HRI Food Service Sector

An Expert's View about Food , Beverages and Tobacco in Hong Kong SAR

Posted on: 31 Mar 2012

Hong Kong food service sector recorded healthy growth in 2011, with restaurant receipts reaching US$11.5 billion.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 3/16/2012 GAIN Report Number: HK1208 Hong Kong Food Service - Hotel Restaurant Institutional HRI Food Service Sector 2012 Approved By: Erich Kuss Prepared By: Chris Li Report Highlights: Hong Kong food service sector recorded healthy growth in 2011, with restaurant receipts reaching US$11.5 billion, an increase of 6.4% over 2010. Hong Kong imports of high value food products from the U.S. reached US$3.3 billion in 2011, consolidating its position as the leading food supplier to Hong Kong. It is expected that Hong Kong will maintain its position as one of the top 5 markets for U.S. consumer ready food products in 2012 as it continues to be a major buying center and transshipment point for other markets in the region. Economic growth in Hong Kong is forecast to be 2% in 2012. Post expects that U.S. products will continue to fair well due to competitive prices and consumer confidence in the quality and safety of U.S. products. Post: Hong Kong Page 1 of 24 SECTION I. HONG KONG MARKET PROFILE HRI Food Service Sector 1. Restaurants Hong Kong restaurant industry?s purchases of over US$4.2 billion in foods and beverages generated sales of over US$11.5 billion in 2011. This represented an increase of 10.9% and 6.4%respectively over 2010. It is expected that restaurant purchases and receipts will continue to grow in 2012. Table 1 ? Hong Kong Restaurants Receipts and Purchases (US$ Billion) 2010 2011 Growth (11 vs 10) Restaurant Receipts 10.8 11.5 6.4% Restaurant Purchases 3.7 4.2 10.9% (Source: Hong Kong Census & Statistics Department) As Asia?s most cosmopolitan city, Hong Kong boasts around 13,910 restaurants serving a wide range of world cuisines. These restaurants are comprised of 37% Chinese, 55% non-Chinese restaurants, and 8% fast food outlets. In addition, there are over 1,000 bars, pubs and other eating and drinking establishments. Chinese restaurants: Chinese restaurants are popular among local citizens and tourists. There are a variety of Chinese restaurants in Hong Kong serving different regional cuisines: Canton, Shanghai, Beijing, Sichuan?etc. A typical lunch at a nice Chinese restaurant costs around HK$150-300 (US$19.23-38.46) per person and a typical dinner costs around HK$200-450 (US$25.64-57.69) per person. Non-Chinese restaurants: Many Hong Kong consumers enjoy western food, as do the over 41 million tourists (in 2011). 5-Star and other high-end western restaurants are as likely to be patronized by locals as tourists/visitors. Japanese food, fast food chains, coffee houses and casual dining establishments are also increasing their presence. A typical lunch at a western restaurant costs around HK$150-350 (US$19.23-44.87) per person and a typical dinner costs around HK$250-500 (US$32.05-64.10) per person. Fast food outlets: Fast food outlets are popular among Hong Kong consumers. The most popular fast food chains in Hong Kong are McDonald?s, KFC and Pizza Hut. There are also some large local fast food chains such as Café De Coral, Maxim?s and Fairwood that serve both Chinese and western foods. Competition among fast food chains is intense, as they each try to keep meal prices competitive. The average cost is around HK$30 (US$3.85) for breakfast, HK$50 (US$6.41) for lunch, HK$25 (US$3.21) for afternoon tea and HK$70 (US$8.97) for dinner. To further meet competition, many fast food operators have renovated their outlets to make them look more modern, spacious and attractive. To meet the demand of a growing number of health-conscious customers, fast food chains have also introduced more new ingredients and developed healthy-food options such as salads, fruits, and fresh juices. Coffee Shops: The coffee shop market continues to grow in Hong Kong?s commercial areas. The two largest coffee house outlets are Starbucks ? operating 115 outlets and Pacific Coffee 110 outlets. Most shops also offer basic menus consisting of muffins, pastries, cakes, sandwiches, and bottled beverages (juices and water). McDonald?s has also vigorously expanded its McCafe in order to gain share in this growing market. Of its Page 2 of 24 232 outlets, 77 include a McCafe inside their shops. Growing Trend ? Healthy Eating: Hong Kong?s food culture is ?fresh?. Consumer preference for fresh and live products is due to tradition, as well as concern about food safety. Hong Kong consumers are increasingly health conscious. Hong Kong has over 50 small to medium size health food stores. The two leading supermarket chains (Wellcome and ParknShop) and drug store chains (Manning?s and Watson?s) also sell natural/organic products at their outlets. The growth of ?Mix? ? a juice bar that also serves food is a good example of a successful ?healthy? restaurant chain. Organic foods are also gaining popularity as evidenced by the growth of specialized retail outlets for organic foods. There is increasing opportunity for U.S. products and ingredients in this sector. 