of 0,8% in 2009, it turned into an inflation of 3,7% in

17

2011, because of the higher global food and energy prices, but also owing to the rise in the VAT rate in 2011.

As a result of the previously mentioned factors, Portuguese people started readjusting their expenses, focusing on cutting the non-essential products. During the worst economic downturn, healthy food was among these non-necessary items. Yet, due to the positive future expectations, there has been a re-engagement with this category in 2015 (Euromonitor International, 2015i).

2.5.3

S

Overall, the Portuguese population was about 10,4 million in 2015. Yet, despite its increase in the past years, it is expected to start declining before 2020 (Euromonitor International, 2016b). The main reasons for this expected contraction are the decrease of births and of the numbers of childbearing women. Thus, by 2020 the Portuguese population aged 65+ will account for more than 22% of the total population. The negative net migration also influences and accentuates this downward trend. Additionally, within the Portuguese population, an alarming situation is arising. In fact, the rates of overweight people and obesity are expected to increase in the future. The World Health Organization predicts that in 2020 22% of Portuguese women and 21% of Portuguese men will suffer from obesity. By 2030, obesity rates could even reach 26% and 27%, respectively. The sedentary lifestyle and the inappropriate diets are some of the reasons to the increase of the excess weight and obesity problems in Portugal (Euromonitor International, 2015i). Indeed, when talking about leisure and recreation time, staying at home to watch TV is still the Portugueses’ favorite program. The interest in other activities are not part of the Portuguese culture, thus the participation rates are low. Yet, with higher level of consciousness about obesity as a public health issue, there was a raise in public awareness of the importance of practicing exercise in general. Hence, sports are becoming part of the routine of the population. (Euromonitor International, 2014c).

Regarding lifestyle, eating out was a habit of the Portuguese before the burst of the crisis. Nowadays, the population has reduced the number of visits to restaurants. People take lunch to work and try to save money by preparing their meals at home. There was a shift in their shopping patterns, since ready meals are now seen as an alternative to eat at home or to take to work (Euromonitor International, 2015p).

When considering the place where consumers normally shop, they mostly go to big stores. Nonetheless, when they do not need to buy much, customers tend to search for convenience

18

and go to stores nearby. Within the past years, the major change in consumers’ shopping habits has been the frequency with which people go to the supermarket. Portuguese customers are now discount addicts and most of them define their shopping list according to the special prices. This new way of shopping has also affected the number of supermarkets that consumers visit, as they look out for the best deals. In addition, Portuguese are changing their shopping habits, including where to buy food, going to organic supermarket or receiving at home bio-baskets with agricultural products. The Portuguese population is more and more aware of healthy eating habits. Consumers are replacing meals by healthy snacks during the day. They also go to nutritionists to help them to change their eating habits (Euromonitor International, 2014a).

2.5.4

T

Consumers are increasingly spending their money carefully, yet embracing technology to simplify their busy lives. Technological advances are altering the way that consumers browse and buy all type of products or services. (Euromonitor International, 2016d).

The internet usage in Portugal grew 120% in the last ten years (IPG Mediabrands Portugal, 2014), showing a significant increase in the usage of smartphones and others mobile devices. The media consumption in Portugal is versatile, and internet users are transversal, since they want both, to be informed as well as to be online. Social media is part of the daily life of the Portuguese, in which Facebook is the favorite one (IPG Mediabrands Portugal, 2014). E-commerce in Portugal is characterized by the interest of consumers in online stores and home banking. The reasons for online store usage are primarily lower prices and convenience. The increasing of internet consumption among the Portuguese population has also obliged retailers to boost their investment in online platforms. Nowadays, consumers have access to a higher level of supply that is traduced by a growth in demand (Euromonitor International, 2016g). Specifically, the sales of health and wellness food and beverages through the internet retailing is gaining importance derived from those who prefer to shop online due to their busy lifestyle. This type of service provides a higher level of convenience, given the lack of time of consumers to shop (Euromonitor International, 2015i).

2.5.5

L

A business environment prone to investment and innovation has to possess an efficient judiciary, both with accessible processes and efficient judicial review. In Portugal, the judicial

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system is typically slow to resolve disputes, since it results in a large number of pending cases and a high uncertainty level for business (OCDE, 2013).

Specifically in relation to food, the main responsible organizations for regulating packages food and beverages in Portugal are the Gabinete de Planeamento Políticas, as well as the

Direcção Geral da Saúde. Still, almost every food safety legislation applied in the country comes from the European Commission (Euromonitor International, 2015i).

The European Commission published a regulation, which states the information about food that should be accessible to consumers. The nutritional label became mandatory and obliged the producers to give information about the energy value, but also about six different nutrients such as fat, sugar, protein, salt, carbon hydrates and saturated fat acids (European Food Information Council, 2012). Moreover, the EU Commission rules on nutrition and health are used by food business operators that aim to highlight a particular benefit of the product on the label or on the advertising, such as nutritional claims for products that have low fat, high fiber, among others. The main objective is to ensure that the usage of any claim is clear, accurate and based on scientific evidence, protecting consumers and guaranteeing fair competition. Specifically towards supplement products, these are thoroughly put under precise rules, as to mitigate potential health risks but also to ensure that they are not provided with misleading information. The Directive of the European Union Commission refers that food supplements can be marketed in “dose” form (European Union Commission, n.d.).

2.5.6

E

Environmental issues have to be considered in daily concerns. When a firm operates in Portugal it is obliged to analyse its potential impacts on the environment. Industrial and agricultural activities have to meet requirements relating to control of air, water, chemicals and soil pollution (Instituto de Apoio às Pequenas e Médias Empresas e ao Investimento - IAPMEI, n.d.). Specifically, hazardous chemicals used in the food industry must be labelled and packaged according to the classification of the Portuguese Environment Agency (Agência Portuguesa do Ambiente, n.d.). Also, organic packaged food has been an important component during the past years and it has continued to grow in Portugal. The demand for these products, which are produced without additives, remains a niche of consumers that are highly educated, and that mainly buy organic products for health or environmental reasons (Euromonitor International, 2015n).

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2.6

SWOT

A

After going through the secondary research, it is advisable to establish an overall evaluation of the company’s and the brand’s strengths, weaknesses, opportunities and threats through conducting a SWOT analysis (Appendix 10). In fact, this is a clear and effective way of monitoring the external and internal marketing environments (Kotler & Keller, 2012) that are ultimately surrounding PV.

On the one hand, the first two letters of the acronym are referring to the internal factors. Hence, the strengths and weaknesses are mainly linked to the inner resources of the company. Considering the strengths side, the brand PV has a high notoriety amongst its customer base. People trust PD’s PLs, and thus PD provides a positive endorsement to PV. Aligned with this factor, PV also benefits from the rising preference towards PLs in general, due to the good perception that consumers have of the value-for-money found in such products (Euromonitor International, 2016d). Furthermore, when recognized, PV is associated to quality products at good price, with a high level of satisfaction, presenting a value of 8,4 on scale from 0 to 10 (Jerónimo Martins, n.d. [g]). Besides, the brand explores well perceived collaborations with accredited institutions such as APC that certify the products with its logo on the package. The brand additionally presents high margins, resulting in potential high profitability.

Regarding the weaknesses side, PV is perceived as a brand that offers a very limited assortment. About 31% of the customers consider PV’s product variety worse than other brands. Moreover, PV has low consumption rate amongst PD’s healthy food customers, corresponding to about 6% of its total and thus proving the low brand awareness and even provoking a low product rotation (Jerónimo Martins, n.d. [g]). Besides not being well known, PV is a small brand, possessing a limited budget and only representing 2% of PD’s sales. Due to this low value, the brand is not a priority and has limited space and low visibility. Furthermore, there is a high rotation of employees in store, which reinforces the lack of their knowledge on placing products correctly, and of their ability to help clients. Also in store, the placement mix has a heterogeneous distribution within the three types of PD stores. Apart from that, there are no clear criteria to define the products, and the boundaries between PV’s and PD’s products are not precise. Additionally, the package and the logo are not consistent within the whole offered range. Lastly, a consequence of PV’s limited assortment compared to other brands is that it may not reach such a broad customer base as it could potentially achieve if it had more options. On a further note, it also limits consumers’ satisfaction, as ultimately they are not able to choose from a wide variety.

