Food and beverage market in Hong Kong

As the trading hub for mainland China and other countries in Asia, Hong Kong is experiencing continual growth in its food and beverage market, although market saturation is causing food companies to look to neighbouring China for opportunities. The steady increase in New Zealand's food and beverage exports into Hong Kong offers opportunities for New Zealand companies to leverage the country's 'clean green' image and take advantage of our reputation as a safe food supplier.  

Market structure

  • Hong Kong imports over 95 percent of food supplies due to limited domestic production. However, the country does produce around US$79 million worth of fresh produce items (i.e. vegetables and fresh meat / poultry products) [i]. 
  • Hong Kong's population of 7.2 million people receives annual inflows of 30,000 to 35,000 migrants, mostly from mainland China [ii]
  • Total grocery retail sales are expected to reach close to US$10 billion in 2013, while consumer foodservice establishments are expected to reach over US$11.5 billion in sales in the same year. There are 13,910 restaurants and over 1,000 bars, pubs and other eating and drinking establishments in Hong Kong [iii]
  • The two main supermarket chains are Wellcome (more than 270 stores) and ParknShop (more than 260 stores), with both accounting for one third of brand value shares. Their combined supermarket turnover account for nearly 80 percent of all supermarket turnover in Hong Kong. The total number of retail establishments in Hong Kong is approximately 14,000, of which 97 percent hire fewer than 10 employees [ii].
  • Much of the daily shopping for fresh food is still done in traditional (wet) markets. However, supermarkets have successfully tapped into the fresh food market by offering competitive prices and a comfortable shopping environment. While both wet market and supermarket sales are increasing, supermarkets are taking a greater share of total sales. Wang On Group is the largest operator of wet markets in Hong Kong. 
  • A small number of large catering groups affiliated with the restaurant sector serve schools, hospitals, airlines and other institutions. There are currently around 550,000 primary students and lower secondary students in Hong Kong. Around 70 percent of these students buy lunch at school, with turnover in this segment estimated at US$250 million. The Hong Kong Hospital Authority operates 41 hospitals and medical centres, with a total of over 27,000 beds and 59,000 staff. The catering services for hospitals are outsourced on a tender basis. The three aircraft catering franchisees at the Hong Kong International Airport (Cathay Pacific Catering Services, Lufthansa Service Hong Kong Ltd, and Gate Gourmet Hong Kong Ltd) have a combined capacity of 135,000 meals per day [ii].

Growth drivers

  • Consumer foodservice is being bolstered by Hong Kong's reputation as a culinary capital. However, the sector has been impacted by the introduction of a minimum wage law, which has driven cost cutting exercises. Further, due to increasing saturation of Hong Kong's consumer foodservice market, many companies are looking to expand into mainland China. 
  • In the short term, a reversal in Hong Kong's booming property market is expected to weigh on consumer purchasing power and reduce spending on higher value consumer goods. Most food and beverage segments are highly mature. However, consumers remain interested in novelty and convenience, which provides opportunities for New Zealand's food and beverage exporters. 
  • Rising health awareness, concerns over food safety, and the preference for 'fresh' will continue to drive the growth in the food and beverage market.

Import trends

  • China and the United States are the top two largest food and beverage exporters into Hong Kong, accounting for over one third of Hong Kong's food and beverage imports. Brazil is the third largest exporter into the Hong Kong market and accounts for eight percent of total food and beverage exports. Meat offal was the highest earning export category for all three countries with combined exports from Brazil and the United States comprising more than half of exports in this category [iv].
  • New Zealand food and beverage exports to Hong Kong totalled just over US$471 million in 2012, representing an increase of close to 18 percent from total value exports in the previous year. Hong Kong is the 10th largest export destination for New Zealand food and beverage products. Dairy products accounted for over 32 percent of New Zealand's total food and beverage exports into Hong Kong [iv].

Market entry and development

Market entry strategies

  • Effective branding of new products in the Hong Kong market is vital. The standard way to market products is by investing in advertising, and promoting products at trade shows that offer free tastings. Common advertising media used by food retail companies are television, radio, magazines, newspapers and signboards. 
  • It is important to develop strong business relationships with counterparts in the Hong Kong market such as a trusted agent, export packer, buyer or business partner. Mutual trust is core to developing lasting business relationships in the Hong Kong market, and opens up customer networks. 
  • New Zealand companies wanting position products in high-end outlets can leverage our 'clean and green' image and reputation for being a safe food supplier. New Zealand companies in the organic sector can also take advantage of the organic trend in Hong Kong, which is gaining popularity in high-end outlet stores that target a more affluent consumers and expatriate groups. The use of New Zealand ingredients also serves as a unique point of differentiation.

Regulatory information

Hong Kong is a free port with no customs tariffs on exports and imports. There are also no import quotas. For more information, refer to the Government of Hong Kong Customs and Excise Department.

The basic requirement is that no food intended for sale should be unfit for human consumption. Refer to Section 54 of Part V of the Public Health and Municipal Services Ordinance, Chapter 132.

The Food and Environmental Hygiene Department of the Government of the Hong Kong Special Administrative Region is responsible for implementing territory-wide policies of food safety control. It also enforces food legislation, will take food samples for bacteriological and chemical analyses at points of entry into the territory.

There are specific legal and administrative requirements for selected food items that are highly perishable or of a high-risk nature. For more information, visit the Centre for Food Safety (CFS) website.

A user guideline has been provided by the Government of Hong Kong for export companies.

Hong Kong's preservatives regulation positive list.

Food and beverage products must comply with local composition and labelling regulations as stated in the following websites:

Market resources and contacts

Government

Industry

Trade events

Sources

[i] USDA Foreign Agricultural Service GAIN Report (16 March 2012). Hong Kong Food Service - Hotel, Restaurant and Institutional (HRI Food Service Sector)
[ii] Euromonitor (23 November 2012) Hong Kong: Country Profile
[iii] Euromonitor (2012). Grocery Retailer Market Size Statistcis.
[iv] Global Trade Atlas (2013). New Zealand food and beverage export statistics

 

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