Hong Kong flag and Chinese national flag (pic: iStock)

Hong Kong flag and Chinese national flag (pic: iStock)

Pandemic and border closure have spelled more pains for Hong Kong's wine market, as trade data shows the fine wine hub's role is quickly diminishing, a somewhat thorny and sensitive subject that will split wine crowds in Hong Kong.

Pandemic and border closure have spelled more pains for Hong Kong’s wine market, as trade data shows the fine wine hub’s role is quickly diminishing, a somewhat thorny and sensitive subject that will split wine crowds in Hong Kong.

The data released by Hong Kong government showed that the city’s wine imports in the first nine months of 2020 dropped by 23.2% in value to HK$ 5.1 billion, while its volume tumbled to 25.49 million litres, a year-on-year decrease of 20.9%.

The set of data would be read with caution and degrees of understanding as the coronavirus pandemic decimated on-trade wine sales and drove away deep-pocketed visitors.

Hong Kong’s wine imports data (pic: screengrab)

What is alarming though is the city’s shrinking re-exports, an important part of Hong Kong’s prized role as a fine wine trading hub to disseminate wines to Southeastern Asian countries such as Thailand, Vietnam, Cambodia and most importantly to mainland China. The latter is home to up to 90% of the city’s re-exports.

Despite Hong Kong’s branding of a wine hub, reality is otherwise.

Re-exports of wines during the period have significantly dropped due to months of border closure since the early days of the coronavirus pandemic. Its wine re-exports from January to September in 2020 only amounted to HK$ 600 million, about 11% of the city’s total import value.

This is a further drop from 2019’s 17.1% amid months of social unrest and 2015’s peak at 44%.

Wine shoppers in Hong Kong (pic: stock image)

The slippery slide has been a long time coming.

Months of protests in 2019 deterred mainland tourists who normally would add fine wine to their luxury shopping list. As a result, since the start of mass protests in June, visitors dropped over 40% in the second half of the year, according to data released by Hong Kong Tourism Board. Hong Kong’s wine imports in value dropped 26.4% and another 19.6% in volume over the previous year.

In 2020, border closure to contain Covid-19 spread from mainland China means cross-border wine trade virtually grounded to a halt, particularly for illegally smuggled fine wines such as grand cru classe Bordeaux, Burgundy and blue-chip wines from Napa and Italy.

Logistically, faster customs clearance and preferential treatment at more Chinese ports particularly in Hong Kong’s neighboring Guangdong province also means wineries and producers would opt to enter China directly.

But of course, Hong Kong’s wine re-export recess also reflects a softer demand in mainland China, due to slower economy, trade war and the pandemic.

As Liv-Ex in its 2020 fine wine report noted that a question over the future of Hong Kong as a fine wine hub is also observed, the idea of tapping into Hong Kong as “a gateway to mainland China’s wine market” is unfortunately fallacious.

More and more wineries that we have talked to are rerouting for this reason.

With international travel and trade not close to be normalized, Hong Kong’s wine trade perhaps need to look inward to reinvent and imagine itself.

4 thoughts on “Pandemic threatens Hong Kong’s role as a wine hub

  1. Hong Kong’s role as the fine wine hub for Asia continues despite the negative effects of the pandemic and the demonstrations. I see it every day working here. We have the highest percentage of professional wine merchants in Asia. We have the key wine auction houses. And we have the highest percentage of knowledgeable and high-end wine consumers. This isn’t even mentioning the number of fine wine programs in restaurants and hotels, which are struggling under the current situation but will continue in the future.

    Wines also continue to be shipped to Mainland China after their purchase in Hong Kong, both officially and unofficially. The problem is that the Chinese wine market is plummeting, especially now after its punitive tariffs against Australian wine, in particular Penfolds, which had a significant percentage of the entire China fine wine market. You have reported extensively on this.

    Hong Kong has never served as a wine hub for Southeast Asia as most wines for markets such as Thailand and Cambodia go through Singapore.

    I am happy to be based in Hong Kong as a wine critic, and I taste and rate more than 400 wines a week at the moment here with the ease of samples arriving from all over the world with no tax or duty. Hong Kong’s logistics for wine are second to none.

    In the end, Hong Kong’s role as the fine wine hub of Asia will only strength when the pandemic is in control and free movement between countries is safe. There’s no question about our future.

    1. Indeed. China’s wine market has been declining since 2018 because of slowing economy and US-China trade. Australian wine tariffs late last year in fact drove up imports because of mass stockpiling at least for the short term.

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