2. Hotels Table 2 ? Hotels, Hostels and Guesthouses in Hong Kong 2010 2011 Growth Number of hotels/guesthouses 794 826 +4% Number of rooms 66,354 68,404 +3% Room occupancy rate 87% 89% - (Source: Hong Kong Census & Statistics Department) According to latest Hong Kong Tourism Board statistics, tourists spent more than US$1.9 billion on food and beverages in 2010 and it is expected the spending in 2011 was in the region of US$2.5 billion. Many five-star hotels serve U.S. beef, chicken, turkey, pork, eggs, fish and seafood products, fruits and vegetables, processed products and beverages. The Hong Kong Government (HKG) provides a searchable list of licensed Hotels & Guest Houses at: A list of Hong Kong hotels are available at: 3. Institutions Institutions like schools, hospitals, and airlines are served by a small number of large catering groups who are generally affiliated with the restaurant sector. These caterers mainly source their ingredients from China where supplies are cheaper and more abundant. They also use ingredients from other countries such as the U.S. when they cannot find the same products in China, or when they want to use products with better quality and taste. Schools: School regulators prohibit primary and lower secondary students from eating out. Students therefore either pack their lunch boxes or subscribe to a school lunch box program. According to the latest statistics (academic year 2010/2011) of the Education Page 3 of 24 Bureau, there are 572 primary schools and 533 secondary schools. The total number of primary students and lower secondary students amounted to 331,112 and 223,177 respectively. About 70 percent of students buy lunch at schools. A typical lunch box consists of meat, rice and some cooked vegetables. The annual turnover is estimated at US$250 million. Healthy eating programs are underway to encourage a change in eating trends for schools. Caterers have to register with the Hong Kong Food and Environmental Hygiene Department (FEHD) before they are eligible to bid tenders provided by individual schools. ATO Hong Kong can provide U.S. exporters with the list of registered caterers for school lunch boxes. Hospitals: The Hospital Authority operates 41 hospitals and medical centers, with a total of over 27,000 beds and staff size of 59,000. The catering services for hospitals are outsourced on a tender basis. The hospitals are served by catering groups, many of which also operate restaurants, fast food chains or school lunch catering services. Airlines: There are three aircraft catering franchisees at the Hong Kong International Airport, each with a 15-year term: - Cathay Pacific Catering Services - Lufthansa Service Hong Kong Ltd - Gate Gourmet Hong Kong Ltd The three airline caterers have a combined capacity of 135,000 meals per day, providing a whole range of in-flight catering services, from preparation and assembly of in-flight dishes to logistics of food delivery and storage of catering utensils. Economy Hong Kong?s economy continued to grow in 2011 helped by the continued influx of investment, particularly from Mainland China. GDP and per capita GDP grew by 8.6% and 8%, and reached US$242 billion and US$34,106 respectively in 2011. Table 3 ? Hong Kong: Gross Domestic Product and GDP per capita 2010 2011 Growth 11 vs 10 GDP US$223 billion US$242 billion +8.6% GDP per capita US$31,593 US$34,106 +8.0% (Source: Hong Kong Census & Statistics Department) Demographics Hong Kong?s population was around 7.1 million in 2011. 1.79 million, or 48% of the total labor force, are women. The large number of employed women is an important influence on the demand in the restaurant business. Table 4 ? Hong Kong: Labor Force Participation Page 4 of 24 2010 % of Total 2011 % of Total Labor Force-Men 1.94 million 53% 1.96 million 52% Labor Force-Women 1.71 million 47% 1.79 million 48% Total 3.65 million 100% 3.75 million 100% (Source: Hong Kong Census & Statistics Department) Imported Foods vs. Domestic Products Due to limited land resources and having a population of 7.1 million, Hong Kong relies on imports for over 95% of it food supply. According to the latest statistics (for 2010) of the Agricultural Fisheries and Conservation Department, the local agricultural industry produced US$79 million worth of products. It is comprised of US$30 million in crop production (mainly vegetables), US$23 million in livestock production, and US$27 million in poultry production. Local production accounted for 2.5 percent of fresh vegetables, 56.2 percent of live poultry and 6.4 percent of live pigs consumed in the territory. Due to its central location, free port status and position as a regional purchasing and distribution center, a significant amount of Hong Kong imports are re-exported. Table 5 ? Hong Kong Imports (2007-2011) of Consumer Oriented Agricultural Products (COAP) & Seafood Share % of Re- Growth in exports (in US$ of Gross Country Million) 2007 2008 2009 2010 2011 11 v 10 2011 Imports World Gross Imports 9,098 11,544 12,826 15,270 18,306 20% 100% Re-exports 2,435 3,409 3,824 4,427 5,158 17% 100% 28% Retained Imports 6,663 8,135 9,001 10,843 13,148 21% 100% United Gross Imports 1,042 1,615 1,972 2,766 3,354 21% 18% States Re-exports 328 609 752 1,155 1,619 40% 31% 48% Retained Imports 715 1,006 1,220 1,611 1,735 8% 13% China Gross Imports 2,007 2,215 2,446 2,735 3,203 17% 17% Re-exports 309 356 334 392 503 28% 10% 16% Retained Imports 1,698 1,859 2,112 2,344 2,700 15% 21% Brazil Gross Imports 989 1,441 1,575 1,415 1,649 16% 9% Re-exports 491 630 737 658 551 -16% 11% 33% Retained Imports 498 811 838 757 1,098 45% 8% France Gross Imports 251 385 446 688 997 45% 5% Re-exports 88 111 115 162 216 33% 4% 22% Retained Imports 164 274 331 526 782 49% 6% Japan Gross Imports 573 603 709 971 954 -2% 5% Re-exports 36 41 43 51 51 0% 1% 5% Retained Imports 536 562 665 920 903 -2% 7% Australia Gross Imports 529 613 682 659 755 15% 4% Re-exports 58 59 91 83 78 -6% 2% 10% Retained Imports 470 553 591 576 677 18% 5% Netherlands Gross Imports 211 306 323 386 666 72% 4% Re-exports 60 100 95 91 111 22% 2% 17% Retained Imports 151 206 228 295 554 88% 4% Thailand Gross Imports 410 486 590 527 583 11% 3% Page 5 of 24 Re-exports 226 267 350 288 312 8% 6% 54% Retained Imports 184 219 240 239 271 13% 2% Germany Gross Imports 148 302 287 307 435 42% 2% Re-exports 73 180 168 166 146 -12% 3% 34% Retained