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Sonae: How a Laminate Factory Became Portugal's Retail Empire
A €10 billion multinational forged through revolution, failed mega-deals, and family capitalism
I. Introduction & Episode Roadmap
Picture this: A factory floor in northern Portugal, 1959. Workers are pressing decorative laminated panels—the kind that would soon line kitchens and offices across a nation slowly modernizing under dictatorship. The company is Sociedade Nacional de Estratificados, a mouthful of a name that employees abbreviate to its initials: SONAE.
Sonae was founded in 1959 by Afonso Pinto de Magalhães, an entrepreneur, banker, and patron from Arouca. The business group originated from an industrial company operating in the area of processed wood—specifically, the production of decorative high-pressure laminated panels.
Fast forward sixty-six years, and that modest industrial enterprise has morphed into something entirely different. Sonae is today a multinational business group headquartered in Maia, Portugal, operating in 90 countries across retail (food, electronics, and fashion), real estate, telecommunications, technology investments, and financial services. It stands as Portugal's largest private employer, with 48,222 employees.
The numbers from 2024 tell a story of momentum. Sonae's consolidated turnover reached an all-time high, growing 18% year-on-year to €9.947 billion, driven by the robust performance of core businesses and strategic portfolio expansions, particularly through the acquisitions of Musti and Druni. The group's investments reached a historic €1.589 billion—more than double the previous year—supporting both strategic acquisitions and organic expansion.
The central question of this deep dive: How did a company making decorative laminate panels become Portugal's retail king, take on the national telecom giant, and now pivot into Nordic pet care?
The answer involves three generations of the same family, a revolution that nearly destroyed the company, a hypermarket that sold out on day one, a €15 billion hostile takeover bid that failed spectacularly, and a strategic reinvention that continues to this day. Along the way, we'll explore the themes that define Sonae's story: family capitalism as competitive advantage, Portugal's EU entry as economic catalyst, vertical integration across seemingly unrelated sectors, and the failed mega-deals that paradoxically shaped its strategy.
II. Origins: The Laminate Factory & The Carnation Revolution
The Portugal of 1959 was a peculiar place. António de Oliveira Salazar's Estado Novo dictatorship had kept the country economically isolated for decades, its industrial base underdeveloped compared to European neighbors. Into this environment, banker Afonso Pinto de Magalhães—founder of Banco Pinto de Magalhães—planted a small industrial seed.
Sonae SGPS was established on August 18, 1959, in Maia, Portugal, initially named Sociedade Nacional de Estratificados. Afonso Pinto de MagalhĂŁes, an entrepreneur, banker, and patron from Arouca, founded the company. The primary problem identified was the need for high-pressure decorative laminated panels, which became the company's first product. For the first two decades, Sonae operated as a small to medium-sized business, mainly focused on wood derivatives.
The real story, however, begins in 1965, when a 26-year-old chemical engineer walked through Sonae's doors.
Belmiro de Azevedo joined Sonae in 1965, aged 26, with a degree in chemical engineering from Porto University. At the time it was a company specializing in the production of 'engineered wood' and laminates.
Azevedo, a carpenter and tailor's son from Marco de Canaveses, earned a degree in chemical engineering from the University of Porto and an MBA from Harvard University. This biographical detail matters enormously. Here was a man of humble origins—not the scion of Portugal's established business families—who would come to reshape the country's commercial landscape. Born in Tuias, a small village in Portugal, Azevedo grew up in a modest household. His parents were farmers, and he developed a strong work ethic from an early age. Despite limited financial resources, Azevedo excelled academically and earned a scholarship to attend the University of Porto.
Then came April 25, 1974—the Carnation Revolution. Young military officers, disillusioned with colonial wars in Africa, overthrew the dictatorship in a largely bloodless coup. Soldiers placed carnations in their rifle barrels. The nation rejoiced. And for Portuguese business, everything changed overnight.
MagalhĂŁes put Azevedo in charge of Sonae during the turbulent years following the 1974 Carnation Revolution that culminated in the seizure of the company by the Government. It was the success in keeping the company running during these years, plus the also successful reclaiming of the company ownership, that led the deceased banker's family to cede the control of Sonae to Azevedo.
During that period, the company was nationalized and then reprivatized.
The revolutionary period was chaotic. The PREC (Processo Revolucionário em Curso—Ongoing Revolutionary Process) saw radical elements push for widespread nationalization. The businessman assumed command in 1974 when the owner, Pinto de Magalhães, was forced to leave the country during the PREC. Workers went on strike against an attempt to nationalize Sonae in 1978.
