I also really doubt what you explain is universally applicable as it looks to be a very large corporation anyway.
There are tons of objective reasons to promote local products, we have incredible soil and weather, we have a historical tradition of shepherding and sea faring. But none of that is promoted, its the "its from here" with vague connotations.
It is a large corporation that has had a huge trouble expanding outside the local area of influence. Eroski has been a huge supermarket in the basque country for decades and has never hold more than a minimun influence in spain (despite other supermaket chains like Mercadona appearing much later and now dominating the country). Fagor grew steadily to 5,600 employees and then went bankrupt leaving all but 700 unemployed when a company from elsewhere bought the remains. The university has 4 thousand students and most are basque.
They are massive but they are massive because they have a huge influence on a very rich part of spain
I.e. a supermarket advertising "it's from here" produce is not xenophobic. From my experience, Spain is actually one of the countries in Europe where it is extremely hard to find local produce. Almost everywhere else I can find specific aisle for "it's from here stuff" and again I fail to see why that would be xenophobic. At least I always prefer to buy from there since it's usually more reasonable ecologically-wise.
Everyone knows that "buying local" is about supporting local jobs/industry. There's nothing xenophobic about caring more about your neighbors than some people you'll never meet thousands of miles away.
If it is to be a meaningful term, xenophobia has to be about fear or hatred. It can't mean "favoring local over non-local".
Perhaps it is not xenophobic, but it definitely is populist nationalistic retoric based on in-group/out-group dichotomy.
The fact that nationalists of every country do that is no excuse.
Not always true. https://www.theguardian.com/environment/2008/mar/23/food.eth...