Posted: May 27, 2019
Hong Kong has become the top export destination for high-end Bordeaux wine for the first time since 2011, knocking China from the No 1 spot.
Last year, the city accounted for 16 per cent of wine sales by value from Bordeaux, the famed wine-growing region in southwestern France, according to the Bordeaux Wine Council.
Hong Kong ranked top of the league tables for sales of high-end Bordeaux by value in 2011, before being overtaken by the UK for one year, and then the mainland from 2013 through 2017.
The equivalent of 10 million bottles were exported to Hong Kong last year, worth 327 million euros (US$366.4 million). This marks a 3 per cent rise in value when compared to 2017, and almost all of it was red wine.
Demand for fine wine as a whole has increased, according to Adam Bilbey, Asia head of Sotheby’s Wine, referring to bottles costing around HK$1,000 to HK$3,000 (US$127.40 to US$382.20).
“Over the last 12 to 18 months we have seen incredible growth in the fine wine market full stop, and that has been driven out of Hong Kong,” said Bilbey. “What we are seeing is more fine wine being drunk, not stock held, on a regular basis in Hong Kong, and it is far broader in client base than we have ever seen before.”
According to the Hong Kong Trade and Development Council (TDC), French wine is the most popular among all imported wine by value, with a 65 per cent share.
In 2011 the popularity of wine from Bordeaux boomed in Hong Kong, before high prices curbed consumption, according to Bilbey. Now, the market has returned to Bordeaux as prices once again look reasonable compared to wine from Burgundy, an area in east-central France, which “are through the roof,” he said.
Fine wine trader BI Wines & Spirits said Hong Kong accounted for half of its Bordeaux wine sales of £21.5 million (US$27.33 million) in Asia in 2018.
The city’s return as a leading wine consumption hub owes much to changes on the mainland, according to experts.
Sales of Bordeaux wine by value to the mainland dropped 22 per cent in 2018, according to Allan Sichel, president of Bordeaux Wine Council. He said a decline in the economy and concerns over the trade war have been factors weighing on consumer confidence in China.
Other analysts said excess supplies of fine wine held in warehouses on the mainland will need to be drawn down before a rebound in orders can be expected.
“There is a lot of Bordeaux sitting in warehouses in China and at some point the levy has got to break and you have to sell that before you start buying more,” said Bilbey. “That, combined with the trade war and macroeconomic conditions in general, means they [Chinese buyers] are probably going to be more cautious with their buying.”
“An overflow of stock needing to be sold is also sitting in China, say experts.
The country’s wine market “got a bit ahead of itself”, Guy Ruston, managing director Asia Pacific, BI Wines & Spirits, said. “It was sprinting before it could walk,” Ruston said, adding that investment in wines was larger than consumption.
Meanwhile, many mainlanders prefer to purchase wine in Hong Kong.
“There are many counterfeit wines in mainland China, so when [mainland buyers] want to buy expensive wine they prefer Hong Kong, because they trust Hong Kong exports,” said Alice Tsang, assistant principal economist at the TDC.
For the lower-priced, mass market wines from Bordeaux, buyers tend to buy domestically, said Tsang. Hong Kong is well down the list of global consumers by volume. Last year the city ranked seventh for imports, trailing China, the US, Belgium, Britain, Germany and Japan.
In 2008, Hong Kong eliminated all wine duties, making it the first free wine port among major economies and accelerating the city to become Asia’s fine wine hub. About 28 per cent of imported wine by value to Hong Kong is re-exported, according to HKTDC.
“In hindsight, that was one of the great decisions made in the fine wine market in Asia as a whole, because what it has done has repositioned Hong Kong as the centre of the Asia wine world,” said Bilbey. “There is an argument to say that Hong Kong has surpassed London as the centre of the wine world.”
By Louise Moon
May 26, 2019
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