What Azevedo managed during this period was nothing short of remarkable. Rather than fleeing or capitulating, he navigated the revolutionary turbulence, kept operations running, and ultimately reclaimed the company from government control. This wasn't just good management—it was a crucible that forged the aggressive, opportunistic approach that would characterize Sonae for decades to come.
In 1982, Afonso Pinto de MagalhĂŁes gave 16% of Sonae to Belmiro de Azevedo, who had been admitted to Sonae in 1965. After the death of the founder, Belmiro de Azevedo reached the majority of the capital, with 54.6%, taking control of the company.
The succession was not without drama. It was the success in keeping the company running during these years, plus the also successful reclaiming of company ownership, that led the deceased banker's family to cede control of Sonae to Azevedo—but not before a protracted legal battle between him and the banker's sons, whom Azevedo accused of incompetence.
For investors, the origins story matters because it established three patterns that persist today: family control as a stabilizing force, crisis as opportunity, and the willingness to fight for what the company believes is rightfully its position.
III. The Belmiro Era Begins: Control & The Hypermarket Bet
By the early 1980s, Belmiro de Azevedo controlled a profitable but limited industrial enterprise. Portugal was preparing for a transformative moment: accession to the European Economic Community (later the EU), scheduled for January 1986. Azevedo saw what was coming. Recognizing the potential for diversification, Azevedo spearheaded a transformation that turned Sonae into one of Portugal's largest multinational corporations. Under his leadership, Sonae expanded into various sectors, including retail, telecommunications, and real estate.
The Continente Revolution
The first hypermarket in Portugal opened on December 10, 1985, in Matosinhos, just north of Porto. Opening of the 1st hypermarket in Portugal, the Continente in Matosinhos. This was the moment Sonae Distribuição began its activity, the result of the joint venture between Sonae and Promodès.
1985 saw the opening of Portugal's first Continente hypermarket—the stock sold out on the first day.
Think about what this meant. Portuguese consumers, accustomed to small neighborhood shops and outdoor markets, suddenly had access to a massive format store offering everything from fresh produce to electronics under one roof. The concept—pioneered in France by Promodès and imported through the joint venture—was revolutionary for a country that had spent decades in economic isolation.
The development of Continente emerged from Sonae's strategic diversification in the 1970s, as the company expanded beyond its core wood products. By the early 1980s, Sonae sought entry into the retail sector through a joint venture with the French retailer Promodès in 1983, drawing inspiration from the innovative hypermarket model that Promodès had pioneered in France, which emphasized large-scale, one-stop shopping to transform traditional retail landscapes.
Early operations faced challenges in adapting the hypermarket concept to Portugal's recovering economy, where high inflation, wage controls, and lingering post-revolution uncertainties hindered supply chains and consumer spending patterns, requiring innovative strategies to build trust in large-format shopping amid a traditional market structure.
But Portugal's entry into the European Union changed everything. This move coincided with Portugal's entry into the European Union, which significantly influenced Sonae's creation and subsequent diversification. Suddenly, foreign investment flowed in. Consumer demand exploded. The middle class expanded. And Continente was perfectly positioned to capture this growth.
Going Public & The IPO Spree
In 1985, Sonae Investimentos SGPS, S.A. was created and the group entered the Lisbon Stock Exchange.
The late 1980s saw Sonae launching Initial Public Offerings (IPOs) for seven of its group companies in 1987. The market responded positively, with demand exceeding supply for five of the IPOs. This demonstrated strong investor confidence and supported further expansion.
This was financial engineering at its finest. Rather than keeping the entire conglomerate private, Azevedo structured Sonae as a holding company with multiple publicly traded subsidiaries. This approach provided several advantages: it raised capital without diluting family control at the holding level, created market prices that could be used for acquisitions, and established discipline through public market scrutiny while preserving strategic flexibility at the top.
The structure also enabled what would become a hallmark of Sonae's strategy: using public market access to fund aggressive expansion while the Azevedo family maintained ultimate control through the parent company. Sonae SGPS is primarily controlled by Efanor Investimentos SGPS, S.E., the holding company of the Azevedo family, which holds 53.0069% of the company's share capital as of December 31, 2023.
For investors analyzing Sonae today, the 1980s established the playbook: use public markets for capital while maintaining family control, diversify aggressively during favorable economic transitions, and don't be afraid to import business models from more developed markets.
IV. Building the Retail Empire: Diversification on Steroids (1990s)
The 1990s transformed Sonae from a successful hypermarket operator into a full-spectrum retail conglomerate. If the 1980s were about planting seeds, the 1990s were about explosive growth.
Real Estate Synergy
The 1990s saw Sonae open the first modern shopping centre in Portugal, CascaiShopping. This would become a strategic area for the group, which continued to develop similar projects throughout the country and abroad.
Sonae Imobiliária, rebranded as Sonae Sierra in 2005 following its 1989 origins, extended to Italy and Germany by 2000, focusing on shopping center development and management.
The insight was elegant: if you're going to anchor a shopping center with a Continente hypermarket anyway, why not develop and own the entire center? This vertical integration created multiple revenue streams from the same customer traffic—retail profits from Continente, rental income from other tenants, and capital appreciation on the real estate. Incorporated in Portugal in 1989, Sonae Sierra is owned by Sonae, SGPS (Portugal) with 70% and Grosvenor (United Kingdom) with 30%.
Sonae Sierra is now managing a global portfolio of 20 investment vehicles worth €7 billion in real estate, of which €1.6 billion is outside shopping centres.
Specialized Retail Brands Launch
The hypermarket model worked, but Azevedo saw limitations. Not every product category could be optimally served in a hypermarket format. In retail, Sonae introduced Modalfa for family clothing in 1995 and Zippy for children's apparel in 2004, while venturing into health clubs with Solinca in 1995.
From Continente, to Modelo, Worten, Sportzone, Zippy, Berg, Deeply, Salsa—the list is seemingly endless.
By 1996, Sonae entered consumer electronics and appliances with the launch of Worten, its first store opening in Chaves alongside a Modelo supermarket.
The strategy was to dominate Portuguese retail across multiple categories: food (Continente, Modelo), electronics (Worten), fashion (Modalfa/MO), children's products (Zippy), sports (Sport Zone), and health/beauty (Wells). Each category had its own dedicated brand and format, but all benefited from shared infrastructure, supplier relationships, and real estate synergies.
Industrial Expansion
In 1993, Sonae IndĂşstria expanded its investments by acquiring a controlling position in Spanish company Tafisa, which allowed the company to extend its business segment.
In 1993, a new phase of rapid growth and international expansion started for Sonae IndĂşstria, becoming the company leader in the wood panels business in Iberia and one of the top-five European manufacturers through the acquisition of Tafisa, one of the leading Spanish companies of the sector.
Even as retail consumed most of the strategic bandwidth, Sonae didn't abandon its industrial roots. The Tafisa acquisition positioned Sonae IndĂşstria as a European leader in wood-based panels, providing diversification and a hedge against retail-specific risks. This would later prove prescient when the industrial business was spun off, providing capital for other strategic priorities.
The 1990s established Sonae as Portugal's dominant retailer. By decade's end, the company was no longer just the operator of the country's first hypermarket—it had built an ecosystem of retail formats, real estate assets, and industrial capacity that would be extraordinarily difficult for competitors to replicate.
V. The Telecom Adventure: Optimus & The PT Battle (1998-2007)
If diversification into retail and real estate demonstrated Sonae's opportunism, its entry into telecommunications revealed a grander ambition—and ultimately exposed the limits of what even the most aggressive private company could achieve against entrenched national champions.
Building Optimus from Scratch
In 1998, with Paulo de Azevedo leading the project, Optimus was born.
Optimus was a wholly owned subsidiary of Sonaecom (a sub-holding of Portuguese conglomerate Sonae). Optimus operations started on 15 September 1998, against the two longer-established operators TMN and Telecel, now a subsidiary of the Vodafone Group.
This was Belmiro de Azevedo's son Paulo making his mark. The challenge was daunting: enter a market dominated by two established players with the backing of Portugal Telecom and Vodafone. The solution was quintessentially Sonae—aggressive, innovative, and leveraging every available synergy.
The company found a way to bring in customers with the creation of a statute called Pioneiros (Pioneers), where pre-registered customers could make low-cost calls for life, just 5 escudos per minute to other Optimus customers—a fraction of then-current mobile tariffs. The campaign also benefitted enormously by parent Sonae owning the Continente chain of hypermarkets, thus reaching mass-market at a cost-effective rate.
The very aggressive strategy used by Optimus to enter the Portuguese mobile telecommunications market paid off, attracting 700,000 customers in only one year of operation. Market share was 13%.