Imports 76 122 118 141 289 105% 2% Canada Gross Imports 217 342 312 394 403 2% 2% Re-exports 43 133 104 133 97 -27% 2% 24% Retained Imports 173 209 207 261 306 17% 2% Total of Gross Imports 6,378 8,307 9,341 10,849 12,999 20% 71% Top 10 Re-exports 1,712 2,486 2,790 3,179 3,684 16% 71% 28% Retained Suppliers Imports 4,666 5,821 6,551 7,670 9,316 21% 71% Total of Gross Imports 2,721 3,237 3,484 4,421 5,307 20% 29% Rest of Re-exports 723 923 1,034 1,248 1,475 18% 29% 28% Retained World Imports 1,998 2,314 2,450 3,173 3,832 21% 29% (Source: Calculations based on World Trade Atlas data) (Retained Imports = Gross Imports into Hong Kong ? Re-exports out of Hong Kong) Thanks to the fast-growing economy and consumer affluence, total retained imports of consumer-oriented agricultural products (COAP) and Seafood products in Hong Kong grew by 21% in 2011. The U.S. consolidated its position as the largest supplier of COAP and Seafood products to Hong Kong in 2011. Retained imports of these products from China and the U.S. in 2011 reached US$2.7 billion and US$1.7 billion, representing market shares of 21% and 13% respectively. Hong Kong?s status as a gateway for trade with other markets in the region is increasingly opening up greater avenues for U.S. high value food products. In 2011, Hong Kong imported over US$18 billion COAP and Seafood from the world and re-exported 28% of these products. (Source: Hong Kong Census and Statistics Department). Outlook of the HRI Sector in 2012 The outlook for spending on food is slightly less optimistic as the Hong Kong economy is not currently expected to grow at the same pace as in both 2010 (7 percent) and 2011 (8 percent). Growth in food imports is expected in 2012 but at a slightly less robust pace. However, U.S. agricultural products are well known in the market for their good taste and quality. In addition, the peg between U.S. dollar and HK dollar will provide much needed foreign exchange stability which will make buying U.S. products more advantageous. Moreover, Hong Kong will continue to be a major tourist destination where tourists spend significantly on food and beverage. Import Regulations Duties With the exception of spirits, all food and beverage products can be imported to Hong Kong duty free. Page 6 of 24 Certificates & Permits In Hong Kong, the legal framework for food safety control is defined in part V of the Public Health and Municipal Services Ordinance and the Food Safety Ordinance. The basic tenet is that no food intended for sale should be unfit for human consumption. Technical requirements for imports vary significantly according to the product. Products which require import permits/health certificates include meat, milk and frozen confections. The Hong Kong Government (HKG) also plans to implement a health certification requirement for eggs and seafood products. The HKG accepts import applications from Hong Kong importers. In other words, local importers and not U.S. exporters are required to apply for import permits. U.S. exporters need to supply their agents/importers with necessary documentation such as health certificates from the U.S. government. Labeling All prepackaged food products in Hong Kong have to comply with Hong Kong?s labeling regulation. There are also labeling requirements for allergens and nutrients. U.S. labels may not be able to meet with Hong Kong labeling requirements particularly for products with nutritional claims. However, the Hong Kong government allows stick-on food labels, which could be arranged by Hong Kong importers with the permission of the manufacturers. The marking or labeling of prepackaged food can be in either the English or the Chinese language or in both languages. If both languages are used in the marking and labeling of prepackaged food, the name of the food, ingredient lists and nutrition information have to be provided in both languages. Labeling for Biotech Food The HKG does not have any specific biotechnology regulations with regard to the labeling of biotech food products. It makes no distinction between conventional and biotech foods. All are subject to the same food safety regulation. The HKG continues to promote voluntary labeling of GMO products as a viable alternative for the trade. The guidelines on labeling for biotech foods, released in 2006, are advisory in nature and do not have any legal effect. The threshold level applied in the guidelines for labeling purpose is 5 percent, in respect of individual food ingredient. Negative labeling is not recommended. Organic Certification While the Hong Kong Organic Center provides organic certification for local produce, Hong Kong does not have a law regulating organic food products. U.S. organic products can be sold in Hong Kong with the USDA organic logo. Others Under the food ordinances, there are regulations governing the use of sweeteners, preservatives, coloring matters, and metallic contaminants. The Hong Kong government enforces its food safety control according to Hong Kong?s food regulations. In the absence of a particular provision in Hong Kong food regulations, the HKG would draw reference from Codex and/or conduct risk assessments to determine whether a food meets the food safety standard. The Hong Kong government is planning to introduce a regulation governing the residue limit of pesticide in foods in April 2012. Its framework is largely built on Codex?s standard, supplemented by standards adopted in China, Thailand the U.S. Page 7 of 24 For details on Hong Kong?s general import regulations for food products, please refer to GAIN Report #1145. (This report is available at: Table 6 ? Hong Kong: Summary of the Key Strengths and Challenges for the Market Strengths Weaknesses Hong Kong is one of the top markets in the U.S. food products are not