The market for natural products is growing rapidly in Hong Kong, especially as consumers strive for healthier lifestyles in the face of concerns about pollution, food safety and outbreaks of Avian Influenza and H1N1. The interest in natural products also reflects growing income and education level, factors typically associated with higher demand for natural products. This report will focus on general trends in natural products and on the market niches of supplements and skincare products. Food will not be discussed in this report.
Hong Kong’s health supplement market is estimated at USD1.2 billion. Vitamins and dietary supplements represent the majority of this market. While the market is growing, competition is becoming more intense. Some industry experts believe the single vitamin and traditional dietary supplements markets are saturated. However, there is market demand for new and innovative vitamins and dietary supplements that address the effects of aging, boost the immune system, and deal with niche areas such as eye health. Elderly and female with higher education and income are the major consumers of natural remedies. Recently, Hong Kong has seen increased interest in certified organic dietary supplements.
Hong Kong is one of the largest skincare and cosmetic markets in the Asia-Pacific region, with a sales value estimated in 2008 over USD1.2 billion. Natural skincare products are growing in popularity as consumers increasingly consider how the chemical substances in traditional products might affect their skin’s health in the long term. Organic products that have been certified by various international organic authorities have also recently entered the market. Consumers tend to buy organic products from local personal care chain stores, a growing number of boutique stores and even supermarkets.
Hong Kong consumers are generally willing to spend more money for quality and safety assurance over low-cost yet less-known products. Furthermore, mainland Chinese consumers who visit Hong Kong have significant buying power. In 2008, nearly 16 million mainland citizens visited Hong Kong, representing over 56% of total visitors arrivals. While Hong Kong-based sales potential is significant, having a presence in this market can also serve as a showcase to position your brand in mainland China. American firms should therefore incorporate Hong Kong into their greater China marketing, promotion and branding strategy.
The market for health supplements is increasing steadily in Hong Kong, growing at 5% annually during last three years.
According to a survey by the Census and Statistic Department in Hong Kong, approximately 22% of Hong Kong citizens consumed health supplements in 2005. About 97% of those surveyed took a supplement product to improve body function or prevent disease. Over 53% took vitamins, 21% Chinese herbs/ OTC Chinese drugs, 15.1% calcium and 12.5% cod-liver oil products.
In 2008, another dietary supplement survey was conducted by the Hong Kong Health Food Association and the Social Sciences Research Centre of Hong Kong University. According to that survey, the number of people taking supplements increased to 35%. The most popular health supplement products were again vitamins and mineral products. However, Hong Kong consumers paid higher prices for Chinese dietary supplement products than western health supplement products.
According to the survey, for those who purchased supplements in Hong Kong, the average spending was about USD$38 per month, and many people took more than one supplement. Consumers fell into two primary groups, the elderly, and females who are well-educated with generally higher incomes. The survey estimated that about 2 million Hong Kong adults purchased health supplement products, and that annual consumption value in Hong Kong exceeded USD1.2 billion.
Supplements related to eye health are among the fastest growing segments in the health supplements market, with 8% growth in 2008. A survey conducted by ESDlife in 2008 claimed that over 90% of survey respondents experience eye problems, including blurred vision, eye strain, and other disorders. Industry sources note that as computers, PDAs and T.V. screens continue to play a significant role in people’s lives, supplements related to improving or protecting the eyes have become popular in recent years. Brand names include USANA and Pharmanes, as well as other eye supplement products made from bilberries extracts and Chinese herbs are present in Hong Kong.
Traditionally, vitamins and mineral products have been the most popular supplement products, and the market is well-supplied by local and international brands. The decreasing growth rate of single vitamins and mineral products suggests market saturation. However, the demand for multi-vitamins and multi-function supplements is increasing as consumers seek convenient products that address multiple health interests at once.
Health supplements geared toward heart function, joint support, bone enforcement and anti-aging products are also strong in market. These areas in particular continue to grow as Hong Kong’s population ages. Calcium products, for example, grew by 8% in Hong Kong in 2008. Other popular products areas include slimming, detoxification regimen, immunity boosting products and a wide range of “functional foods.”
Hong Kong is one of the largest cosmetic and skin care markets in the Asia-Pacific region, with sales value estimated in 2008 over USD1.2 billion. Whitening, skincare and anti-aging products are key segments of the market. Growing awareness about product ingredients, harmful chemicals and environmental sustainability have spurred demand for natural skincare products and also organic products. More and more products in Hong Kong promote natural extracts, and essential oils, and also have organic certification. ( L’OCCITANE just introduced a new series of organic olive skincare product with ECO CERT.) These products are targeted to middle-to-highincome consumers who are willing to spend more money for good quality.
For example, Skin Food, a Korean natural skin care brand, entered the Hong Kong market in 2006. The brand has been expanding and now has 18 specialty stores in Hong Kong. Other overseas natural product skincare brands have entered the Hong Kong market including Fushi from the U.K., Dr. Hauschka from Germany and Origins from the U.S. These brands have all established specialty stores in Hong Kong. For smaller market entry investments, many brands choose to cooperate with the largest chain stores in Hong Kong that feature personal care products, such as Watsons, Manning, and Sasa, and even supermarkets such as PARKnSHOP and Wellcome. Recently, Watsons has promoted natural and organic products through in-store displays. Brands such as Avalon Organics, Kath’s Family, and Perfect Potion have been placed on a special shelf for organic products.
Other Product Areas
The interest in natural products has expanded to other product areas, in particular clothing and household cleaning products. Although these are still relatively new areas, Hong Kong has witnessed an increase in the availability of organic clothing and other lifestyle products. Specialty stores featuring a complete line of organic baby products, from toys to food to clothing have also surfaced in the last year. The establishment of a supermarket called ThreeSixty, which focuses on healthful products, including supplements and organics is seen as an early indication of things to come. Hong Kong’s major retailers have also introduced bio-degradable and natural household cleaning products, suggesting a growing interest among consumers. Fast food chains are also starting to incorporate bio-degradable cups and utensils into their offerings.
The Hong Kong market is not limited to Hong Kong residents. Over 29.5 million visitors came to Hong Kong in 2008. Visitors from mainland China accounted for 56.9%, at 16.8 million, representing massive potential buying power in Hong Kong for luxury products, consumer goods and especially food and healthcare related products. Key product areas include skincare, food, pharmaceuticals, vitamins, health supplements, clothing, audio/video product and jewelry. Some residents in neighboring Guangdong province visit Hong Kong often to purchase daily necessities whereas visitors from northern China may visit Hong Kong less frequently, but spend larger amounts, especially on high-value merchandise. Hong Kong is an attractive shopping destination because it has no import duties, no sales tax and maintains a reputation for high quality, safe and legitimate products. Recent incidents involving food contamination and counterfeit products in mainland China have further motivated citizens to shop in neighboring Hong Kong.
By Carrie Chan