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Hong Kong Food and Drink Report 2007
Business Monitor International, Jan 2007, Pages: 72
The Hong Kong Food Drink Report provides independent forecasts and competitive intelligence on Hong Kongs food and drink industry.
Hong Kong’s mature food, drink and retail industries are somewhat unique within the broader Asia Pacific region. In the newly-published Hong Kong Food & Drink Report, the report examines why - when individual product sub-sectors are set to witness moderate, if unexceptional growth - food consumption in value terms in the country is actually set to fall.
In our latest report, we forecast for key consumer industries in Hong Kong exceed many more conservative analyst predictions. We are forecasting that value sales through modern retail outlets will climb by 26.1% to 2010 - a reasonably high growth forecast in what is a very mature market - while volume sales of alcoholic drinks, another important indicator in a fast-moving market where disposable incomes are high, are also on the up. Hong Kong’s on-going economic growth and the impact that this has on consumer confidence in the country explains the trend to some extent. Additionally, both can be explained by the investment that Hong Kong still receives, in spite of its maturity. In the retail industry local players, such as Convenience Retail Asia, continue to invest in their domestic market if only for the purpose of preserving a profit centre to support their activities in higher-growth markets. Likewise, alcoholic drinks majors, such as Philippines-based San Miguel’s local subsidiary, view Hong Kong as a stable and low-risk market in which to invest.
However, just as Hong Kong’s stability and maturity encourages this sort of investment, the author believes that they are the very trends that keep investment moderate and focused on only certain types of business activities, which actually have a slightly detrimental effect on overall consumption levels in value terms. The mass grocery retail industry is a good example of this. Operators are not investing in new store openings. Instead they are investing in diversifying their existing store offerings, primarily through the launch of added-value in-store services, and in competitive price wars. A supermarket chain which launches a range of in-store services, such as dry-cleaning and massage services, in order to gain a competitive advantage, will contribute to boosting general sales through modern retail outlets. However, that same retailer will then invest in hefty price cuts across key product categories, thus reducing the actual value of groceries sold through modern retail outlets. In a country
where modern retail is accessible to almost everybody, these low prices do not attract a whole new breed of consumers, they simply draw customers away from a rival store. Consequently, price wars in a market where everyone already shops at modern retail outlets, simply reduce the value of food consumption without having a negative effect on volume sales.
The author is not, however, claiming that this is an industry-wide trend. Certain product categories are not targeted as part of price wars and these products have their own unique value and volume sales growth curves.
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