This was classic disruption: lower prices, innovative marketing, and distribution leverage through existing retail assets. The Continente hypermarkets became Optimus sales channels, reducing customer acquisition costs far below what competitors faced.
The Failed Portugal Telecom Hostile Takeover—A Key Inflection Point
On 6 February 2006, Sonaecom, a sub-holding of the private communications group Sonae which holds a considerable market share in the country's communications sector, announced a takeover bid for Portugal Telecom (PT), the country's leading telecommunications company. Sonaecom controls other important telecommunications companies in Portugal, such as Optimus (mobile phone operator), Novis (fixed-line operator) and Clix (internet service provider).
The case is set in February 2006, right after Sonaecom's announcement of its takeover bid for Portugal Telecom (PT) of €9.50 per share. The case recounts this fascinating and intense M&A transaction, taking us through one of the largest takeover bids ever in the European Telecom sector, with a deal value above €15 billion.
On the one hand, it represented a 20% premium over the prior stock price. On the other hand, it was a terrible blow to the international aspirations of the PT group. Moreover, the sometimes conflicting views of the general public, the competition regulator, employees and the government had the potential to complicate matters further.
The bid was audacious. PT controlled approximately 90% of Portugal's fixed telephony and cable TV sectors, plus 50% of the mobile market. Acquiring it would have created a telecommunications powerhouse under Sonae's control.
The main shareholders of PT were Spanish Telefonica holding 9.9% of the company's capital, followed by investment funds. The Portuguese state directly and indirectly owned 7% of PT's capital and held 500 'golden shares'. The golden shares gave the government special voting rights, including the possibility to reject certain strategic decisions such as mergers or acquisitions.
PT's management and employee representatives mobilised investors and workers against what they considered to be a hostile takeover offer by Sonaecom. Trade unions and PT's works council asked the government to take action against the takeover while also organising a public protest.
In February 2007, Sonaecom revised their bid to €10.50 per share. In March 2007, more than a year after Sonaecom had announced its original takeover bid, things had progressed: new investors had come along, the authorities had approved the deal. The day before the final shareholders' meeting, everyone was doing their own numbers. According to the company's bylaws, votes cast by a single shareholder whose shares exceeded 10% of the share capital would not be counted. Sonaecom's offer was conditional on the removal of this restriction. The removal of this restriction had to be approved by two-thirds of the shareholders present at the AGM.
The bid failed. The offer was considered unsolicited and therefore hostile by the target's board. The takeover battle dragged on for more than a year and ended in defeat for Sonae, with Belmiro de Azevedo accusing the Portuguese government of interference.
Lessons Learned
The PT defeat was painful but instructive. Even though Sonae did not manage to succeed, the telecommunications market in Portugal changed, with the obligation of PT to separate the wholesale from the retail business, destroying the monopolistic position of the company across the market.
For Sonae, the lesson was clear: there were limits to what private capital could achieve against national champions backed by government golden shares and entrenched interests. But the effort wasn't wasted—the battle positioned Optimus as a credible challenger and laid groundwork for future consolidation.
VI. Leadership Transition: The Carrefour Deal & Generational Shift (2007-2017)
The failed PT bid marked a transition point. Soon after the failure of the takeover battle, Sonae announced a change in its management structure. Belmiro de Azevedo retired as CEO, leaving the job for his son Paulo Azevedo, but remaining as Chairman. The latter was considered to be the mastermind behind the tender offer and had gained credit in the market from its leadership of Sonaecom.
In 2007, Paulo de Azevedo took over the leadership of the Sonae group, succeeding his father, Belmiro de Azevedo.
Strategic Consolidation
In 2007, Sonae Distribuição purchased Carrefour's Portuguese hypermarket operations, strengthening its position in food retail amid leadership transition to Paulo Azevedo as CEO.
The Carrefour acquisition was significant. The French giant had entered Portugal but struggled against entrenched local players. Their exit validated Sonae's strategy: international retailers could enter Portugal, but dislodging the home team—with its real estate lock-up, supplier relationships, and customer loyalty—proved nearly impossible.
Strategic Spin-offs for Focus
This period also saw spin-offs for operational focus, including Sonae IndĂşstria in 2005 and Sonae Capital.
The spin-offs represented a shift in thinking. Rather than running an ever-expanding conglomerate, Paulo Azevedo focused on businesses closest to the consumer. Industrial operations and peripheral holdings were separated, allowing management attention and capital to concentrate where competitive advantages were strongest.
