The city-state is also offering trends which Swiss manufacturers are able to accommodate, as demonstrated by a study conducted by Switzerland Global Enterprise (S-GE), which will be published at the S-GE Impulse: Food event on 15 September.
There are currently 7.1 million people living in Hong Kong. They are earning good money, with the GDP per capita being ranked 25th in the world. Added to this Hong Kong welcomes more than 50 million tourists, including more than 40 million from “Mainland” China, every year. The city is considered to be the shop window of the entire region and, as a free port, offers particularly low customs tariffs.
Sales opportunities: eating habits are being westernized and becoming healthier
Hong Kong is therefore located at the center of the region where the middle class is constantly growing and having a more decisive role. Spending on food will increase by 9% per year in the 10 largest “Rising Middle Class” markets. The new social climbers are increasingly acquiring Western eating habits, more and more frequently preferring meat, cheese, milk and wine to traditional dishes.
There are signs everywhere that the brand-new representatives of the middle class are keen to demonstrate their acquired wealth. They are even placing higher demands on their ‘daily bread’. This is also true of food safety and the healthiness of products. The local government is supporting this with various campaigns. Therefore, the market for carbonated beverages in Hong Kong has stagnated in recent years and is even expected to reduce slightly.
Many of Hong Kong's residents eat out and are endeavoring to compensate for the lack of fresh fruit and vegetables by consuming natural, healthy drinks and packaged foods which are often also calorie-reduced. Swiss manufacturers, with their reputation for hygienic, reliable, and natural products, are of course in an excellent position.
The market for babies’ and infants’ food is enjoying particularly strong growth rates. This is expected to increase by about 19% every year up to 2017 to around 29 billion Hong Kong dollars. This massive demand is due less to a high birth rate, but rather the desire for greater food safety among the Chinese who are flocking to Hong Kong to buy large quantities of powdered milk for their offspring. Exporters from Switzerland can capitalize on their reputation for reliability. However, in terms of marketing, manufacturers are advised, for cultural reasons, to present their products as a complement to breast milk.
Alcohol consumption is expected to grow annually by around 6% in the next few years – in particular due to the increase in demand for wine. Hong Kong is becoming a hub for alcoholic beverages for Asia in general and China in particular, especially since Hong Kong is the only country in the world which is able to import wine to China on particularly favorable terms. In addition, the trend for pairing a specific wine with the food is also creating an opportunity for a market entry strategy.
Strategies for entering the market
Larger brands are relying on the effect of Hong Kong’s reputation in the region and are opening flagship stores in the shoppers’ paradises of the city-state. However, even smaller companies can take advantage: in Hong Kong they can take the pulse of Asian consumers and gain initial experience which they can use to more precisely tailor their entire Asian strategy.
The traditional SME Kägi Söhne AG did precisely this and has been operating in Hong Kong with a local representative since 2011. From there, they are cultivating the entire region, which they believe will be very profitable in the medium term – for example due to the Asian culture of giving presents, for which Western products which enjoy a good reputation are very popular. Strategically, Kägi is not relying, like many companies, on adapting its product to the local market, instead only varying the packaging sizes from market to market.
S-GE Impulse Food in Winterthur and Fribourg
Switzerland Global Enterprise’s Food Forum will focus entirely on the export opportunities of Swiss food and drink companies all over the world. On 15 September at the Kongresshaus Liebestrasse in Winterthur and on 16 September at Fribourg Chamber of Commerce, experts will be offering exclusive insights and Swiss companies will be talking about their ventures abroad – from the Chinese wine market to Russian food technology to the Canadian premium segment. You will also receive the complete study on the Hong Kong food market. Register now at: www.s-ge.com/impulsefood.
The 10 most important RMC markets Number of people who will rise up and join the middle class by 2030 (in millions) ** China 564 India 170 Brazil 73 Russia 51 Philippines 40 Mexico 40 Egypt 32 Turkey 32 Indonesia 31 Pakistan 22
Source: PwC analysis, HSBC; according to the HSBC’s definition middle-class households earn incomes ranging from $3,000 to $15,000 (in constant 2000 dollars).