The market for natural and organic products in Hong Kong is unique. It presents its challenges, but it also has some advantages. In the food sector, the supermarkets dominate 60 percent of the market. The Wellcome retailer, part of the Dairy Farm Group, and A.S Watson and its Park N Shop Group, also impose high slotting fees as result of a duopoly. The remaining 40 percent is made up of specialty retailers looking for superior quality, and the street market that plays a significant role in the fresh food segment.
The island is a free trade zone; a trans-shipment point and buying center for China and elsewhere in the region. Hong Kong is also open to new products. Each year, there are 8 to 10 trade shows that focus on food and beverages. Consumers are accustomed to daily purchases, and therefore distributors must adapt and supply in the same fashion while maintaining low inventories due to space limitations.
‘Global Organic Trade,’ reports the total market size for organic packaged food and beverages in Hong Kong in 2015 was US$27.4 million making it the 33rd largest market in the world by value.
Within this dynamic context, entrepreneur Claudia Cheung and her husband Charles founded Impex Quality Products in 1991. The venture started with the launch of a premium Scottish shortbread and cookie gift set to top hotels and department stores in Hong Kong. The beautiful tins and unique taste of the “Simmers” brand attracted Claudia's attention. The couple quickly recognized the sales opportunity to cater to consumers seeking premium gifts from around the world.
In 1996 Claudia visited Anuga in Germany, the largest food show in the world. The event was an eye-opener for the large variety of natural and organic products that were available and the potential opportunity for Hong Kong and all of Asia. In 2000, Claudia and her husband turned their attention to organic, unique and premium quality brands and Impex introduced its first organic juice from Germany, ‘Rabenhorst.' “We still represent the brand today in Singapore and Hong Kong,” she says.
“Although at that time, organic and natural products were not yet that popular, the retailers had started with a small corner of some items, however, retail prices were very high,” she says.
“After the SARS scare in 2003 in Hong Kong, people started to realize that eating healthy was important”. Thus, Claudia and Charles saw new shops opening and offering only natural and organic products. Hong Kong imports 95 percent of the food it consumes. Impex found a niche for leading organic brands. Currently, in the beverages category and in addition to the German Rabenhorst brand, its portfolio includes “Hoellinger” and “Pfanner” (Austria); the cereal brands “Familia” (Switzerland) and “Seitenbacher” (Germany), and “Coconut Matter (Australia).”
Impex also introduced Canadian organic snack bar Taste of Nature and later added MadeGood also a Canadian organic brand that Riverside Natural Foods developed in an attractive and fun packaging. It includes delicious Granola Minis and Bars free of peanuts and other main allergens. “Rabenhorst Juice is our number one brand and still growing, MadeGood is number two,” Claudia says.
Impex Quality Products was the first international customer for MadeGood when the young brand started nearly three years ago, said Peter Mulherin, VP Sales at Riverside Natural Foods Ltd. The unique mini format and product attributes of organic and allergen free, with added vegetables” is what first attracted Claudia to the brand.
“MadeGood is now in the high-end supermarket chains, department stores and health food stores in Hong Kong, with exceptional growth,” she adds.
In Singapore, the organic market is growing very fast, and MadeGood’s range of products is also doing very well, says Peter Mulherin. “Singapore supermarkets are stocking more organics and health products,” Claudia says. “Retailers such as Cold Storage have nutritionists on staff who check products, while NTU Fair price are stocking some organics through their Finest private label brand.”
Claudia pointed out that a new food labeling law in force in Hong Kong since 2010 is helping healthy products get into the market. “Since the government introduced nutritional labeling on food and beverage products the importer must
be able to provide certain information to ensure that the product is fit for consumption and chemicals must be listed on the labels,” she explains. “Hong Kong consumers are now reading labels, and they are more aware of natural products.”
This has led to consumers discovering that with organic products, the taste is often better. “Higher educated people and the expat community have more awareness of organics. Mothers with young children are also a major demographic for the segment,” Claudia says. “People are using more social media and food bloggers and authors are also helping the market expand. They are using social media to promote health food recipes for children.”
In Hong Kong, organic foods experienced slower growth of 4% in 2015 compared to the remainder of the Asia Pacific region with growth of more than 13%. However, Claudia sees the organic market stabilizing and believes it will increase slightly due to consumer health concerns. “Consumers feel that it’s worthwhile to pay for organic, even if prices are slightly higher than conventional, people will buy,” she says.