Lacking a Domestic Source, Hong Kong Must Import Organics
by Carolyn Yuen
Traditionally partial to low-cost, high-volume foods, Hong Kong is gaining more of an appreciation for organic products as it follows a trend somewhat further developed in other affluent Asian markets. Organic products from the United States may have a window of opportunity to gain recognition there if they can acquire distribution during this formative period.
The good news is, this is a market where U.S. organic food producers are assured of little domestic competition; the nation produces no organic products, with the exception of a few vegetables.
More serious competition comes from Australia and Europe. That these nations are active players comes as no surprise to those who know Hong Kong, with its population of 6.8 million and per capita income of $25,000.
Admittedly, organic food is a new market sector, and certainly not a well-documented onethe government of Hong Kong keeps no statistics on organics. In fact, even industry veterans concede that the Hong Kong organic markets size is impossible to estimate.
Market-watchers have noted that organic foods have been selling in Hong Kong since the early 1990s.
Industry watchers predict that, in the years ahead, consumption of organic foods will continue to rise moderately. For one thing, consumers have become more health-conscious. Those who purchase organic foods tend to read labels carefully; nutritional value counts a lot.
Another factor is the trend in Asian retailing toward more specialty shops carrying health foods.
Health Food on the Menu
The term "organic foods" is virtually synonymous with "health foods" in Hong Kong, so it's important to emphasize the overall nutritional value and health food image of organic products. Best prospects in Hong Kong include baby food, rice cakes, grains, fruit juices and breakfast cereals.
U.S. firms will do well to remember that its a different food culture in Hong Kong. For best market results, give consideration to Asian flavor preferences. Dont fail the local taste test, as certain U.S. organic drinks recently did, because they were too sweet. Attend to the importance of attractive packaging as well; the dull and simple package designs that often characterize organic foods are unlikely to play well here.
Entering the Market
There are several channels for U.S. organic products to access the Hong Kong market. Consolidators are popular with supermarkets because they facilitate small orders and can provide valuable input on how to source new products.
Retail operations offering organic foods fall into three categories:
Supermarkets. Park N Shop and Wellcome are the two dominant chains.
Department Stores. Citysuper, Seibu, Jusco, Uny and Sogo are Japanese-style department stores that feature food sections.
Specialty Health Food Shops. Around 50 to 60 health food shops carry organic, health and diet-supplement foods.
Fewer than 20 importers currently deal in organic products, while major importers of conventional foods do not necessarily handle these products.
However, some specialty shops import directly from overseas suppliers and, since in most cases a full container would be too much, act as wholesalers for their fellow shopkeepers.
For consumers, prices can be steepmark-up tends to be higher on organics than on conventional foods. An industry source revealed that the gross profit enjoyed by an importer ranges around 40 percent, while supermarkets may mark items up another 35 percent. Even stiffer mark-ups occur when retail outlets import organic foods directly from suppliers; gross profit may be as much as double or triple the import price.
Import-Friendly Hong Kong
U.S. organic foods are freely imported into Hong Kong as long as they conform to Hong Kong food laws; there are no laws that specifically pertain to organic foods. However, importers and retailers usually require suppliers to provide organic certifications.
Take Time To Attend a Trade Show
Be a part of a major food-industry trade show, held in Hong Kong every two years.
May 8-11, 2001
Hong Kong Convention and Exhibition Center
9/F, Shiu Lam Bldg., 23 Luard Road
Wanchai, Hong Kong
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The author is an agricultural specialist at the U.S. Consulate General, Hong Kong. Tel.: (852) 2841-2242; Fax: (852) 2845-0943; E-mail: ATOHongKong@fas.usda.gov