21

On the other hand, the last two letters of the acronym are referring to the external factors. Therefore, the wider environment was scanned for external or competitive factors that provide opportunities or pose threats to the company or the brand in particular (Wood, 2014).

Considering the opportunities side, the healthy sector is becoming very popular among consumers, and it is considered a trend to endure for the future due to several reasons. Firstly, there have been demographic changes, and the population is getting older (Jerónimo Martins, n.d. [g]). Secondly, people are becoming more aware and informed about food safety and looking for food that is nutritionally more complete. Thirdly, the population has been facing more chronic diseases, such as obesity, diabetes, hypertension, high cholesterol, among others. Beyond these factors, the purchase of this type of products is no longer preferably made in specialty stores, which reinforces the potential of PV, supported by its aim of offering quality and affordable prices. Furthermore, the market of non-category users for healthy food in Portugal still consists of the great majority of people. Together with the rising awareness of the importance of healthy food, this creates a future opportunity of a growing market to target. Regarding the threats side, there is a strong and very attentive competition within the healthy food business, that has been growing at an accelerated pace, as for example Continente’s PL. In addition, despite being more instructed on healthy habits, the population’s education on this topic is still very limited. In this sense, it may be risky for PV to present an innovative range of products, if people will not be interested in buying them mainly due to the absence of knowledge of their functions and benefits. Lastly, as a result of the economic crisis that is present in Portugal, consumers may be averse to spend money on healthy food products, since they are generally more expensive than the standard ones.

After conducting a SWOT analysis, the best strategies can achieve a company’s mission by leveraging its opportunities and strengths, while neutralizing its threats and improving its weaknesses (Griffin, 2008). As a consequence of this, PV should set priorities and take immediate advantage of the growing existing market, but also of the one that is yet to be explored by leveraging on the good consideration that people have about PL brands due to the value-for-money perception. Nevertheless, this should be parallel to the continuous effort of surpassing competition and providing sufficient information to consumers, as well as to mitigate the inconsistencies and lack of organization within PV, and ultimately improve the assortment to engage more potential buyers.

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3.

P

D

In order to find out more about the healthy food market, and more precisely about consumers’ perception and behavior, several kinds of research were conducted in the scope of this project.

3.1

S

-

As to better understand PD’s organization, guided visits were made to three stores in the Lisbon area, each with a different size and disposition. In addition, due to the importance of monitoring the competition, other visits were made not only to other retail stores, but also to specialty stores. In fact, store-checks enable a deeper knowledge of different assortment, prices, shelf space management and other relevant ideas that competitors might implement (Hollensen, 2007).

3.1.1

P

D

S

As already mentioned, PD’s PL for healthy food is PV which is the subject of study. Even though the brand’s assortment contains several products, in stores it could be seen that there is no clear boundary between what products should belong to the PV private brand or to the PD private brand (e.g. there is a sugar-free jam that is labeled PD and that should belong to PV instead). In addition, it was found that the allocation of items is normally made in one specific area of the store, and depending on the space, it is either a shelf or an area. Nevertheless, the dairy and refrigerated products of PV are present in other areas of the store. In relation to the price, the brand has a competitive price when compared to manufacturer brands. Regarding communication, it is mainly made through the weekly leaflet. Still, the flagship store in Telheiras possesses two main screens, in which some pictures of products are showed. On a further notice, stores are not consistent, because in some the products are divided into sub-categories, such as “wholegrain” and “gluten-free”, whereas in others they are mixed between each other without a clear separation.

3.1.2

O

R

S

In respect to the retail store-checks, the main retail players operating in the health and wellness sector were considered, namely Continente, Jumbo, Lidl, Minipreço and SuperCor. Firstly, Continente owns a private brand for healthy food products called Área Viva that can be directly compared to PV. Concerning the assortment, it is slightly wider than PV. These

23

healthy products are divided by sub-categories, as for instance there is a “vegetarian” or the “teas and supplements” area, and consumers can find other brands besides Área viva products. The healthy products are concentrated within one big area, including refrigerated and frozen items. In fact, Continente has small fridges for such products. The prices are in accordance to the ones charged by PV. Regarding price promotions, Continente has several items with a lowered price. This type of information is present both in store, but also in their leaflet. Referring to communication, Continente presents a book in the tea and infusions area, in which it is possible to read information about the products and its specificities. In addition, in the supplement areas, they have a small indication to go to the website in order to check recipes that can be done with Área Viva products. Overall, stores look very consistent among each other.

