Over 20,000 bottles of smuggled wine have been seized as part of what Hong Kong customs has described as the city’s “largest smuggling case on record” that led to the seizure of HK$1.5 billion (US$191.5 milllion) worth of smuggled goods from expensive food ingredients to endangered species.
According to customs, the contraband goods include electronic goods, expensive seafood, fine wines, music records and endangered species, and the evaded taxes for the goods would amount to HKD 600 million (US$76.6 million) if successfully smuggled.
Judging by images and live video feed from the customs’ press conference on June 26, the majority of the wines consist of the popular Australian wine brand Penfolds. St Henriz and Bin 28 were among some of the identifiable bottles spotted in the haul.
Bourgogne’s rising popularity means that more Burgundian houses appeared in the mix. Hospices de Beaune wines, Domaine d’Eugenie Aux Brulees, Etienne Sauzet Montrachet grand cru were among bottles seized by the authorities in addition to some classified Bordeaux, as the customs video shows.
Penfolds Stash in Hong Kong
This seizure marks another significant bust involving smuggled wines destined for mainland China, following two previous incidents last year. In December, customs authorities confiscated 9,000 smuggled wines, and just two months prior, they uncovered a staggering 30,000 bottles. In all three cases, Penfolds accounts for majority of the busted wines.
The large cache of smuggled Penfolds suggests that demand for the Australian wine brand still remains high on the mainland despite up to 218% tariffs. It also indicates that after two years of tariffs with no immediate sign of lifting, merchants who had stockpiled Penfolds in tax-free Hong Kong with the hope of entering mainland market once the tariffs are lifted are running low on patience.
Incidentally, Australian wine exports to the tax-free city rose 24% in the 12 months after China imposed hefty tariffs on Australian wine, according to Wine Australia data.
As of now, the tariffs are still in place, resulting in long-term storage costs in Hong Kong, one of the most expensive cities in the world. This predicament might have prompted many parallel importers to offload their inventory, and cross-border smuggling is undoubtedly one of them.
According to the customs, they discovered that criminals were plotting to use ocean-going vessels to smuggle goods to the mainland via Southeast Asian countries. Fifteen containers, declared as carrying wood pulp, prepared to be shipped to the mainland via Singapore by an ocean-going vessel, were identified at the Kwai Tsing Container Terminals.
Upon inspection, Customs officers found that the 15 containers were fully packed with wooden boxes. Some of the wooden boxes were used to carry raw paper while most of the wooden boxes were used to conceal suspected smuggled goods. The majority of them were electronic goods, including integrated circuits, printed circuit boards and capacitors, totalling about 1.1 billion pieces.
Other goods included about 25 tonnes of expensive food ingredients, about 20,000 bottles of wines, about 27,000 pieces of classical music CDs and vinyl records, and scheduled endangered species.
A 45-year-old man suspected to be connected with the case has been arrested, and 15 containers suspected to be involved were detained.
An investigation is ongoing. The arrested man has been released on bail pending further investigation and the likelihood of further arrests has not been ruled out.