Is Hong Kong a Wine Hub?

22 November 2010
Author: Jeannie Cho Lee

 

It is incredible how quickly Hong Kong is solidifying its position as the premier wine centre for Asia. In early 2008, I was working on my Master of Wine dissertation on the potential of Hong Kong becoming a fine wine hub within five years. I projected the growth in wine auctions as well as the increase in the number of wine brokers, merchants, retailers and importers that would flood the scene. Conservatively, I calculated that it would take about five years for Hong Kong to solidify its position as a fine wine hub by 2013. In the minds of most wine professionals and consumers, Hong Kong has already reached this goal, taking less than three years.

 

Hong Kong now seems to have it all – a vibrant wine community and industry with the government and tourism board all chipping in to promote Hong Kong as a wine and dining hub. Ask any wine auction house, fine wine producer or international wine distributor which Asian city they believe is the centre for wine and most likely the answer will be Hong Kong. Recently, while crunching some numbers on Hong Kong’s import and re-export figures along with China and other key Asian markets, the trends and figures that I saw did not always support this view.

 

Re-exports in 2009 only accounted for 18% of Hong Kong’s total value of imports — a very modest figure given its ‘hub’ status. Even in terms of volume, only 20% of its total imports were re-exported. For China, re-exports from Hong Kong only accounted for 9% of its total wine imports by value in 2009. Interestingly enough in 2007, Hong Kong’s re-exports to China accounted for 24% of China’s total imports, indicating that re-exports from Hong Kong are becoming less significant. Taking a more rigorous approach to defining a ‘wine hub’, should we not consider how much wine is actually re-exported and to which countries? In Hong Kong nearly 90% of all re-exports are destined for just two markets — China and Macau. Can a city that services predominantly two markets be viewed as a wine hub? The value and volume to other re-export markets such as Vietnam and Singapore are still minute.

 

While everyone has their eyes on Hong Kong, Macau is a city to watch closely. It is quietly expanding its wine industry, poaching many wine professionals and food and beverage staff from Hong Kong. In 2011, over 2,000 additional hotel rooms will be added with the opening of the Galaxy Macau complex, which will include Hotel Okura and Banyan Tree. Since 2008, Macau has overtaken China as the premier re-export destination for Hong Kong in terms of value. In 2009, US$49 million worth of wine was re-exported from Hong Kong to Macau compared to China where the value was only US$33 million. 2010 figures suggest this trend will continue. Re-exports to Macau from January to August 2010 was US$55 million compared with only US$32 million to China. Macau accounts for 57% of all re-exports from Hong Kong by value thus far in 2010!

 

While there is no question that Hong Kong is a vibrant, dynamic wine centre, defining Hong Kong as a wine hub for Asia is still premature. For a defined segment like fine wines (say above HK$500 a bottle), Hong Kong may qualify given the volume and values currently generated by the auction market and fine wine merchants. But as a hub for all wines, Hong Kong may not yet fit the bill. There are some basic, important questions that we should ask about what constitutes a ‘wine hub’: How much of its imports should be re-exported to other markets to qualify Hong Kong as a ‘wine hub’? Is Hong Kong a hub for greater China or for the rest of Asia? Is Hong Kong a wine hub for all wines or just for fine wines? As a start, Hong Kong should expand its re-export destinations to beyond just two key markets and re-export at least 30% of its imports by value. Given the pace with which Hong Kong is moving, this may not take that long. But for now, it might be best to reserve the term ‘wine hub’ for Hong Kong until it is more clearly defined.

 

Reprinted with permission from the South China Morning Post