HONG KONG PACKAGED GOODS PROPHETIC.

ACNielsen says that consumer spending on groceries is a key living standard indicator. Starting in April of 2004, Nielsen gave a random sample of 1350 Hong Kong consumers hand-held bar code scanners and asked them to keep track of household grocery purchases. Nielsen says this is Asia's first electronic consumer panel.

Panel returns during the third quarter of 2004 showed that grocery purchases were increasing, suggesting that households were now feeling optimistic enough about the Hong Kong economy to spend more at the store. The panel's reports were consistent with other economic news such as strong retail sales, more tourists, and a declining rate of unemployment. All these factors taken together suggest to Nielsen that Hong Kong may finally be coming out of its recession. Particularly telling for Nielsen analysts was that fact that the consumer panel reported a 4 percent growth in spending for packaged goods during the third quarter.

The biggest growth in packaged goods spending was recorded during August when a year-on-year spike of 8 percent was recorded. Year-on-year growth in September added another 5 percent. Higher income families were the main reason the packaged goods total increased so much. During the third quarter these families increased packaged goods spending by 12 percent.

Nielsen said that this upward trend was encouraging not only because of absolute gains but because the gains were real. Nielsen found that the number of shopping trips stayed the same but more items were purchased per trip. The true nature of the gains was underscored by stable prices. Gains in individual categories also substantiated Nielsen's conclusions. Typically, in difficult times people cut back on snacks. But no such retrenchment appeared.

Still, the growth observed has been moderate, and Nielsen said it wouldn't be satisfied that it was measuring a real turnaround until low income families mirrored the consumption experience of the higher income families.

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