Revolutionized by eliminating taxes on wine in 2008, Hong Kong has become a significant wine investment and trading hub for China and Asia in general. Polly Aylwin-Foster and Ian Ford of Nimbility Asia go deep into all aspects of the Hong Kong ("HK") wine market. From the HK wine consumer, the retail landscape, cross border transactions with China, the large "hand carry" market, and the British influence on the wine culture, they provide lots of essential data and detail for HK wine. 

Detailed Show Notes: 

2008 - all wine duties removed for anything <30% abv, making HK the preferred place to store and trade wine

• Wine importers - 310 (2008) - 790 (2021)
• Speciality wine shops - 140 (2008) - 470 (2021)

HK wine consumers - 7M people

• Expats - 500k - consumed wine at 5-star hotels, int’l restaurants
• Indigenous people - wine consumption not part of daily culture
• "Tycoons" - wealthy people, drive fine wine consumption, high value of wine purchased
• Consumption mostly at restaurants and bars, big eating out culture
• Pre-pandemic - 5-star hotels, int’l on trade, & large restaurant groups sold most of the wine
• Culture of private kitchens, wine clubs, private room dining - for top wines

HK's more mature wine market

• Bordeaux historically, massive Burgundy growth, some iconic American wines
• The influence of British wine culture over many decades created HK wine culture (e.g., trading houses, merchants)
• Average fine wine consumer more advanced in HK than China (started in 60s vs 90s in China)

HK retail landscape

• Supermarkets drive bulk of sales (2 main players - Welcome, Park n Shop; Watsons wine owned by a supermarket) - sell big brands, sub-HK$ 100 (~$7-9/bottle)
• Independent wine shops - importers' retail / private client arms, a few independents, British wine merchants, Enoteca (Japan) -fine wine
• Online very small, <7%
• Auctions influential - attract attention for brands, provides halo effect for in mainland China, mainland buyers participate
• Pandemic - local airline encouraged uses miles on products, including wine, 1 importer sold $1M in wine via airline

HK wine market

• 4.3M 9L cases imported (2021), +10% from 2019, expected to grow 5-6%/year over the next few years
• HKTDC figures - 26% officially re-exported (to China, Asia), 74% conveyed out by individuals, in storage, and local consumption

The "hand carry" market

• People are allowed to take 2 bottles/person into China w/o paying taxes (~50%)
• At HK/Shenzen border - many people would take 2 bottles, drop them off on the other side and go back and take 2 more bottles repeatedly
• Impossible to know the scale, but a significant amount of wine goes across the border this way
• Wines then put into commercial distribution in China

HK as a trading hub - initial idea of shipping to HK and re-exporting flawed

• Add’l logistics costs make it more expensive
• Taxes are paid on landed costs, including the add'l shipping costs
• Need diff back labels for SE Asia and China (HK doesn't have requirements)

Cross border e-comm into China (TMall, JD.com)

• Chinese consumers buy offshore at favorable tax rates
• Limitations per year and per transactions
• Opens up the availability of products to consumers

HK has a more Western media landscape

• Douyin illegal (Chinese TikTok)
• Does not have KOL (key opinion leader) industry like China
• James Suckling invested a lot in HK, has a wine club, events
• Int’l wine critics are critical - Jancis Robinson, Wine Spectator, Wine Advocate

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