Secondly, Jumbo owns a private brand for healthy food products called Viver Melhor that can be directly compared to PV. Its assortment is a bit more limited than PV, yet it also has several sub-categories, as for instance gluten-free products. In relation to the prices, Viver Melhor products are slightly cheaper than PV, but there were no price promotions in the stores. Besides, Jumbo also has some healthy food products within its normal brand Auchan. For instance, among them, it is possible to find gluten-free beer. Despite its cheap prices, the offer is very limited and does not follow a specific rule. Typically, these products are concentrated in one area called “Dietética”, and they are divided in sub-areas, such as “Natural” and “Wholefoods”. However, the refrigerated and frozen products are found in other part of the supermarket, together with the same respective categories. Relating to the communication, each sub-area had not only “big tags” with its name, but also images and some “humorous sentences”. Furthermore, stores are not consistent among each other, because some are more sophisticated and developed, whereas others are still to be restructured and present a worse organization and disposition.

Thirdly, Lidl does not possess any specific private brand for healthy food, yet it sells PL brands that concern this area. The assortment for healthy food products is very limited, and there are only a few products that can be compared to PV. Within the stores, there is no specific area or shelf that contains all the healthy products, thus the products are spread throughout the store. For Lidl, there is a wide range of promotions, and the prices are a bit cheaper than in PD. On a further notice, the consistency among stores is clear.

Fourthly, Minipreço does not have any specific private brand for healthy food neither, yet possesses some products of its own brand Dia that are part of the healthy food category, such as rice and corn cakes, oat flakes, seeds, wholegrain rice, wholegrain spaghetti, and soy milk.

24

However, the assortment is a little less when compared to PV, and there is normally one shelf dedicated to the healthy food (although some products may be in other shelves, such as the wholegrain spaghetti that can be found next to the normal one). Also, Minipreço sells manufacturer products that belong to the healthy area. For Minipreço, there are some promotions, and the prices are slightly cheaper than in PD, even when considering the manufacturer brands. On a further notice, Minipreço stores are not consistent among each other.

Lastly, SuperCor neither owns a specific PL for healthy food and the offer is totally made out of manufacturer brands. There is a wide assortment, and some of the sold brands can otherwise only be found in specialty stores, such as Celeiro. The products are divided by sub-categories, for example “gluten-free” and “lactose-free”. The majority of the healthy food products are concentrated in one area. However, the refrigerated products are in another part of the supermarket. Concerning prices, these are more expensive than the other considered retailers, without any observed price promotion. About communication, there are no relevant or particular tools that can be mentioned. On a further notice, the two existing stores in Lisbon are consistent between each other.

In general, none of these retail stores had specialized people to support clients in their decisions. However, both Continente and Jumbo are restructuring their healthy sections and they are using stronger tools of in-store communication to reach consumers.

3.1.3

S

S

In relation to the specialty store-checks, the main players operating in the health and wellness sector are Celeiro, Miosótis and Brio.

Firstly, Celeiro has a PL for healthy food products called Vida Celeiro, providing several products. Nevertheless, those are complemented with several different brands that promote a varied and very complete assortment that meets all types of demand. The areas of the store are normally separated by sections, for example “vegetarian and biological products” and “natural snacks”. Within the store, it is becoming more common to find a healthy food restaurant that serves meals. Also, there is a specific area that provides pre-prepared packaged take-away food. About the prices, they are higher than PV or any other manufacturer brand present in retail stores. In regard to communication, the store has a loyalty card for consumers, which allows them to accumulate points whenever they make a purchase.

Secondly, Miosótis does not possess a private brand for healthy food. The assortment is wide, solely including biological products from several brands that can be described as exclusive,