Hong Kong Aims to Become Hub for Wine Trade
As Wine Consumption in Asia Grows, Business Opportunities Abound
Dec 4, 2008
Asia has become an important source of growth for the world wine trade in recent years. Wine consumption in the region has risen sharply, with total volume sales up by 9 percent between 2005 and 2007, according to business intelligence provider Euromonitor International. Some 40 percent of the US$1.3 billion worth of fine wine traded annually in London is already being bought by consumers from Hong Kong and mainland China. Wine in Asia is increasingly big business.
The End of Import Duties on Wine in Hong Kong
Hong Kong moved to centre stage in February 2008 when the city abolished import duties on beer, wine and all alcoholic drinks except spirits. Wine duties were slashed from 40 percent to zero. Along with streamlined administrative controls, the removal of taxes was aimed to promote Hong Kong as the Asian hub for the trading and distribution of wine.
In a survey conducted at the 2008 Hong Kong International Wine Fair, 69 percent of exhibitors strongly agreed that the removal of import duties on wine will foster wine trading both in Hong Kong, and via Hong Kong to Asia and the Chinese mainland.
The strategy appears to be paying off, if the amount of wine stored in Hong Kong is any indication. In March wine storage company Vinfolio announced that it planned to open a storage facility in Hong Kong, while in November, reporter Hazel Parry of the South China Morning Post reported that the amount of wine coming back to Hong Kong had increased sixfold since the duty was removed.
Hong Kong Wine Trade Weathers Financial Storm
A number of auction houses headed to Hong Kong in the wake of the removal of import duties. The first auction held by US firm Acker, Merrall & Condit in May fetched a record US$8.2 million, which subsequent auctions struggled to match. However, while many lots sold for 10-20 percent less than their low estimates at Acker’s second sale in November, Reuters reported that nearly 90 percent of 950 lots were sold. Given the fact of the financial crisis, the results were encouraging enough for Acker to plan for more auctions in 2009.
While the financial climate remains difficult, Hong Kong still hopes to capitalize on its position as the wine gateway to China, a vinous land of opportunity. In June 2008, Wine Spectator magazine reported the findings of the 2007 edition of The Global Drinks Market: Impact Databank Review and Forecast, which finds that China is now the largest wine market in Asia and the only Asian country among the top 20 wine-consuming nations, at 74 million cases in 2007 (a gain of 35 percent from 2006). As the magazine notes: “the Chinese drink less than a bottle per person annually, compared with almost 6 cases per person in France, so huge opportunities still abound.”
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