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The Economic Lessons Of Portuguese Sardines

In Portugal, crisis or no, value is measured one can at a time.

Sardines at the Loule market in Portugal
Sardines at the Loule market in Portugal
Claire Gatinois

MATOSINHOS — If Antonio Pinhal’s life was to be summed up in one word it would be consistency. In a moving and restless world, this quiet man has managed to keep his father’s sardine cannery as it was. Just about.

Pinhais, the family company that was established in 1920 in the small Portugese fishing town of Matosinhos, has remained in its original condition for almost a century now. The same beige marble tables are used to prepare the fish that the boats from the Algarve region bring in every morning. Only the machines that lubricate the fish and can them have been upgraded. “I don’t like change,” Antonio says.

His son Antonio Junior comes up with all kinds of new ideas, including wrapping the boxes of the sardines with peppers in a flashy yellow package. But his boss isn’t very enthusiastic about it. “He is young, and young people always want to change everything,” he says gazing at his son’s latest idea: business cards in the shape of a sardine can.

His stubborn consistency, his love for tradition, his refusal to sell to supermarkets that “want quantity but not quality” — this is why Antonio Pinhal is successful.

A luxury product

Thanks to a simple sardine can, Antonio Pinhal has made a luxury product he sells in high-end grocery stores in Portugal as well as abroad. Ninety percent of the cans go to France, Austria, Denmark, the U.S., Italy and the Netherlands.

Thanks to the exports, neither the company’s revenue nor the number of employees has changed because of the economic crisis. Plus, this company is one that has helped Portugal’s foreign trade improve progressively.

Portugal is hoping to free itself from the Troika — the European Commission, the International Monetary Fund and the European Central Bank, which gave the country 78 billion euros in May 2011 — by the end of June. In this context, Pinhais stands as an economic model, proving that the country can get through the crisis by ennobling its past and not deprecating it.

In Matosinhos, purchasing power has been greatly affected by the economic crisis. “After the Carnation Revolution in 1974, the wages shot up,” explains Dr. Narciso Castro e Melo, secretary-general of the Portuguese Association of Manufacturers of Canned Fish. “The competition with Morocco killed most of the factories. Only the best remained.”

An adapting industry

But the sardine industry had already adapted and adjusted its strategies. Some companies, like Pinhais, chose the niche market while others opted for the larger-scale market. With some innovation, new products such as rillettes and pâté, and new flavors such as oil, tomato and pepper, the professionals tried to focus on exports and the top-of-the-range market.

[rebelmouse-image 27087946 alt="""" original_size="1024x685" expand=1]

A fisherman in Matosinhos — Photo: Lamúrias por gole

“In 1938, there were 153 factories in Portugal and they produced 43,000 tons of fish,” Castro e Melo says. “In 2013, 20 factories produced 80,000 tons.” According to him, this is “progress towards modernity.”

Other manufacturers also invested in exports to hold on during the crisis. Textile and agribusiness companies were forced to abandon the grim domestic market and look overseas. This explains why the country re-examined its GDP growth perspective from 0.8% to 1.2% this year.

“We still have a long way to go,” notes Joao Loureiro, a macroeconomics professor at Porto University. “We were asleep for years but now we are waking up. The companies that produced for others are reclaiming their products and enforcing the Portuguese added value of their brands.”

But after three years of supervision, the “post-Troika” era seems scarier than desirable. “Since the beginning of the year, we had many positive economic signals,” says Joao Cesar Das Neves, professor of economics at the Catholic University of Portugal. “But the public sector’s budget is not great.”

Is the Troika essential?

Whether supporting right or left wing parties, the majority of the country is angry at Prime Minister Pedro Passos Coelho’s government, which made cuts in public service wages, pensions, bonuses and subsidies, rather than reform the economic model entirely.

“When the Troika leave, our problems won't disappear with them,” says Eurico Dias, the Economic Secretary to the Socialist Party, the main opposition. There’s a high deficit, a debt that equals 130% of the GDP, high rates of unemployment, and a drain of young people emigrating, he notes.

Plenty of people think it would be crazy to let the country escape the Troika without any guarantee. “We still need the EU — the public’s confidence in the financial markets hasn’t recovered yet,” says Das Neves. The public also mistrusts politicians, who are tempted to make promises they won’t be able to keep just so they can win the upcoming election next year.

But none of this scares the Pinhal family. The only concern for them at the moment is bad weather and smaller schools of sardines.

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