The NOS Merger—Transformative Consolidation (2013)
NOS is a Portuguese telecommunications and media company which provides mobile and fixed telephony, cable television, satellite television and internet. The company resulted from the merger in 2013 of two of the country's major telecommunications companies: Zon Multimédia (formerly known as PT Multimédia, a spun-off media arm of Portugal Telecom) and Sonae's Optimus Telecommunications.
The pivotal consolidation occurred in 2013 when ZON merged with Optimus, the mobile telecommunications arm of Sonaecom, forming ZON Optimus SGPS and establishing a comprehensive provider of fixed and mobile services with combined annual revenues exceeding €1.6 billion. The merger was subject to scrutiny by the Portuguese Competition Authority, which granted conditional approval on August 26, 2013.
One year after the merger, the company changed its name to NOS, meaning "Us" in Portuguese.
The irony was delicious. After failing to acquire Portugal Telecom, Sonae ended up merging with PT's spun-off media arm. The combined entity—NOS—became Portugal's second-largest telecommunications provider. Sonae holds 37.4% of NOS's capital.
Belmiro de Azevedo's Death (2017)
Belmiro de Azevedo has been described by commercial group Sonae, which he led for 50 years, as a "visionary entrepreneur." He died at CUF hospital in Porto, leaving an estimated personal fortune of €1.3 billion. He was 79 years old.
AntĂłnia Saraiva, the head of Portugal's business confederation, told Observador that "if examples like him could be replicated, the country would be on a different path of development and growth."
The founder's death marked the end of an era. Belmiro Mendes de Azevedo (17 February 1938 – 29 November 2017) was a Portuguese entrepreneur, ranked by Forbes as the 605th richest person in the world (2008), and 3rd richest in Portugal, with an estimated wealth of US$2 billion. His legacy was unambiguous: he had transformed a small laminate factory into Portugal's largest private employer.
VII. The Cláudia Azevedo Era: Reinvention & Internationalization (2019-Present)
Third Generation Takes Over
In 2018, Cláudia Azevedo was elected executive president of Sonae by the biggest shareholder company of the group, the Efanor. Belmiro de Azevedo's daughter started functions in May 2019, replacing the group Co-CEOs, Paulo de Azevedo and Ângelo Paupério.
Chief Executive Officer of Sonae since April 2019, Cláudia Azevedo has been working at Sonae Group since 1994, where she has held several positions in companies from different activity sectors. She began her professional path in the Visa Universe project, having been in charge of Optimus' Marketing and Privates Management in 1998. Between 2001 and 2018, she took the lead of Sonae Investment Management, a company dedicated to managing investment in information technology applied to retail and communication.
She holds a Bachelor's in Management from Universidade CatĂłlica Portuguesa, an MBA from INSEAD, and several management courses at Harvard University and Stanford University.
Cláudia represented the third generation to lead Sonae, though the first not named Paulo. Her background in technology investment and marketing—rather than operations—signaled a strategic shift toward growth through acquisitions and internationalization rather than purely organic expansion.
2022 Brand Restructuring
On February 17, 2022, the company's CEO, Cláudia Azevedo, announced a restructuring of the company's image and its respective subsidiaries.
The restructuring simplified and modernized Sonae's brand architecture, making the corporate structure clearer to investors and the market while reinforcing the connection between the parent company and its operating subsidiaries.
The Health, Wellness & Beauty Pivot—Key Strategic Inflection
In 3Q24, MC finalised its agreement with Druni's founders to merge Druni with Arenal, strengthening MC's position as the Iberian leader in health, beauty, and wellness retail and reinforcing its long-term growth strategy in Portugal and Spain.
Druni, founded in 1987 by its current shareholders, the Casp family, has a network of around 400 stores in Spain, mainly in the regions of Valencia, Catalonia and Madrid, and a rapidly expanding online channel with a turnover of around €575 million in 2022. Arenal is also a perfumery, cosmetics and health & beauty retailer with a network of almost 70 stores located mainly in northern Spain.
The expansion of Wells and Arenal, combined with the Druni acquisition, led to the health, beauty, and wellness store network more than doubling during the year, reaching 797 company-operated stores by the end of 2024.
This represented a major strategic bet. The health, beauty, and wellness market offered higher margins than food retail, less susceptibility to discounter competition, and strong growth tailwinds as consumers prioritized self-care. The Druni-Arenal merger created the largest Iberian player in the segment overnight.
