Consumer Trends Cooking Oils in Hong Kong
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International Markets Bureau MARKET INDICATOR REPORT | OCTOBER 2012 Consumer Trends Cooking Oils in Hong Kong Consumer Trends Cooking Oils in Hong Kong MARKET SNAPSHOT INSIDE THIS ISSUE The Hong Kong Special Administrative Region (Hong Kong) is a Market Snapshot 2 political and administrative subdivision of China. Hong Kong has a high degree of autonomy in all of the region’s economic, social Trade 3 and political issues except for diplomatic relations and national defense. Retail Sales 4 The total population of Hong Kong exceeds 7.1 million (July 2011, estimate, Central Intelligence Agency [CIA] World Factbook, New Product Launches 6 2012). The region’s population is ethnically diverse, as immigration contributes to the growth of the population. The majority of Hong Kongites are Chinese, but other major ethnic New Product Examples 8 groups include Filipinos and Indonesians (CIA Factbook, 2012). Company Shares 10 Hong Kong has shown strong economic growth over the last decade. The region’s gross domestic product (GDP) registered at US$224 billion in 2010. Hong Kong’s economy is mainly Brand Shares 11 supported by the service industry, which accounted for approximately 93% of the region’s total GDP during the last five Sources 12 years (World Bank, 2012). Annex A: Hong Kong displayed a robust trade performance during the last New Canola Oil Products 13 couple of decades. For example, the region’s total trade was 440% of the region’s total GDP in 2010. In the same year, the export of goods and services was 223% of the region’s total GDP Annex B: 17 (World Bank, 2012). New Food Products Containing Canola Oil According to Euromonitor (2011), more than 95% of Hong Kong’s total exports were, in fact, re-exports of imported goods whose final destination was mainland China, which is also the region’s biggest agri-food and seafood trade partner. In 2011, Hong Kong’s total value of agri-food and seafood imports was US$23 billion, while exports were valued at US$8 billion. In terms of domestic food consumption, total consumer expenditure on foods saw an upward trend during the 2006-2011 period with a compound annual growth rate (CAGR) of 10.1%, reaching US$20.5 billion in 2011. Consumer expenditure on oils and fats accounted for 1.5% of total consumer expenditure on foods, at US$305 million in 2011. Expenditure on oils and fats increased during the 2006-2011 period at a CAGR of 11.2%. Hong Kong’s culinary styles include Cantonese and Chinese, which require frying and steaming methods. Therefore, oils and fats are considered essentials for cooking in Hong Kong. According to Euromonitor (2011), there have been changes in the consumption of oils and fats over the last five years due to increasing health consciousness. This contributed to an increase in demand for higher quality cooking oils and fats with less trans-fat or with fortified contents such as docosahexaenoic acid (DHA) and omega 3. PAGE 2 TRADE Hong Kong was a net importer of oils and fats in 2011 (including edible animal fat). Hong Kong imported US$253 million of oils and fats products from the world and exported just US$61 million in 2011. In 2011, Hong Kong imported US$49 million of canola oil products, and exported US$15 million. Traditionally, China has been Hong Kong’s major trade partner for canola oil products. However, over the last five years, Hong Kong’s canola oil exports to Macau have increased, reaching US$11 million, or 69% of the region’s total canola oil exports in 2011. The total import value of canola oil products from China was US$2.7 million in 2011, while canola oil exports to China dropped by 66% in 2011 from the previous year, recording US$3.6 million. Canada is the major exporter of canola oil products to Hong Kong. Canada exported C$31.3 million of canola oil products to Hong Kong in 2011, according to Statistics Canada (2012) . The total export value of Canada’s canola/rapeseed oils to Hong Kong fluctuated during the 2006-2011 period. In 2008, they registered a big drop, but showed a strong recovery in 2009, maintaining the top position. The total export volume of Canada’s canola/rapeseed oils also fluctuated during the 2006-2011 period. In 2009, total export volume reached 31 million kilograms, the highest export volume