Ever since it abolished wine duties in February 2008, Hong Kong has quickly moved towards its goal of becoming Asia’s wine trading and distribution hub.

Wine importing houses have seized the opportunity to increase shipments and establish a greater presence in Hong Kong with an eye on the huge mainland market which is expected to become the driver of global wine sales in the next decade and beyond.

“Hong Kong may not be a wine-producing region but our neutrality in trading and promoting wine is widely recognized.  Wine traders find Hong Kong an ideal place because of its proximity to the mainland market, coupled with its well-developed infrastructure, and its modern storage and distribution facilities,” explains Wendy Cheung, principal assistant secretary for commerce and development in the Hong Kong administration, in an interview.

Meanwhile, Hong Kong has taken a number of measures to promote wine imports and exports.  “We facilitate a pro-active dialogue between trade and industry.  Hong Kong has, meanwhile, become the world’s second largest wine auction centre.  Indeed, new wine companies arriving in Hong Kong have even started wine processing, fermentation and bottling,” Cheung claims. 

Wine imports into the former crown colony have surged 122% to US$ 632 million in the 18 months from March 2008 to August 2009 compared with the preceding 18 months.  According to the Commerce and Economic Development Bureau, international wine auction houses have held multiple wine auctions in Hong Kong.  Total sales in 2008, for example, amounted to US$ 27 million.  According to the Bureau, the wine industry has been saying that Hong Kong surpassed London in 2009 to become the world’s second largest wine auction centre after New York.

Hong Kong held 23 wine auctions between April 2008 and January 2010, with total auction sales amounting to US$ 64 million in 2009.

Cheung says that Hong Kong’s wine exports had also increased as consumption in China rose thanks to the growing prosperity of its people who are now acquiring a taste for foreign wines.  Indeed, some 30% of Hong Kong’s exports are destined for the mainland market. 

“We have reached an agreement with the mainland customs to facilitate pre-determined wine duty and also expedite customs clearance,” Cheung says. The mainland customs imposes, in general, a 48% duty on wine imports.  “Given Hong Kong’s expertise in wine culture, we have also been able to increase our exports to other destinations in Asia such as Taiwan, Singapore, Korea, etc. 

Asia’s wine market has unleashed opportunities for wine imports.  Imported wine value (excluding Japan) is expected to reach US$ 1.1 billion by 2012 and US$ 1.5 billion by 2017, according to a TDC consultancy report in 2007.  Within Asia, mainland China will become the largest importer (excluding Japan).  The industry expects wine imports into mainland China to grow to as much as US$ 870 million by 2017, accounting for 58% of the Asian market (excluding Japan).

The global economic crisis may have hit wine-trading hubs in other parts of the world but it has not had “much of an impact” on Hong Kong.   In fact, as Cheung reveals, some London-based wine dealers had migrated to Hong Kong to set up shop.

This view is also echoed by Gregory De Eb, a retired South African diplomat who took up wine business and is the concept founder and general manager of the Hong Kong-based Crown Wine Cellars Ltd.

De Eb says that he was captivated by the idea of Hong Kong becoming a wine hub when he attended an event called “Can Hong Kong Become a Wine Trading Centre?” in June 2000. 

Crown Wine Cellar, whose main business is wine storage, maintains what De Eb describes as an “exclusive wine list” which is provided by wine-merchant friends, with each giving 10 wines that they personally drink and serve at the dining table at home.

Juggling with figures, De Eb describes Hong Kong’s wine-drinking constituency as a “small population”--- 2 million drink wine (that is drink more than one glass), 200,000 are “active” wine drinkers (repeat drinkers), 20,000 are wine collectors (owning 10 cases of wine or more).  “We have some very serious world-class collectors in Hong Kong.  The French export large quantities to Hong Kong, followed by Australia,” maintains De Eb.