The Musti Acquisition—Nordic Expansion
In 1Q24, the Sonae-led consortium secured control of Musti, reaching approximately 81% of its share capital, in a total investment of around €700 million. Musti, the leading pet care retailer in the Nordics, represents a strategic step towards expanding and internationalizing Sonae's retail portfolio.
Musti Group is the leading Nordic pet care specialist operating in Finland, Sweden, Norway and Baltics. Their mission is to make the life of pets and their parents easier, safer and more fun throughout the whole lifespan of the pet.
CEO David Rönnberg stated: "The move into the Baltics represents a natural next step for international expansion, and the first acquisition for Musti as a part of the Sonae Group."
The Musti acquisition was Sonae's largest international move. Pet care offers similar characteristics to health and beauty—emotional purchasing, recurring revenue, and relative insulation from economic cycles. The Nordic markets provide stable demographics and high disposable income. The €700 million investment signaled Sonae's willingness to deploy significant capital for strategic internationalization.
ISRG Exit—Portfolio Discipline
Sonae made significant divestments in 2023, in particular by exiting the sports retail sector following the sale of its stake in ISRG (total cash proceeds of €300m and a capital gain of €168m).
The sports retail exit demonstrated discipline. Rather than defending every historical position, Cláudia Azevedo's Sonae proved willing to exit categories where competitive dynamics had deteriorated, redeploying capital toward higher-return opportunities in health, wellness, and pet care.
VIII. Current Business Portfolio Deep Dive
Sonae MC (Food Retail)—The Cash Cow
MC is the leader in the Portuguese food retail market. It has 1,411 stores, comprising the brands: Arenal, Bagga, Continente, Continente Bom Dia, Continente Modelo, Continente Online, Dr. Wells, Elergone Energias, Go Natural, Meu Super, Note!, Wells and Zu.
MC—the retail unit of Portuguese conglomerate Sonae—achieved revenue growth of 15.3%, to €7.6 billion, in its full financial year for 2024. The EBITDA margin rose from 9.7% to 10% during the year.
MC's food division further strengthened its leadership within the country, gaining 50 basis points in market share and widening the gap with its closest competitor. Grocery sales grew by 7.1%, to €6.5 billion, with a like-for-like increase of 4.4%.
Continente holds a leading market position with approximately 27% share of supermarket sales as of 2023.
MC remains Sonae's core business. Its competitive position relative to Jerónimo Martins' Pingo Doce—one of the largest supermarket operators in Portugal, with 482 stores as of 2023 (just behind Continente which is the largest food retailer in the country)—provides the stable cash flows funding Sonae's expansion into newer categories.
Worten (Electronics)
An omnichannel retail company focusing on appliances and electronics with a total of 276 physical stores. It also has an online presence, complemented by the expansion of its marketplace. It includes the brands Worten, Worten Mobile, and Worten Resolve.
Despite a challenging operating environment in the Iberian market, Worten reinforced its leadership in electronics and home appliances retail in Portugal, consolidating its market share in 2024. Turnover grew by 8.8% YoY to €455 million in 4Q24, with a solid like-for-like growth of 5.6%. In 2024, turnover reached €1.4 billion, an increase of 7.6% YoY.
The online channel recorded significant growth, increasing by 21% YoY in 4Q24 and 17% YoY for the full year, leveraging the Worten marketplace, which accounted for 17% of total turnover in 2024. Worten opened 38 new iServices stores in 2024, ending the year with 61 stores in Portugal and 32 abroad.
Worten demonstrates Sonae's ability to compete in categories facing structural challenges from online pure-plays. The marketplace model and services expansion provide differentiation against Amazon and other digital competitors.
Zeitreel (Fashion)
Zeitreel is the largest Portuguese fashion group, responsible for Sonae's specialized retail area in sports and clothing. Its portfolio includes the brands Salsa (jeans, clothing, and accessories), MO (clothing, footwear, and accessories), Zippy (baby and child clothing, footwear, and accessories), and Losan (specialized in wholesale children's clothing with an international presence).
Fashion remains a smaller but strategically important category, providing additional footfall drivers for shopping centers and category coverage for the retail ecosystem.
Sonae Sierra (Real Estate)
Sonae owns 100% of Sonae Sierra's capital.