always price world for food and beverages, processed, fresh competitive. China is the largest competitor of and frozen gourmet products. U.S. exports of U.S. food products. high value food and beverage (HVFB) products to Hong Kong reached US$2.56 billion, consolidating Hong Kong?s position as the 5th largest market for the U.S. in 2011. Hong Kong is a major trading hub where buyers Lengthy transportation time and availability of make purchasing decisions for hundreds of product due to seasonality (e.g. fresh produce) millions of dollars of consumer oriented products associated to importing U.S. food and beverage that are transshipped to China and other parts products to Hong Kong can make them less of Asia. competitive than products available in the region or from China, Australia New Zealand (favorable in terms of location). U.S. food products enjoy an excellent reputation The importance of Hong Kong as a among Hong Kong consumers, as they are transshipment point and buying center for renowned for high quality and food safety China and elsewhere is not widely known to standards. U.S. exporters. The U.S. is the 2nd largest supplier of Hong Kong labeling and residue standards differ agricultural, fisheries and forestry products to in some cases, which can impede trade. Hong Kong. For HVFB products, the U.S. remained as the largest supplier to Hong Kong in 2011. Technical barriers to imports of U.S. products Numerous HK food regulations are not in line are generally very low. with Codex, which can complicate import clearances. There is a wide variety of U.S. products While Hong Kong has one of the busiest available to Hong Kong consumers (over 30,000 container terminals in the world, it also has the different items). most expensive port handling charges. The link between the Hong Kong Dollar (HKD) to Hong Kong?s top supermarkets are a duopoly the U.S. Dollar help insulate the HKD from that often request slotting fees. currency fluctuations. In general, implementation and application of Inflation is on the rise in Hong Kong. The regulations is transparent and open. increase in food prices may cause some consumers to turn to more lower-price lower- quality food products where U.S. products do not enjoy strong competitive advantage. Hong Kong exporters choose to work with Hong Page 8 of 24 Kong importers and distributers to get their products to Mainland China because of Hong Kong?s dependable legal system, financial system and rule of law. Most trans-shipments to Macau are purchased, consolidated and shipped via Hong Kong. Demand is increasing most rapidly for ?healthy? and gourmet foods, market segments where the U.S. is especially strong. Hong Kong concerns over food safety have made U.S. food products as a top choice for quality and safety. Hong Kong?s modern and efficient port terminal and free port status make it an attractive destination and for re-exports. Hong Kong is a ?quality? and trend driven market so price is not always the most important factor for food and beverage purchases. Hong Kong is a dynamic market with a sophisticated international community where new high quality products are readily accepted. Hong Kong is dependent on imports for meeting its food needs. With continued economic growth, U.S. high value food & beverage (HVFB) exports to Hong Kong grew by 21% in 2011 compared to 2010 and consolidated Hong Kong?s position as our 5th largest market for HVFB products in the world. Biotech products are freely imported and products containing biotech ingredients are generally not controversial. Lack of local production means virtually no protectionist pressures for food and agricultural products. Hong Kong is in an economically vibrant region and its economy is expected to grow by 2% in 2012. Hong Kong?s duopolistic supermarkets have a wide distribution network. Cold chain and distribution channels for food products are generally efficient and dependable, as is the customs clearance process. SECTION II. ROAD MAP FOR MARKET ENTRY Page 9 of 24 Exporting and Selling Since very few hotels, restaurants or institutions import directly from exporters, most suppliers sell to importers for further distribution to the HRI sector in this market. Establishing a Business in Hong Kong If U.S. restaurant chains or caterers want to establish a stronger foothold in Hong Kong, they are allowed to incorporate freely. However, there are two market entry channels that U.S. companies may consider in their attempt to establish a presence in Hong Kong?s HRI sector. 1. Franchising The concept of franchising has been growing in Hong Kong for the past decade. Nearly 80 % of the franchise operations in Hong Kong are of U.S. origin. Home-grown franchises have also developed, especially in catering. 2. Joint Ventures Joint ventures or strategic alliances can be very helpful in entering the market, and are particularly important in competing for major catering projects. In order to attract foreign investment, the HKG set up a special department called ?Invest Hong Kong? to help overseas companies establish a presence in Hong Kong by providing all the support needed to establish and expand their operations ( Entering the Hong Kong market with products suitable for the HRI trade can be handled in a number of ways. Certainly the end customer, the hotel, restaurant, institution or caterer has an influence on the selection of products or ingredients but the choice is all very much guided by a network of reliable and trusted suppliers. 