Food and beverage to Hong Kong

(Last updated: 19 Jun 2009)

Trends and opportunities

The market

With a population of almost seven million and a significant tourism industry (a total of 29.5 million visitors in 2008), Hong Kong is a substantial market for all kinds of food products.

Hong Kong can be characterised as a food import-dependant market, there is minimal domestic agricultural production and a small food processing industry. Hong Kong is also a trading hub for re-exports into mainland China, Macau and other neighbouring markets in Asia. 

While there is increasing demand for various kinds of convenient food items, consumers are becoming more health conscious about what they eat (eg. healthy diet, concerns over GMO, interest in organic food). As a result, we are seeing an increasing trend towards healthy, functional and organic foods which is reflected in the introduction of more of these products in the retail channels.

The food retailing and catering market has been changing in recent years as a result of the changing lifestyle of the local population. Supermarkets, fast food stores and theme restaurants continue to grow and have become an integral part of shopping and dining out habits.

Major supermarket chains are being transformed into one-stop-shop ‘superstore’ outlets enabling business growth through new set-ups of wet market corners, in-store bakery, take-away food services, specialty selections and linked shopping facilities such as personal care stores, wine cellars, banking facilities, books and photo processing.

There has been a trend of retail expansion in the upper-end sector. Oliver’s Delicatessen, Great Food Hall and Citysuper are the three key players in the market who effectively cater to the needs of the upper-end market segments in Hong Kong. In addition, a new store Three Sixty was launched in late 2006, to cater to health conscious consumers as a one stop-shop for organic, natural and wholesome foods.

Opportunities

Meat

In the absence of meat safety problems such as 'foot and mouth' or 'mad cow' disease, Australian is perceived as one of the top supplying countries for beef, lamb, pork and poultry. Significantly increased demand for various meats and meat products from Australia has been witnessed in the last five years.

Dairy

Australia and New Zealand are regarded as the two key supplying countries for all types of dairy products in the Hong Kong market. Australia is the leading market share position in fresh/UHT milk, cheese, yoghurt and butter categories.

Fruit and vegetables

Per capita consumption of fresh fruit and vegetables in Hong Kong is thought to be among the highest in the world. However, the openness of the Hong Kong economy contributes to the competitive nature of the fresh produce trade.

Fruit demand is high for oranges, apples and grapes. Pears, mandarins, bananas, mangoes, papaya, melons and plums are other major imported lines.

Vegetables imported from Australia into Hong Kong mainly include: potatoes, onions, tomato, lettuce, celery, broccoli, carrots, Chinese cabbage, cucumbers, leafy and root vegetables. In recent years, pre-packed salad mix is also high in demand.

Based on current market developments, consolidated Australian fruit and vegetable export efforts will lead to greater competitiveness for Australian exporters in the international market places in terms of bargaining power, pricing, quantity and quality consistency, credit management, marketing funding and brand building.

Seafood

Hong Kong has a very high per capita consumption of seafood. Substantial demand exists for all kinds of seafood, ranging from the low price fin fish (eg. croaker and carp) to the more expensive gourmet delicacies (eg. abalone, lobster and shark fins).

The Hong Kong Chinese population has a strong preference for fresh seafood, resulting in an unusually high demand for live and chilled products. It is estimated that 45 per cent of local requirements for fish and fish products are purchased in live or chilled form. However, as the cost of live seafood increases, industry sources believe consumers will purchase increasing amount of frozen seafood.

Australia is a major source of supply for most gourmet shellfish sold in Hong Kong.  The main items imported from Australia include: live, frozen, and canned abalone, frozen scallops, live lobsters, frozen prawns, coral trout, oysters, king crab, selected fin fish, etc for Western catering.

Wine

Despite a small winery recently set up in Hong Kong (the very small wine production is based on imported frozen grape juice), Hong Kong is a typical import-dependent market for all wines. The expatriate population, which makes up approximately two per cent of Hong Kong's population of seven million, has traditionally been the main consumer segment for wines apart from the consumption by the many visitors to Hong Kong each year.