Much of the assets under management involve 29 shopping centres in Portugal and others around the world, plus over 100 other assets in geographies as diverse as Europe, South America, North Africa, and Asia. Sonae has €100 million invested in the commercial real estate offices segment also via Alternative Investment Funds. In 2023, Sonae Sierra partnered with GFK to develop a sustainable office project in Porto in a €45 million investment.
Sierra provides stable, long-term returns from prime real estate assets while supporting the retail operations with advantaged locations and integrated development capabilities.
NOS (Telecommunications)
NOS is a telecommunications and entertainment group offering telecommunications services to all market segments: personal, residential, business, and wholesale. It has a prominent position in subscription TV services, next-generation broadband services, telephony, and film distribution in Portugal.
NOS SGPS had around 11.4 million total RGUs as of 2024, with about 6.2 million mobile voice customers, 1.6 million broadband users, and 1.7 million pay-TV customers. The operator's RGU base continued to grow, with mobile subscriptions rising by over three percent year-on-year in 2025.
NOS leads 5G deployment with 4,786 sites, followed by Vodafone's 4,611 and Digi's 2,130.
NOS is Portugal's second-largest telecommunications provider, leading the country's 5G deployment.
NOS represents Sonae's equity-method investment in telecoms. The 37.4% stake provides dividend income and capital appreciation exposure without the operational complexity of running a telecom directly.
IX. Competitive Landscape & Strategic Analysis
Porter's Five Forces Analysis
Threat of New Entrants (Low-Moderate): Sonae's Portuguese retail dominance is protected by scale economies, prime real estate lock-up, and decades of supplier relationships. The Carrefour experience demonstrated that even well-capitalized international entrants struggle to displace entrenched local players. However, discounters like Lidl and Aldi have gained share in food retail, and e-commerce platforms continually test barriers.
Bargaining Power of Suppliers (Moderate): Sonae's scale—€10 billion in consolidated revenue—provides significant leverage over suppliers. Private label penetration (historically high in Portuguese retail) further strengthens negotiating position. However, in categories like electronics, global brands retain pricing power.
Bargaining Power of Buyers (High): Portuguese consumers are notoriously price-sensitive, and competitive intensity in food retail is fierce. In 2024, consumers remained cautious, seeking savings opportunities, which resulted in an intensified competitive environment with all operators competing for volume growth, amidst aggressive store expansions, focusing particularly on proximity concepts.
Threat of Substitutes (Moderate-High): E-commerce threatens electronics and fashion categories. Meal delivery apps challenge food retail convenience positioning. Health and beauty faces competition from pharmacy chains and pure-play specialists.
Competitive Rivalry (High): Pingo Doce is one of the largest supermarket operators in Portugal, with 482 stores as of 2023 (just behind Continente which is the largest food retailer in the country). The JerĂłnimo Martins-Sonae duopoly in food retail creates intense competitive dynamics, with both players constantly investing in store expansion, price positioning, and format innovation.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Sonae's dominant share in Portuguese food retail generates meaningful scale advantages in purchasing, logistics, and marketing. The 27% market share leadership position creates a virtuous cycle of lower costs enabling lower prices enabling higher volumes.
Network Effects: Limited. Unlike digital businesses, Sonae's retail operations don't exhibit strong network effects, though the Universo financial services card creates some loyalty loop effects.
Counter-Positioning: The Druni-Arenal health and beauty strategy represents counter-positioning against traditional grocery operators who struggle to replicate specialized beauty retail expertise.
Switching Costs: Moderate. Loyalty programs (Continente card, Universo) create some switching costs, but Portuguese consumers demonstrate willingness to shop across retailers for promotions.
Branding: Strong. Continente enjoys Portugal's highest brand trust in food retail. Worten leads in electronics brand recognition. Decades of consistent positioning have built durable brand equity.
Cornered Resource: Sonae Sierra's prime shopping center locations represent cornered resources—once developed, these sites cannot be replicated by competitors.
Process Power: Sonae's ability to execute complex acquisitions (Musti, Druni), integrate diverse retail formats, and manage a diversified conglomerate represents accumulated process power developed over decades.
Myth vs. Reality
| Myth | Reality |
|---|---|
| "Sonae is just a Portuguese retailer" | Sonae operates in 90 countries with significant positions in Nordic pet care (Musti), Spanish health & beauty (Druni), and telecommunications (NOS) |
| "Family control means conservative management" | Sonae has executed major transformative deals including the €700M Musti acquisition and €15B PT bid |
| "Diversified conglomerates always trade at discounts" | Sonae's diversification provides counter-cyclical balance and redployment optionality that pure-plays lack |
| "Portuguese market is saturated" | MC continues gaining 50bps of share annually while health & beauty stores doubled in 2024 |
X. What Matters for Investors
Key Performance Indicators to Track
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MC Like-for-Like Sales Growth: The most important indicator of competitive health in Sonae's core business. The 4.4% LfL growth in 2024 in food retail—in a low-inflation environment—demonstrates volume gains that suggest genuine market share capture rather than price-driven growth.