during this period. Canada’s total export volume of canola/rapeseed oils has decreased since, recording 26 million kilograms in 2011. Canada’s Exports of Canola Oil Products to Hong Kong 35.0 30.0 25.0 20.0 15.0 C$ - Millions 10.0 5.0 0.0 2006 2007 2008 2009 2010 2011 Rape or colza oil, (Refined) Rape or colza oil, (Crude) Low erucic acid rape oil ( Refined) Low erucic acid rape oil ( Crude) Source: Statistics Canada, 2012 PAGE 3 RETAIL SALES Retail Sales Overview The total oils and fats market in Hong Kong was valued Vegetable and Seed Oil by Type* – % Breakdown at US$122 million in 2011, which was up by 3.7% from by Retail Value Sales in 2011 the previous year. By volume sales, the market expanded by just 2% during the same period. The vegetable and seed oil sub-category represented the majority of the oils and fats market both by value and by volume terms. During the 2006-2011 period, vegetable and seed oils accounted for approximately 69% of total value sales, and 84% of total volume sales. Within the vegetable and seed oil category, canola oil accounted for approximately 28% of total vegetable and seed oil sales by value throughout the 2006-2008 period. The butter sub-category showed fast growth in value sales at a CAGR of 10.6% during the 2006-2011 period. Considering the low volume sales growth at a CAGR of 2.7%, value sales were largely driven by price Source: Euromonitor International, Oils and Fats in Hong Kong, 2012 * Note: Vegetable and seed oil does not include olive oil. increases during this period. The olive oil sub-category experienced a big drop in value sales following fast growth during the 2006-2008 period. However, considering the high volume growth during the 2008-2011 period at a CAGR of 4.1%, market expansion was led by consumption growth during this period. The unit price of vegetable and seed oils saw an upward trend between 2006 and 2008. However, it has declined since the 2008 peak price of US$4.2 per kilogram, reaching US$ 2.9 per kilogram in 2011. Hong Kong’s Oils and Fats Market Size by Retail Value Sales (Historic) in US$ Thousands 2006-11 Category 2006 2007 2008 2009 2010 2011 CAGR Total oils and fats 109,731.3 127,923.6 153,980.3 128,871.0 118,020.5 122,355.6 2.2% Butter 1,229.4 1,290.9 1,833.0 1,924.7 1,963.2 2,037.8 10.6% Olive Oil 7,833.0 8,459.6 9,178.7 7,801.9 7,255.8 7,582.3 -0.6% Spreadable oils and fats 26,295.2 28,924.8 30,515.6 31,431.1 29,859.5 30,635.9 3.1% Vegetable and seed oil 74,373.6 89,248.4 112,453.0 87,713.3 78,942.0 82,099.7 2.0% Hong Kong’s Oils and Fats Market Size by Retail Volume Sales (Historic) in Tonnes 2006-11 Category 2006 2007 2008 2009 2010 2011 CAGR Total oils and fats 29,708.5 30,768.1 31,696.2 32,153.4 33,082.4 33,732.7 2.6% Butter 132.0 133.3 134.9 140.9 146.6 151.0 2.7% Olive oil 488.3 507.8 530.6 551.9 576.7 598.6 4.2% Spreadable oils and fats 4,130.1 4,295.3 4,424.1 4,534.7 4,625.4 4,694.8 2.6% Vegetable and seed oil 24,958.1 25,831.7 26,606.6 26,925.9 27,733.7 28,288.3 2.5% Source for both: Euromonitor International, Oils and Fats in Hong Kong, 2012 PAGE 4 RETAIL SALES (continued) Retail Sales Overview (continued) The commodity price hike during the 2008-2009 period contributed to increased prices of oils and oil products in Hong Kong. From 2009, as commodity prices went down, oil and oil product prices went back to pre-2008 levels. Retail Sales Forecasts Hong Kong’s total oils and fats market is projected to grow during the 2011-2016 period at a CAGR of 3.8%, reaching US$147 million by 2016. Total volume sales are expected to grow slowly at a CAGR of 1.1%, a decrease of 1.5 percentage points from the CAGR recorded during the 2006-2011 period. According to Euromonitor (2011), the slow growth rate may be attributable to rising health consciousness and governmental healthy eating campaigns regarding the use of less oils and fats when cooking. The vegetable and seed oil sub-category is expected to expand at a CAGR of 3.8% during the 2011-2016 forecast period, to be valued at US$99 million by 2016. However, by volume, the vegetable and seed oil sub-category is expected to record slower growth than the 2006-2011 period, at a CAGR of just 1.1% over the period. Considering the consumption trends, Hong Kong’s oils and fats market will continue to show shifting sales trends as consumers choose healthier and high-quality oils.