Brand is becoming increasingly important in the Hong Kong wine industry, which is undergoing a self-restructuring process. Rather than engaging numerous wine suppliers, major importers are now focusing on brand building. On the other hand, the wine industry is becoming increasingly consolidated. Non-performing brands are being deleted from importers’ wine portfolio,, and many importers are generally hesitant to draw too many additional new-to-market wines at any one time.

Australia has been the second largest supplier of table wines to Hong Kong over the past decade. Most of the local import agents are carrying a wide range of wines from different countries.

Australian wines have been making healthy inroads into this industry with wine quality gaining increasing recognition amongst the trade and consumers. The growth of market share for Australian wines has been very much at the expense of French wines in recent years.

The quality and reputation of Australian wines are now well established in Hong Kong. They are perceived as steady quality, everyday wines and still being ‘value for money’. 

The recent signing of wine MOU between Australia and Hong Kong governments has further enhanced the wine trade and related services promotions between the two places. Australia is now believed to have a much bigger role to play in assisting Hong Kong to become a regional wine trading hub in Asia.

Other products

Australia also has strong market shares in packed rice, dried fruit, edible oils, healthy and functional food and drink sectors. 

Competitive environment

Being one of the freest markets in the world, there is minimal trade barriers for imports. The market is therefore extremely competitive, which means quality products are often competing on price.

The image of Australia’s ‘clean and green’ production environment and high food safety standards helps the promotion of Australian food exports to Hong Kong. Organic productions help sustain and develop the market share for Australian food products in markets like Hong Kong.

Australia is currently the fourth largest food supplying country to Hong Kong after China, USA and Thailand.

Tariffs, regulations and customs

Hong Kong is a free trade port. With the exception of spirits, there are no duties or tariffs imposed on imports of food and beverages. However, import of food and beverages into Hong Kong is subject to the control of various local food laws and regulations pertaining to: 

• Bacteriological or microbiological standards
• Preservatives
• Food colours
• Metal and mineral oil content
• Contamination by harmful substances (such as hormone residues)

Food labelling regulations

Import of food and beverage products, whether packaged for retail or catering sectors, must comply with the local composition and labelling regulations. 

Labelling can be in English, or English-Chinese (bilingual). Generally, these require all products to be labelled with:

• Name and address of the manufacturer
• Net weight
• List of ingredients
• Special storage instructions
• Expiry date (if applicable)

In many cases, it is acceptable to leave the original English label unchanged. However, the expiry date and other important information should be printed in English and Chinese.

From 9 July 2007, changes to the labelling regulations of allergenic substances, food additives and date format took effect and is in force.

With respect to food allergens, to comply with these new regulations, declaration of the presence of the allergenic substances listed below, must be specified in the list of ingredients:

• Cereals containing gluten (namely wheat, rye, barley, oats, spelt, their hybridised strains and their products)
• Crustacean and crustacean products
• Eggs and egg products
• Fish and fish products
• Peanuts, soybeans and their products
• Milk and milk products (including lactose)
• Tree nuts and nut products

Changes in the labelling of food additives requires that if it is an ingredient of a pre-packaged food, it must be listed by both its functional class and its specific name or its identification number under the International Numbering System (INS) for Food Additives.

Date format in labelling durability must be in English lettering AND Chinese characters.

Nutrition labelling regulations

On 28 May 2008, Hong Kong’s Legislative Council passed a regulation relating to nutrition labelling of pre-packaged foods. Under the Amendment Regulation on Nutrition Labeling, with effect from 1 July 2010, all general prepackaged foods are mandated to carry a nutrition label, unless the food product is an exempt prepackaged food under Schedule 6 of the Amendment Regulation. However, the Amendment Regulation, is not applicable to formula and food intended to be consumed principally by children under the age of 36 months, and other food for special dietary uses.
 

The nutrition label (or nutrition information panel) must contain information on energy plus seven core nutrients: 

• protein
• carbohydrates
• total fat
• saturated fatty acids
• trans fatty acids
• sodium
• sugars

In addition, the amounts of any claimed nutrients (ie. nutrient content, comparative or function claims) must be listed. If a nutrition claim related to any type of fat is made, the nutrition label should also include the amount of cholesterol
.

