BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Food & Drink Sector Of Hong Kong

Hong Kong’s mature food, drink and retail industries are somewhat unique within the broader Asia Pacific region. In the newly-published Hong Kong Food & Drink Report, BMI examines why – when individual product sub-sectors are set to witness moderate, if unexceptional growth – food consumption in value terms in the country is actually set to fall.

In our latest report, BMI’s forecasts for key consumer industries in Hong Kong exceed many more conservative analyst predictions. We are forecasting that value sales through modern retail outlets will climb by 26.1% to 2010 – a reasonably high growth forecast in what is a very mature market – while volume sales of alcoholic drinks, another important indicator in a fast-moving market where disposable incomes are high, are also on the up. Hong Kong’s on-going economic growth and the impact that this has on consumer confidence in the country explains the trend to some extent. Additionally, both can be explained by the investment that Hong Kong still receives, in spite of its maturity. In the retail industry local players, such as Convenience Retail Asia, continue to invest in their domestic market if only for the purpose of preserving a profit centre to support their activities in higher-growth markets. Likewise, alcoholic drinks majors, such as Philippines-based San Miguel’s local subsidiary, view Hong Kong as a stable and low-risk market in which to invest.

However, just as Hong Kong’s stability and maturity encourages this sort of investment, BMI believes that they are the very trends that keep investment moderate and focused on only certain types of business activities, which actually have a slightly detrimental effect on overall consumption levels in value terms. The mass grocery retail industry is a good example of this. Operators are not investing in new store openings. Instead they are investing in diversifying their existing store offerings, primarily through the launch of added-value in-store services, and in competitive price wars.

A supermarket chain which launches a range of in-store services, such as dry-cleaning and massage services, in order to gain a competitive advantage, will contribute to boosting general sales through modern retail outlets. However, that same retailer will then invest in hefty price cuts across key product categories, thus reducing the actual value of groceries sold through modern retail outlets. In a country where modern retail is accessible to almost everybody, these low prices do not attract a whole new breed of consumers, they simply draw customers away from a rival store. Consequently, price wars in a market where everyone already shops at modern retail outlets, simply reduce the value of food consumption without having a negative effect on volume sales.

BMI is not, however, claiming that this is an industry-wide trend. Certain product categories are not targeted as part of price wars and these products have their own unique value and volume sales growth curves.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Business Environment Rankings

SWOT

Hong Kong Food & Drink Industry SWOT

Macroeconomic Outlook

Table: Population And Output

Chapter 2 – Retail

Regional Overview – Private Labelling In Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Hong Kong Mass Grocery Retail Sales (by format) - Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Structure Of Hong Kong’s Mass Grocery Retail Market By Number Of Outlets

Table: Structure Of Hong Kong’s Mass Grocery Retail Market - Sales (US$mn) By Format

Table: Average Sales Per Outlet By Format (US$mn) - 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy in Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Hong Kong Large Food & Drink Indicator

Company Developments

Market Overview

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Food, Drink & Tobacco Sectoral Trade Forecasts

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In Hong Kong’s MGR Sector – 2005

Table: Key Players In Hong Kong’s Food & Drink Sector – 2005

Asia Pacific Regional Company Case Studies

AEON In Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil In Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken In Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft In Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

Tsit Wing

AS Watson

Convenience Retail Asia

Dairy Farm International

Aeon Stores

San Miguel Hong Kong

Vitasoy International

Swire Coca-Cola

Golden Resources

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: