Wine has boomed in popularity in Hong Kong since tax on the drink was abolished in the spring budget, government figures indicated Thursday. Since tax on wine was scrapped Feb 27, the price has fallen by 20 per cent and imports of wine to the wealthy city of 6.9 million have soared by 78 per cent, a government spokesman said.

Supermarkets and wine stores reacted to the budget measure by slashing prices and some stores are now struggling to import enough wine to meet rapidly growing demand. Tax on wine in Hong Kong was 80 per cent as recently as the beginning of 2007. It was cut to 40 per cent in last year's budget and then abolished completely in February, when duty on beer was also cut from 20 per cent to zero.

The aim of the tax abolition was to make the city, which attracts more than 25 million tourists and visitors a year, a hub for fine dining as well as for its famous shopping and nightlife.
A government spokesman said: "The initial response to the duty reduction is encouraging in terms of positive impact on the further development of the wine business in Hong Kong."

News of the growing taste for wine came as auctioneers Bonhams prepared to stage an inaugural Hong Kong wine action Thursday, where some of the world's finest available wines including a 1982 Lafite and a rare magnum of 1992 Screaming Eagle was due to be held.

Hong Kong and China together account for more than 60 per cent of the Asian wine market and are relatively sophisticated in terms of consumption compared to other developing markets in the region.

French wine accounts for around 43 per cent of sales in Hong Kong, followed by Australian wines at around 18 per cent and Californian wines at 10 per cent. Potent Chinese-made rice wine remains popular among older Hong Kong people but is rarely drunk by young people.