A small volume exemption may be applied for products with a total sales volume in Hong Kong of less than 30,000 units a year, provided the products do not make any nutrition claims.

While these changes will be enforced from 1 July 2010, they are already being adopted at the trade level. Major retail chains have indicated that they are working towards full compliance by 1 January 2010 at the latest and have requested Hong Kong importers and distributors to provide all related information, as above, as soon as possible.

The new Hong Kong requirements are unique and require more information than currently necessary in Australia eg. labelling of trans fatty acids, however these new regulations will be mandatory in Hong Kong. This will affect all manufacturers of prepackaged foods that export to Hong Kong (except those falling within the criteria of exemptions) and will require testing and labeling of nutrients (or provision of such results for re-labelling by your Hong Kong importer or distributor) to meet the Amendment Regulation, including those nutrients for which claims are made. You should work with your Hong Kong importer or distributor to meet these requirements.

Please note that under Section 5 of the Amendment Regulation, non-compliance would result in an offence, which is liable to a fine and imprisonment.

For a listing of accredited laboratories in Australia (as advised by the Hong Kong Food and Environmental Hygiene Department / Centre for Food Safety), please visit the National Association of Testing Authorities' website www.nata.asn.au. For biological testing, please visit :
www.nata.asn.au/index.cfm?objectid=91A6633A-65B1-96AB-7EAF2879B94B08C3&parentCategory=Biological%20Testing/Foods/fats%20and%20oils,%20microbiological&categoryLevel=4
 
For information relating to the Amendment Regulation for Nutrition Labeling and food laws in Hong Kong, please visit the following links:

• www.cfs.gov.hk/english/programme/programme_nifl/programme_nifl.html  (this contains a handy frequently asked questions)
• www.cfs.gov.hk/english/food_leg/food_leg_nl_guidance.html
• www.cfs.gov.hk/english/food_leg/files/nl_technical_guidance_e.pdf
• www.cfs.gov.hk/english/food_leg/files/nl_method_guidance_e.pdf
• www.cfs.gov.hk/english/programme/programme_nifl/nlc-intro.html
• www.fehd.gov.hk/safefood/foodlaw1.html

The cost of labels and the cost of food testing - whether for nutritional data or compliance, cannot be claimed under the Export Market Development Grants (EMDG) scheme. However, other promotional costs such as travel, literature, websites, advertising and trade shows are covered under the scheme and full details of the types of expenditure that can be claimed can be found on the Austrade website.
 

For more information about compliance with the Amendment Regulation, please contact your Hong Kong importer/distributor or for technical advice, please contact the Hong Kong Government's Food & Environmental Hygiene Department's Helpdesk on +852 2381 6096 or email your enquiry to enquiries@fehd.gov.hk.

Should you require further assistance, please contact Austrade Hong Kong on +852 2588 5300 or hong_kong@austrade.gov.au.

Export certification

The Australian Quarantine Inspection Service (AQIS) health certification is required for live animals, meat, poultry, fish and dairy products. AQIS certificates are the only official health certifications recognised by the Hong Kong authorities. Importers of live animals, meat, poultry, ice cream, wine and rice have to be either licensed or registered with the local authorities.

Duties

Effective from 27 February 2008, the duty on alcoholic beverages with an alcoholic strength of more than 30 per cent by volume is 100 per cent. The duty on wine and other alcoholic beverages with an alcoholic strength of 30 per cent or less by volume is zero per cent.

For alcoholic beverages with a zero rate of duty, no import licence or permit is required where the purpose of import is for own use or non-commercial purposes. If imported for commercial purposes, no licence or permit is required for a single shipment with a value less than HK$5,000. For commercial shipments imported under an annual Import and Export Licence or for single commercial shipments with a value of HK$5,000 or above, a licence or permit from the Customs and Excise Department is required.

For alcoholic beverages that are subject to duty, a licence is required to import dutiable goods into Hong Kong and to store dutiable goods for which duty has not yet been paid. A permit is also required to remove dutiable goods from bonded warehouses to the market.

Where duty is payable, it must be paid upon delivery of dutiable goods from the importing carrier or bonded warehouse to the market. The Customs and Excise Department assesses the amount of duty payable and issues a removal permit for the duty-paid goods upon payment of duty.

