Hong Kong is one of the most densely populated places in the world and Farm2Table believes that it is the ideal location for the birthplace of its first Farm2Table concept.
Hong Kong is regarded as a metropolitan area and special administrative region of the People’s Republic of China on the eastern Pearl River Delta of the South China Sea. It has over 7.5 million people of various nationalities. The territory has become one of the world’s most significant financial centres and commercial ports. It is currently ranked number 3 in the word in terms of its population density with 6,659 people per square kilometre of land area.
Purchasing power parity (“PPP”) is a measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries’ currencies. It is widely used when comparing the Gross Domestic Product (“GDP”) of different countries. With this in mind, Hong Kong holds the highest GDP per capita PPP at US $64,928 in 2019 for Asian countries and when ranked in the world it is placed number ten. This translates to the highest GDP per capital of PPP in Asia. In addition, Hong Kong displays traits of high double-income household facilities and more importantly a positive GDP per capital trend.
2018 2019 Growth 2019 vs 2018
GDP US$ 362.7 billion US$ 372.99
billion
+ 2.8%
GDP PER CAPITA
US$ 48,675 US$ 49,334 + 1.3%
Table 1: Hong Kong GDP Trend
The tourism industry has been an important part of the economy of Hong Kong since it shifted to a service sector model in the late 1980s and early 90s. Tourism, along with international trade and financial services are the three main sources of income for Hong Kong. Hong Kong is ranked number thirteenth in the world for the number of visitors it receives on an annual basis, 59.39 million visitors. It is ranked among cities such as London, Singapore, Bangkok, Paris, Macau, Dubai, Shenzhen, New York City and Istanbul. When ranked by the category of international tourists’ receipts, the amount of money spent by international tourists on an annual basis, Hong Kong has consistently ranked in the top 10 at the tune of US$36.2 billion in 2019.
The impressive statistics of its earning power of its residents as well as the revenue generated by its tourism industry has led to immense growth for its food service sector which is valued at HK$ 104,357 Million with a year on year growth of approximately 3.9%. Both its resident and tourists seek for culinary adventures and unique dining
experiences and this has led Hong Kong to become the second Asian country to host the greatest number of Michelin star restaurants.
Farm2Table finds Hong Kong’s vegetable and produce market to be suitable for the implementation of its business model. For its fresh vegetable supply, Hong Kong has 98%
of its vegetable produced imported whilst only 2% of it is produced locally. It’s main source of vegetable suppliers are Mainland China (77%), United States of America (7%), and Australia (3%). For the year of 2019, the total vegetable market size is US $420 Million. Farm2Table is positioned to provide an alternative solution to Hong Kong’s imported fresh vegetables and as such the total accessible market size would be US$419 Million due to 98% of Hong Kong’s vegetable produce being imported.
A market trend analysis is performed against the external environment. It is important to acknowledge that the industry is ever-changing and Farm2Table will continue to stay ahead of its competitors by keeping current with its analysis. The purpose of the analysis is to recognise any consistent trends or results that Farm2Table has implemented to map its business strategy. The analysis below lists out the four major drivers which Farm2Table believes to be most relevant and they are as follows. Technology, specifically the technology concerning vertical hydroponic farming and the value that it represents.
Demographic, specifically the demographic of Hong Kong where Farm2Table is planning for its initial investment. Specific International Events, specifically, triggers that are driving the reform on both the domestic and international level. Legal and political
condition, specifically, whether if local rules and regulations would be supportive of Farm2Table’s initiatives.
Figure 1: Trend Analysis
The target market and the addressable market size is too large for the likes of Farm2Table.
As such, it will aim to divide the market into smaller addressable markets by ways of market segmentation. The result would be dividing a large target market into distinct groups of consumers who have similar character tics, needs or behaviours. Phase 1 of the below table would be Farm2Table’s initial business model and the details to the financial model will be discussed in the subsequent sections. Phase 2 and phase 3 of the below table would be part of Farm2Table’s future expansion plan.
PHASE 1 PHASE 2 PHASE 3
•Highest Purchasing Power in Asia
•Food Safety and Health Conscious
Target
Description Fine Dining Restaurants With Average Spending > HK$200-400 per person Has high demand for food safety, quality, Provision of Seed &
Nutrient Pack Table 2: Target Market Segmentation