In 2010, Sovena Group has changed dramatically compared to 2002, from being a diversified food manufacturer with leading brands in the Portuguese market, but with virtually no international presence and little growth opportunities, to become the second biggest producer and bottler of olive oil in the world, obtaining more than 70% of its revenues outside of Portugal. They are also the biggest olive oil bottler for retail private labels in the world. They have a global presence, with factories in Portugal (where they are a leader with recognized consumer brands), Spain (where they are an inter-supplier of leading retailer Mercadona), USA and Tunisia. The private labels business has allowed Sovena to grow rapidly and obtain economies of scale and global efficiencies both in sourcing and production. Furthermore, the agricultural initiative to cultivate their own olive groves opened the way to secure around 10-15% of their olive oil sourcing needs.
By focusing on olive oil, Sovena has found new avenues for growth in international markets with attractive margins. But many challenges and decisions still lie ahead: Is Sovena well positioned to take advantage of the World opportunity? Is its high concentration in private label and bulk sales an advantage, or a disadvantage that limits the potential to access higher margins and profits? Should Sovena concentrate on growing the private label business or should it focus on developing strong consumer brands? Which world markets are to be prioritised? Which strategies are adequate for each market? How far should it go in the vertical integration effort to cultivate their own olive groves? What are the strengths that Sovena should leverage and which capabilities should be acquired or developed?
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