3. Setting up a Representative Office One of the most effective but costly means that U.S. companies can use to sell their products to this market is to set up a representative office in Hong Kong. Information on how to set up a new business in Hong Kong can be found at: l 4. Appointing Agents U.S. exporters may consider hiring a local agent. A key consideration is whether the prospective agent has a good marketing record and widespread distribution network. The advantage of having an agent is that it can help with marketing and distribution. Some companies may secure a very competitive price package with TV, magazine and radio for advertisements. In addition, well-established companies have extensive distribution networks not limited to the HRI sector but also to retail outlets. Importers and distributors tend to focus on specific categories of products and end markets. Research should be carried out to ensure the importer/distributor selected is appropriate for your products. Page 10 of 24 Marketing Strategies Identify key players for the products - ATO Hong Kong can provide lists of importers, distributors, commodity cooperators and regional business groups. Test marketing maybe required prior to establishing a presence in the market. Communicate product benefits to end-users - although distributors maintain the relationships with their customers, end users assert influence over the buying decisions. It is important to directly educate all stakeholders as to the features and benefits of your products. Participate in or visit trade shows ? Hong Kong has an excellent reputation of hosting international trade shows. In cooperation with cooperators and regional groups, the shows will demonstrate the versatility and safety of U.S. food products. Some major shows include: Table 7 - Hong Kong: Trade Shows Featuring Food & Agricultural Products Date Name of Show Website May 29-31, Vinexpo Asia Pacific 2012 Aug 16-20, HKTDC Food Expo 2012 Expo.html Aug 23-25, Natural Products Expo Asia 2012 Sep 5-7, 2012 Asia Fruit Logistica* Sep 11-13, Restaurant and Bar 2012 Sep 11-13, Asian Seafood Exposition 2012 Sep 11-13, Frozen Food Asia 2012 Nov 8-10, 2012 5th Hong Kong Int?l Wine & Spirits Fair Dec 5-7, 2012 Agri-Pro Expo Asia (* USDA-endorsed trade shows, more information on USDA-endorsed trade shows can be found at: Stage menu promotions with major restaurant chains - Menu promotion dollars will be maximized if spent on promotion events held with the major restaurant chains. With the restaurant chains? announced intention to have an image overhaul, this provides for an opportunity to introduce new U.S. foods. Page 11 of 24 Invite restaurant owners/chefs to seminars and/or to the U.S. - ATO Hong Kong/ cooperators organize seminars and trade missions to the U.S. with an intention to introduce U.S. products, meet U.S. exporters, and share with them food service operations in the U.S. MAP Program Small to medium sized U.S. food companies wishing to export their products can get funding assistance from the USDA Market Access Program (MAP). The reimbursement rates for branded promotions are equal to the percentage of U.S. origin content of the promoted agricultural commodity or a rate of 50 percent, whichever is the lesser. If you are a producer or exporter and want to participate in the MAP, please contact a trade association that represents your specific product. If no trade association is applicable, please contact one of the four State regional trade groups: Food Export USA - Northeast (FEUSA), Food Export Association of the Midwest USA (FEA), Southern US Trade Association (SUSTA), and Western US Agricultural Trade Association (WUSATA). For details of the MAP program and a list of trade associations, please contact our office or visit the website: Market Structure U.S. Exporter Importer / Distributor / Wholesaler Wet Markets Hong Kong HRI Trade The market structure for Hong Kong typically involves a dedicated importer/distributor who deals with the U.S. exporter and maintains relationships with local resellers. Some special items are imported directly by large hotels, restaurant chains and institutions but most tend to outsource the import burden. Hong Kong is a mature trading port and as such has developed an effective network of importers, distributors and wholesalers that support the HRI trade. Page 12 of 24 Most major importers/distributors service multiple reseller sectors including HRI/food service, retail and wet markets. ATO Hong Kong has a resourceful database of Hong Kong importers servicing the HRI trade. For information regarding specific category suppliers, the ATO Hong Kong can provide additional information. Given below is a partial list of catering franchises in Hong Kong Name of Franchise No. of Outlets Ajisen-Ramen (catering - Japanese noodles restaurant) 29 Double Star (catering - coffee shop) 2 Genki Sushi (catering - Japanese restaurant/takeaway 43 Grappa's Ristorante (catering - Italian restaurant) 4 (+ 1 wine bar) Hui Lau Shan (catering - herbal tea house and health food) 47 Hung Fook Tong (catering - herbal tea house) 89 Jollibee (catering ? restaurant) 1 Kentucky Fried Chicken (catering - fast food restaurant) 62 Kung Wo Tong (catering - herbal tea house) 10 Kung Wo Beancurd Products (catering - beancurd drinks and products) 14 Magic House Superstore Ltd (catering - ice cream and snacks) 58 McDonald's (catering - fast food restaurant) 232 Mian Cafe (catering - cafe) 8 Mrs. Fields Cookies (catering ? bakery) 14 Pie & Tart Specialists (catering - pie and tart) 15 Pizza Box (catering - pizza delivery) 15 Pizza Hut Restaurants (catering - restaurants) 66 Saint?s Alp (catering ? Taiwanese tea house) 6 Strawberry Forever (catering - western dessert house) 1 TGI Friday's (catering - restaurant) 1 Yoshinoya (catering - Japanese restaurant) 55 Given below is a partial list of restaurants in Hong Kong Company Name Type of Food No. of Outlets Maxims Chinese Restaurants /fast food / Max Concepts / 376 bakery McDonalds Fast Food - Burgers 232 (77 McCafe) Café de Coral Chinese fast food / lunch boxes 151 Fairwood Chinese Fast food 107 KFC Fast Food - Chicken 62 Starbucks Coffee & snacks 115 Page 13 of 24 Pizza Hut Pizza, local menu 66 (32 takeaway) Pacific Coffee Coffee & Snacks 110 Deli France Bakery, Fast Food Sandwiches 34 Steak Expert Steak house 24 Spaghetti House International 24 Epicurean International 15 Café Deco Group International 43 Lan Kwai Fong International 4 Entertainment Oliver?s Super Sandwich Fast Food Sandwiches / Salads 18 Mix California Smoothies & Wraps 5 Pret a Manger Fast Food Sandwiches / Salads 12 Chiram Restaurants Ltd International 5 Eclipse Management International 11 Outback Steakhouse Australian / American style Steak House 7 Red Ant Chinese 7 Elite Concepts International 8 California Pizza Kitchen American style pizza 4 Dan Ryan?s American Style dining 3 Ruby Tuesday?s American Style dining 5 Burger King Fast Food - Burgers 15 Jimmy?s Kitchen International 2 Ruth?s Chris Steakhouse American Style Steak House 2 Bubba Gump American Style dining 1 Harlan?s International 1 Lawry?s The Prime Rib American Steak House 1 Morton?s the Steakhouse American Steak House 1 TGI Fridays American Style dining 1 Tony Roma?s American Style dining 2 SECTION III. COMPETITION Note: Trade Statistics for 2011; Market Share in terms of Gross Import Value Source: World Trade Atlas ? Hong Kong Census & Statistics Department Table 8 ? Major Product Categories of Hong Kong?s Imports of COAP and Seafood Products And Competition Product Category Major Strengths of Key Supply Advantages and Supply Countries Disadvantages of Local Sources Suppliers Red Meats, 1. Brazil ? Products from Brazil and China Local production is largely Page 14 of 24 chilled/frozen 31% are price competitive, but they on freshly slaughtered are of different market segments meats. Imports 2. U.S. ? from U.S. products. US$3 billion 13% 1,170,850 MT U.S. market share dropped from 3. China ? 21% in 2003 to 3% in 2005 as a Retained Imports 10% result of the ban on U.S. bone-in US$2.2 billion beef. Market share of U.S. beef 610,002 MT 4. Germany gradually picked up following ? 10% Hong Kong?s opening to U.S. beef since the beginning of 2006. Hong Kong currently allows U.S. boneless beef derived from animals less than 30 months of age. Bone-in beef and offals from the U.S. are not yet allowed entry into Hong Kong. Hong Kong Government adopts zero tolerance on bone fragments. U.S. beef is highly regarded in Hong Kong. It is always the top choice for high-end restaurants and sophisticated consumers. U.S. beef is largely for the high- end market. Red Meats, 1. China ? Chinese supplies dominate the Local production is Prepared/preserved 25% market because there is a big insignificant. demand for price competitive Imports 2. U.S. ? prepared/preserved meatballs US$919 million 12% and other products typical in 436,259 MT Chinese dishes in Chinese 3. Spain ? restaurants and processing in Retained Imports 11% China is cost effective. US$756 million 307,460 MT Poultry Meat 1. U.S. ? Brazil took over as the leading Local production is on (Fresh, chilled & 38% supplier of poultry for Hong freshly slaughtered frozen) Kong market in 2004, when meats. 2. Brazil ? Hong Kong banned entry of U.S. Imports 32% poultry products (between HRI sector tends to use US$1.99 billion February 11, 2004 and April 30, chilled and frozen chicken 1,293,268 MT 3. China ? 2004) due to outbreaks of Avian products rather than 13% Influenza cases in the U.S. freshly slaughtered Retained Imports Though the ban was then lifted, chickens because the US$1.09 billion Brazil continued to be the latter are far more 490,221 MT largest supplier due to price expensive. competitiveness of its products and established business relationship between Brazilian Page 15 of 24 exporters and Hong Kong importers. The depreciation of U.S. dollar attracted more imports of U.S. products to Hong Kong and market share of the U.S. grew more significantly & resumed the leading position with a market share of 38% in 2011. Dairy Products 1. Netherlands is strong in dairy Local companies supply Netherlands product supplies and it has fresh milk drinks, which Imports ? 37% established position in Hong are processed in Hong US$918 million Kong. Kong with milk originated 200,164 MT 2. Ireland ? from farmlands in the 12% Dairy products from major southern part of China. Retained Imports supplying countries primarily US$805 million 3. New include concentrated dairy and Local companies can 181,215 MT Zealand ? cream. easily fulfill local milk 10% registration requirements. Melamine was found in eggs and dairy products from China and U.S. ? 1% that has led consumers to pay more attention to food safety and seek high quality products from other supplying countries. Eggs 1. China ? Eggs from China are price Local production is 58% competitive. However, since insignificant. Imports 2006, when some Chinese eggs US$156 million 2. U.S. ? were found tainted with Sudan 2.06 billion eggs 21% red (which is a dye for industrial use), Hong Kong consumers Retained Imports 3. Malaysia lost confidence in the safety of US$155 million ? 6% all Chinese eggs. 2.04 billion eggs U.S. dominates the white egg markets. Melamine was found in eggs and dairy products from China and that has led consumers to pay more attention to food safety and seek high quality products from other supplying countries. Fresh Fruit 1. U.S. ? U.S. fresh fruits are highly No local production. 28% regarded as having good quality. Imports US$1.56 billion 2. Thailand Thai Trade commission in Hong 1,500,084 MT ? 