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Health, Beauty & Wellness Store Count and Comparable Sales: With the network doubling to 797 stores in 2024, the next phase requires demonstrating same-store productivity. Tracking LfL performance in this segment will reveal whether the Druni-Arenal merger creates value or merely adds scale.
Bull Case
Sonae is executing a multi-decade transformation from Portuguese retailer to diversified European retail conglomerate. The family control structure enables long-term thinking that public market pressures often preclude. The health, beauty, and wellness pivot positions the company in higher-margin, faster-growing categories. The Musti acquisition opens a new geographic vector in markets with stable demographics and high consumer purchasing power. NOS's leading 5G position creates optionality as telecommunications converges with digital services.
The €10 billion revenue milestone achieved in 2024 demonstrates the strategy is working. "2024 was a fantastic year for Sonae, and I am fully convinced that we have the foundations to achieve even greater success in the future," said CEO Cláudia Azevedo.
Bear Case
Portuguese food retail faces structural challenges: population stagnation, discounter competition from Lidl/Aldi, and margin pressure from promotional intensity. The diversification into health & beauty and pet care, while strategically sensible, requires execution capabilities Sonae is still developing outside its home market. Integration risks from major acquisitions are real—Musti and Druni represent combined investments exceeding €800 million with uncertain synergy realization.
Family control, while enabling long-term thinking, also creates governance risks and succession uncertainties. The conglomerate structure generates complexity that may obscure underperformance in individual segments. NOS faces disruption from low-cost entrant Digi and continued price competition in Portuguese telecoms.
Regulatory and Accounting Considerations
Sonae consolidates Musti and Druni while accounting for NOS via the equity method (37.4% stake). This creates complexity in analyzing group profitability. The significant acquisition activity in 2024 (€1.1 billion in M&A) means goodwill and intangibles require monitoring for impairment risk. Despite high investment levels and dividend payments of €154 million, consolidated net debt stood at €1.6 billion at year-end. Leverage remains manageable but bears watching as acquisition-driven growth continues.
XI. Conclusion: From Laminates to Labradors
The Sonae story is ultimately about adaptive reinvention. A laminate factory became a hypermarket pioneer. A hypermarket operator became a telecom challenger. A failed acquirer became a merger architect. A Portuguese retailer became a Nordic pet care owner.
Sonae became a powerful multinational "managing a diversified portfolio of businesses in retail, financial services, technology, shopping centres and telecommunications," and rapidly became one of the largest employers in the country.
Three generations of the Azevedo family have guided this evolution, each adding their own strategic layer while preserving the aggressive opportunism that Belmiro demonstrated during the revolutionary chaos of the 1970s. The family control structure—Efanor Investimentos SGPS holds 53.0069% of the company's share capital—provides continuity and long-term orientation that enables multi-year strategic pivots impossible for quarterly-earnings-obsessed public companies.
The failed Portugal Telecom bid, rather than being a defeat, clarified strategy. Sonae learned it couldn't acquire national champions through hostile bids, but it could achieve similar outcomes through patient consolidation—as the NOS merger eventually demonstrated.
Today's Sonae, generating nearly €10 billion in annual revenue with operations spanning from Continente hypermarkets in Portugal to Musti pet stores in Finland, looks nothing like the laminate factory of 1959. But the DNA remains consistent: identify underserved consumer needs, deploy capital aggressively, leverage existing assets for synergies, and maintain strategic patience through family control.
For investors, Sonae represents a case study in family capitalism's potential—the ability to pursue decade-spanning transformations while maintaining operational discipline. The question going forward is whether the third generation can replicate the transformative success of the first two, and whether the internationalization strategy can deliver returns justifying the capital deployed.
The early evidence from 2024—record revenues, successful major acquisitions, strengthening market positions—suggests the Azevedo legacy remains in capable hands. Whether Sonae can become a true pan-European retail champion, or remains primarily a Portuguese success story with selective international exposure, will determine whether the company's next 66 years prove as transformative as its first.
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