What will be the wine market status and development in Hong Kong (hereinafter shortened as “HK”) right after the announcement of import duty exemption by the HK Financial Secretary on 27 February 2008?  This is a very interesting topic, not just to the wine associates in the industry of HK, China mainland & Macau, but also to the wine lovers (including drinkers & collectors).  However, before we explore this issue, we get to review the Wine development in HongKong during the past 10  years.  This sort of history review may to certain extent disclose some hints and indication which might help readers understand what would happen next in the HK wine market.

Since HK was in big financial difficulties in 1998, like all other neighboring Asian countries, most inhabitants there almost lost everything just overnight.  They lost their jobs and around the same time they became negative-value property owners.  Relatively, most people in HK enjoyed a lot just one year earlier before and right after the hand-over of HK to China in 1997 when they could easily pay for a bottle of Chateau Lafite Rothschild 1982 or Chateau Margaux 1981 or other top ten first growth Bordeaux wines in repeated bottles.  It was mainly due to considerable daily increase of their assets of stock shares and properties. Money could easily come and let go easily too.  Those were the days…..

Frankly speaking, there might be possibly less than 2% of the population in HK in 1997 who knew about wine (that is around 100,000 against 6 million heads).  And out that head count, maybe only half of that wine-related class who really collected and studied wine information through local & overseas wine magazines (like WINENOW MONTHLY in HK, WINE SPECTATOR in USA, DECANTER in UK, etc.), wine tasting events, etc.  At that stage, wine lovers had got certain knowledge about French wines, especially the Bordeaux & some Burgundy wines in addition with southern region wines.  Most of them were still at learning curve about new world wines from Australia, New Zealand, Chile, USA (mainly Napa Valley & Sonoma County).

It was until after the SARS event (as from September 2003) that the wine market in HK recorded considerable increase in sales & consumption. At that time, people in HK started to realize that LIFE COULD BE SO SHORT.  They either believed that wine could reinforce their immunity or would rather enjoy life with wine, or perhaps both.  Such increase was averagely over 35% against the year 2002 respective figures.  The writer knew one developing wine cellar in HK which managed to sell each case of Chateau Lafite Rothschild 1996 & Chateau Latour 1985 within one day to local solicitor firms as gifts to their counter parts in China mainland during the SARS period. These two cases had already exceeded HKD100,000.

During the hard time within 1998 to 2004 in HK, the majority of wine drinkers would prefer either buying wines at supermarkets or as from the last quarter of 2003 via newspaper advertisement against bulk delivery.  As either way might indicate clear prices within their individual budgets. This was a matter of limited income during the hard time.  Since late 2003, more new importers started to import wines from small countries like Macedonia (north of Greece), Bulgaria, Tunisia, etc.  Of course, middle class wine drinkers would continue going to close-related wine cellars to continue their purchases, but still at medium price setting even after the VIP services from the cellar sales people.  Only the very well-off wine drinkers/collectors would buy overseas via regular auctions, for instance in UK, and keep the forward stock in the books & the ready stock in the bond houses there.  Such act would leave investors sufficient flexibility to resell both stock at good prices or move back some stock to HK for personal consumption after import duty payment (the duty rate was first at 80% & then down to 40% before the exemption).  

Right now, following the duty-free policy against wine import into HK, the initial difficulty stage has almost been over after decent reduction of wine prices against non-delivery stuffs from importers to wholesales & retailers.  However, such reduction had been off-set by continuous increase in freight charges & appreciation of foreign currencies against USD (like Euro, Australian dollar, etc.).  On the other hand, private wine lovers & collectors can now easily form limited companies to apply for Liquor Import Licences to import wines.  That sudden action is killing a great number of wine importers & wholesalers.  Who are the winners of this game?  Logistics and related industries like warehousing, etc. will definitely be the initial winners.  Then who are the subsequent losers?  Other industries which still rely on warehousing will have to suffer by paying more to acquire decent space to run the businesses.

No doubt China mainland wine industry will become the subsequent winner too whereas Macau will lose the re-export role of fine wine.  As China wine industry will face uncountable choices of wines from all over the world even the country currently is still imposing import & other duties on wine.  Three years ago when it was 2005, the HK wine industry expected that Italian & Spanish wines would become more popular during the subsequent 3 to 5 years.  In some ways, the industry was right, but no one could ever predict fully correct as wines from these two countries are still difficult to be classified (unlike the Bordeaux wines with clear classification) as the wine regions there are really tremendous, especially Italy which has wine regions from north to south covering the whole BOOT-LIKE land of the country.

The writer forecasts that there will be more and more new comers in the HK wine industry, followed by frequent wine exhibitions & auction events as well as wine course training (again the wine tutors will have great chances to earn extra income), not just to bloom up the market here, but also to find more golden opportunities in the mainland market where the industry & end-users there are still below the learning curve.  However, sooner or later, the wine market in HK will be developed further to support the fast developing market in China mainland. 
The writer always trusts that wine business may not create a big fortune to traders therein, but it will definitely bring a lot of business contacts to benefit other business sectors.  If you are looking for job placement, go to attend some professional wine training courses and enter the wine industry to start up this fantastic career!  Cheers!

Note by editor: the author is well-known as a wine expert in Hong Kong.