Portugal, the westernmost country of Europe, not only has a rich culture to offer, but also an interesting promotional products scene. As one of the most popular European travel destinations, Portugal is everything but a terra incognita – the Statistical Office of the European Union, Eurostat, registered around 34 mil. overnight stays by foreign guests last year. The charming landscapes and quaint, old cities, the rich culture and last, but not least the country’s excellent cuisine are renowned all over Europe.
The Portuguese promotional products scene is less well known – this is mostly due to the fact that the industry is of course rather manageably-sized since the country is comparably small with only around 10.4 mil. inhabitants. As such, there is no bigger, nationally or internationally significant promotional products trade show in Portugal – the suppliers and distributors visit primarily shows such as the Promogift or C!Print in Madrid, the CTCO and C!Print in Lyon or the PSI in Dusseldorf.
Market structures
Portugal doesn’t have its own promotional products association either. However, the Portuguese promotional products companies are organised within Fyvar (Asociacion de Fabricantes y Vendedores de Articulos Publicitarios y Promocionales), which was previously purely Spanish, but has also been accepting Portuguese members since 2004. So, it really is a pan-Iberian association now. At the moment, Fyvar has around 60 Portuguese members. The actual market is, of course, much bigger. Whereby, as is the case everywhere else in Europe, it is difficult to define their precise industry affiliation, because there are of course also a number of printing service providers or agencies, who also earn a certain share of their turnover with promotional products: “There are probably around 1,000 active distributors,” estimated Alexandre Gil, CFO at the import company, Paul Stricker. “On the supplier side, strictly counting only those national suppliers, who operate exclusively on the promotional products market with own stocks, we must be talking about fewer than a dozen players. Obviously there are a large number of suppliers, who also supply other markets.”
Regarding the market structures, in Portugal there is a strict division between suppliers and distributors as is the case in many other European countries. Gil: “A supplier only sells to distributors and they in turn interact with the end customers. It is not acceptable at all for a supplier to operate simultaneously on the reselling and consumer markets.”
Economic crisis and cost-cutting measures
Whether distributors or suppliers – the entire industry was hit hard by the economic crisis from 2009 on, and it is not unrealistic to assume that the market shrunk by more than a third as a consequence. “At a very rough estimate, between the second quarter of 2010 and the first quarter of 2014, the crisis reduced the market by between 30% and 40%,” commented Gil. “We jumped from a point of clear overspending on the promotional products market (compared to the macroeconomics figures) to a point where the big companies even had a zero budget policy for the traditional promotional events. I don’t think the figures of 2009 will be reached again before 2019. Therefore you can say this crisis delayed the growth of our market by a decade!”
But not only the direct consequences of the crisis hit the country badly, the cost-cutting measures that were introduced from 2010 onwards did too: “The numerous cuts and the in some cases drastic tax increases have hit every single citizen hard,” reported Jose Dias, CEO of the textile specialist Picos. “The saving policies are also a big challenge for the entrepreneurs. Company cars are not even tax deductible anymore. There are indeed state support measures – for example for the export business or to create new jobs. However, these take a high financial capacity for granted – which is difficult when most of the capital is already tied up in the company.“
Slow upturn
Nevertheless, recently Portugal has often been cited as an example for successful saving policies, and like in neighbouring Spain, over the past year or two there have been signs that the general economy is starting to recover. “The economy is moving forward and one also notices this within the industry,” reported Ricardo Jorge, CEO of the promotional products agency, Effect. The Portuguese GDP rose by 0.9% up to 230 bil. US Dollars between 2013 and 2014. “The recovery process is stable, but slow,” confirmed Gil. “But the growth of the market will not be more than 5% this year and that will probably also apply for the next two years.” In the light of the economic recovery, the significance of the domestic market, which is still very price-oriented, is also rising. That is why many companies rely more on give-aways and the corresponding fields of application, as Gil explained: “Colourful and cheap products are generally popular. Furthermore, products that can be implemented at the POS are also important. Promoting sales directly in interaction with the final customers is a significant trend nowadays. Telco and food companies for example are responsible for some of the biggest campaigns. Since the tourism is so important I would also rate summer products as a segment with more weight than on average in Europe.”
A host of Portuguese suppliers however don’t exclusively operate on the domestic market, but – in some cases mainly – on the international markets. There is a great proximity between Portugal and Spain: “There are similar framework conditions in Spain and Portugal,” explained Fyvar President Gabriel Moese. “The Spanish and Portuguese markets are closely linked and many people consider them to be more or less a single market.” Traditionally, close trading partnerships – also due to a joint language – exist between Portugal and Brazil, Angola and Mozambique. Quite a few Portuguese suppliers are active in the former colonies, some distributors have subsidiaries there, such as Effect for example: “Whilst the crisis reigned in Portugal, we were able to do good business in Angola,” stated Jorge.
Many suppliers strongly pushed the export business in the course of the crisis, were able to successfully position themselves internationally. Thus, the Portuguese promotional products scene that was hitherto unknown outside of the Iberian Peninsula, slowly began to gain recognition in the rest of Europe. And there definitely are interesting companies and products on the westmost tip of the Continent. The following pages give a brief overview of them, followed by a further short excursion to Spain.
photos: Jni/flickr.com; Shutterstock; Thinkstock
Read more: The Spanish promotional products market