Marketing your products and services

Market entry

For commodity types of food products (eg. fresh produce, meats and dairy, etc.), the most effective marketing strategy, which is becoming increasingly popular is industry consolidation in export efforts. Consolidation may often improve the competitiveness of Australian exports to Hong Kong and supports: 

• Bargaining power
• Pricing
• Quantity and quality consistency
• Credit management
• Export marketing funding
• Brand building

Consolidation can be based on product category, producing region, industry association, interstate or nation-wide.

For gourmet food products, dedicated partner research in selected overseas markets is the key to success. Generally speaking, you should promote your export business with a marketing package or a concept where you can work together with the importer to build the business and not just focus on the product itself.

Companies may consider the following:

• Select a committed agent and work hard on building the relationship for the long term.
• Use a qualified export packer for exports (if your volumes are too small to sell direct to an overseas importer), or team up with a producers’ association for collective export marketing and logistics while individual producers may still have its own identity for marketing its own brand in the domestic market.
• Visit the market before exporting.
• Work closely with buyers in the market as mutual trust is important. You may also learn how to engage in direct trade with mainland China from your business partnership with a Hong Kong company.
• Brand building of your products over time including use of product promoters.
• Innovative products and packaging.
• Attending or participating in trade shows is another way of marketing your products. HOFEX is one of the most important food shows in the region.
• Set up your own representative office in the market, you would therefore own the customer network (rather than depending on the ‘mercy’ of your agent). Once your presence in the market is well-established, you could even take on additional export business from others. 

Distribution channels

Most imports of food and beverages are channelled through import agents who normally distribute direct to retailers and catering end-users.

Major supermarket chains buy many products directly from selected overseas suppliers. The two largest supermarket chains, Park'N Shop and Wellcome, are obtaining supplies of products by direct import and through local agents, however, it is generally the intention of both chains to by-pass the agents and go direct wherever possible for selected large volume product lines. The two major supermarket chains in Hong Kong have their own large warehousing facilities for the handling of perishable goods, re-packing and distribution.

Due to the lack of adequate central warehousing, processing and delivering facilities, the second tier supermarket groups and the local convenience stores are currently importing selected product items from overseas. As the trade continues to expand it is expected that some of these organisations will manage to develop their own facilities and purchase some of their requirements direct from overseas sources.

Because of the small volumes and the need for frequent and consolidated orders, most of the local hotels, restaurants and many fast food operators normally cannot afford to handle the direct import from a large number of individual suppliers overseas for their own requirements of food and beverages. Import agents generally undertake distribution of food and beverages to users in this market sector directly, with only a small quantity being handled by a few provision wholesalers.

On the other hand, Great Food Hall, Citysuper and Oliver’s, the three higher-end food retail stores in Hong Kong, are effectively using appointed consolidators in specific countries including Australia for their own sourcing requirements to broaden the range and variety available to their customers. These are typically smaller volume, niche products.

Distribution to wet markets, hawkers, groceries and small corner stores is handled by a number of intermediary provision wholesalers.

Links and industry contacts

Food and beverage­-related resources

Citysuper – www.citysuper.com.hk
Great Food Hall – www.greatfoodhall.com
HOFEX – www.hofex.com
Hotel Asia Pacific – www.hotelasiapacific.com
Vegetable Marketing Organization – www.vmo.org

Government, business and trade resources for Hong Kong

The Australian Chamber of Commerce in Hong Kong (Austcham) – www.austcham.com.hk
Bilingual Laws Information Service – www.justice.gov.hk 
Centre for Food Safety – www.cfs.gov.hk
Hong Kong Customs – www.info.gov.hk/customs
Hong Kong Food and Environmental Hygiene Department – www.fehd.gov.hk
Hong Kong SAR Government – www.info.gov.hk
Hong Kong Trade Development Council – www.tdctrade.com
Invest Hong Kong – www.investhk.gov.hk

Media

South China Morning Post – www.scmp.com.hk

Australian resources

Australian Quarantine Inspection Service  – www.aqis.gov.au

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au