18% Kong aggressively sponsors trade promotion activities. Retained Imports 3. Chile ? Thai?s tropical fruits are very Page 16 of 24 US$761 million 18% popular in Hong Kong. 586,274 MT Chile?s biggest fruit item to Hong Kong is grapes. The supplying season is different from the U.S. Fresh Vegetables 1. China ? Products from China are very Local production is about 72% price competitive. Due to 5 % of total demand. Imports expensive operation costs in Production costs, both in US$250 million 2. U.S. ? Hong Kong, some farmers in terms of land and labor, 693,805 MT 9% Hong Kong move their in Hong Kong are high. operations to China and sell The Hong Kong Retained Imports 3. Australia their products back to Hong Government has US$245 million ? 3% Kong. encouraged organic 688,698 MT farming so as to find the High-end restaurants and five- niche market for local star hotels prefer to use high vegetables. quality U.S. products. A lower U.S. dollar value helps U.S. exports to Hong Kong. Processed Fruit & 1. China ? Supplies from China are price Local production is Vegetables 31% competitive. Besides, some insignificant. international brands have Imports 2. U.S. ? operations in China and their US$455 million 26% exports to Hong Kong are 243,521 MT considered as imports from 3. Thailand China. Retained Imports ? 10% US$260 million 156,138 MT Tree Nuts 1. U.S. ? The U.S. is very strong in No local production 72% supplying almonds, walnuts, Imports hazelnuts and pistachios. US$1.29 billion 2. Iran ? 282,690 MT 16% Some of the imports are re- exported to China for Retained Imports 3. S. Africa processing. US$445 million ? 3% 18,605 MT Wine 1. France ? France is the major supplier for Hong Kong has 62% wine. French wine is highly insignificant wine Imports regarded in Hong Kong though production. US$1.2 billion 2. U.K. ? expensive. 45.5 million liters 13% Hong Kong people are becoming Retained Imports 3. Australia more familiar with California US$971 million ? 6% wine. 28.5 million liters 4. U.S. ? The Hong Kong Government 6% abolished the tax on wine in February 2008. The new policy has attracted more wine imports Page 17 of 24 into Hong Kong. SECTION IV. BEST CONSUMER ORIENTED PRODUCT PROSPECTS Notes : 1 95% of Hong Kong food supplies are imported. Since Hong Kong?s domestic production is nominal the market size in the following table is equal to retained imports without taking into account local production. U.S. exports to Hong Kong are also based on imports minus exports. 2 Import tariff rates for all food and beverage products in the tables are zero except for spirits with alcohol content greater than 30%, which is 100%. 3 Products listed below are either enjoying a large market import value or a significant growth rate for the last 5 years (2007-2011). Table 9 ? Hong Kong: Top 10 Prospects Product 2011 2011 2007 ? Key Constraints Over Market Category Retained Retained 2011 Market Development Attractiveness Imports Imports Average For USA (MT) (US$ Annual million) Retained Import Growth Fish & Volume US$3 +12.9% Major suppliers of fish and U.S. fish and seafood Seafood statistics billion (value) seafood products are products are Products not China (20%), Japan perceived as high available (16%), quality and safe. Australia (8%) and the US (6%). Many 5-star hotels in Hong Kong are carrying Alaska seafood products such as king salmon, king crab, snow crab, black cod and halibut. It is anticipated that these seafood products will continue to be popular among HRI sector in Hong Kong. Fresh Fruit 586,274 MT US$761 +2.8% Hong Kong consumers U.S. fresh fruit are million (volume) prefer fresh fruit to frozen well known for their fruit. Competition from large variety, good +9.3% Thailand and China is quality and tastes. (value) keen as these countries supply tropical fresh fruit U.S. was the largest at competitive prices. The supplier (28%) of Page 18 of 24 shorter travel time for fresh fruit to Hong shipments from these Kong, followed by countries to Hong Kong Chile (18%) and also render their products Thailand (18%). ?fresh? to Hong Kong consumers. The top U.S. fruit exports to Hong Kong were citrus products (US$138 million), grapes (US$93 million), apples (US$78 million), cherries (US$59 million), plums & sloes (US$22 million) and strawberries (US$19 million). Poultry 490,221 MT US$1.09 +16% Brazil moved in as the no. U.S. exported Products billion (volume) 1 poultry exporter to US$755 million worth Hong Kong when U.S. of chicken products poultry imports were to Hong Kong, +23.6% temporarily banned during accounting for 38% (value) February 11 to April 30, of the market share. 2004 due to Avian Influenza cases in the U.S. products are United States. Though highly regarded in the ban was later lifted, food quality and food Brazil continued to be the safety. largest supplier due to its More popular U.S. price advantage and its chicken products exporters? relationships include chicken wing with Hong Kong mid joints and importers. chicken legs because of their sizes and The depreciation of U.S. quality. These two dollar attracted more products are imports of U.S. products particularly popularly to Hong Kong and the among Hong Kong U.S. regained its leading style cafes. position with a market share of 38% in 2011. Pork 179,637 MT US$613 +3.9% China and Brazil are the U.S. exported US$49 million (volume) top suppliers of pork to million worth of pork Hong Kong because their to Hong Kong, products are very price accounting for 7% of +19.1% competitive. the market share. (value) There is a big demand for U.S. products are price competitive highly regarded for prepared/preserved quality and food meatballs and other safety. products typical in Page 19 of 24 Chinese dishes in Chinese restaurants, which are made from pork. China enjoys the advantage of low processing cost. Processed 156,138 MT US$260 -2.1% China is the largest U.S. processed fruit Fruit & million (volume) supplier (31%), closely and vegetables are Vegetables followed by the U.S. well known of their +3.8% (26%). superior quality and (value) tastes. U.S. Some international brands processed fruit and have operations in China vegetables such as and their exports to Hong potatoes, nuts, sweet Kong are considered as corn, mushrooms, imports from China. peaches and pineapples will continue to be in large demand in Hong Kong. Beef, 70,541 US$449 +8.6% Because of BSE cases in U.S. exported Frozen MT million (volume) the U.S., Hong Kong US$162 million worth currently allows boneless of frozen beef to +31% beef derived from cattle Hong Kong in 2011, (value) under 30 months of age accounting for 30% from U.S. E.V (Export market share. Verification) approved Although U.S. beef plants. was banned in Hong Kong in 2004 and Bone-in beef and variety 2005, Hong Kong beef from the U.S. are not consumers still have yet allowed in. high regards for U.S. beef in terms of Short U.S. beef supplies quality and safety. make U.S. beef very expensive. Brazil beef took the opportunity to gain market share. Brazil beef imports grew from US$49 million in 2004 to US$177 million in 2011. Wine 28.5 US$971 +14% Competition is keen in U.S. exported US$70 million liters million (volume) Hong Kong. Major million of wine to competitors come from Hong Kong in 2011, +70% France and Australia. accounting for 6% of (value) French wine is the market share. traditionally more popular in Hong Kong. The HKG abolished the import tax on wine and beer in Page 20 of 24 February 2008. The HRI sector in Macau is growing, making it an excellent opportunity for U.S. wine traders to expand their exports. Hong Kong consumers are more and more receptive to wine. The total elimination of the excise tax on wine would probably help nurture wine drinking culture in Hong Kong. Tree Nuts 18,605 US$445 -22% The U.S. is very strong in No local production MT million (volume) supplying almonds, hazelnuts and pistachios. +21.5% (value) Some of the imports are re-exported to Vietnam and China for processing. Fruit & 17,206 US$29 -2.4% The U.S. is still the Given the high Vegetable MT million (volume) market leader, exported quality of U.S. fruit & Juices US$13 million worth of vegetable juices, U.S. +2% fresh fruit juices to Hong fruit and vegetable (value) Kong, accounting for a juices such as orange market share of 43%. juices, apple juices, grape juices, grapefruit juices, tomato juices and pineapple juices are expected to continue to be very popular in 2012. Organic Statistics Statistics Statistics Organic F&B products are As Hong Kong Food and not not not generally 20-40% higher consumers are Beverage available available available in prices compared to becoming more non-organic products. health-conscious, the (The size of demand for organic the Hong There are many organic products will continue Kong standards in the market to grow in 2012. organic food and the poor quality of a and country?s organic products USDA Organic enjoys beverage may negatively affect the an excellent market is image of organic products reputation among estimated at from all supplying consumers in Hong US$500 countries. Kong. Consumers Page 21 of 24 million, with generally have more an annual confidence on USDA growth of Organic standards 10-15%) than other countries?. Grain products, soybeans, cereals, oats, noodles?etc are in good demand. Other products such as organic meat (beef and pork), condiments, poultry, eggs etc are starting to have more interest in the market. There is also a strong demand for organic vegetables and fruits, organic coffee and tea products. SECTION V. KEY CONTACTS AND FURTHER INFORMATION Post Contact Foreign Agricultural Service (FAS) Home Page: Agricultural Trade Office American Consulate General 18th Floor, St. John?s Building 33 Garden Road, Hong Kong Tel: (852) 2841-2350 Fax: (852) 2845-0943 E-Mail: Web site: Department to Implement Food Safety Control Policy Food & Environmental Hygiene Department 43/F., Queensway Govt Offices 66 Queensway, Hong Kong Tel: (852) 2868-0000 Fax: (852) 2834-8467 Web site: Department to Control the Importation of Plants & Live Animals Page 22 of 24 Agriculture, Fisheries & Conservation Department 5-8/F., Cheung Sha Wan Govt Offices 303, Cheung Sha Wan Rd Kowloon, Hong Kong Tel: (852) 2708-8885 Fax: (852) 2311-3731 Web site: Department to Issue License for Imported Reserved Commodities Trade & Industry Department 18/F., Trade Department Tower 700 Nathan Road Kowloon, Hong Kong Tel: (852) 2392-2922 Fax: (852) 2789-2491 Web site: Department to Register Health Foods Containing Medicine Ingredients Department of Health Pharmaceuticals Registration Import & Export Control Section 18th Floor, Wu Chung House 213 Queen?s Road East, Wanchai, Hong Kong Tel: (852) 2961-8754 Fax: (852) 2834-5117 Web site: Department to Issue License for Imported Dutiable Commodities Hong Kong Customs & Excise Department Office of Dutiable Commodities Administration 6-9th floors, Harbor Building 38 Pier Road, Central, Hong Kong Tel: (852) 2815-7711 Fax: (852) 2581-0218 Web site: Department for Trade Mark Registration Intellectual Property Department Trade Marks Registry 24th and 25th Floors, Wu Chung House 213 Queen?s Road East Wan Chai, Hong Kong Tel: (852) 2803-5860 Fax: (852) 2838-6082 Web site: Page 23 of 24 Semi-Government Organization Providing Travel Information Hong Kong Tourist Board 9th - 11th floors, Citicorp Center, 18 Whitfield Road, North Point, Hong Kong Tel: (852) 2807-6543 Fax: (852) 2806-0303 Home Page: Semi-Government Organization Providing Hong Kong Trade Information Hong Kong Trade Development Council 38th Floor, Office Tower, Convention Plaza 1 Harbor Road, Wan Chai, Hong Kong Tel: (852) 2584-4188 Fax: (852) 2824-0249 Home Page: Page 24 of 24
Posted: 31 March 2012

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