Traders cheer as wine business booms (hktdc.com)


	Gregory De'eb of Crown Wine Cellars says Hong Kong is Asia's fine wine hub

	Empty wine racks at Crown Wine Cellars will soon be filled with repatriated wine

	Boris de Vroomen sees Hong Kong as a wine market equal to London and New York

Wine buyers, distributors and collectors are toasting the end of Hong Kong's wine tax, saying the initiative will promote trade and further elevate the city as an international wine hub.

Within days of Financial Secretary John Tsang's budget announcement that the 40 per cent duty would be scrapped, effective immediately, traders were bringing back fine wine they had previously stored overseas.

Gregory De'eb who runs Crown Wine Cellars, a professional wine storage facility and private clubhouse, says six cargo containers of fine wine were repatriated by members to his cellar alone. "They are celebrating the fact that Hong Kong is now the only destination in the world that has no VAT and no wine tax," he said.

Mr De'eb says Hong Kong is seizing its rightful role as the region's wine hub.

Fine wine hub

"We already are Asia's fine wine hub – this (initiative) is merely an acceleration of an existing fact," he said. "Hong Kong has four decades of fine wine trading as background, it is by far the most knowledgeable, and the city currently controls 20 to 25 per cent of fine wine auctions worldwide."

Hong Kong collectors control one million cases of fine wine, a quarter of the world's total, Mr De'eb said.

"Add to this the fact that we are on the edge of one of the greatest (potential) fine wine buyers in the world, being the Chinese mainland, and it becomes incredibly logical to bring fine wines to Hong Kong."

Boris de Vroomen, Managing Director of Moet Hennessy Diageo Hong Kong Limited and Chairman of the Wine and Spirits Industry Coalition, said the move would "send a strong message that Hong Kong is determined to become an international fine wine hub" alongside London and New York.

He added that 40 per cent of wines traded in London and New York, the world's biggest trading markets, are owned by Greater China consumers – predominantly in Hong Kong. With the duty obstacle removed and wine flowing back to Hong Kong, the potential revenue shift is enormous.

Inaugural auction

Other businesses quick to react to the news include auction house Bonhams, scheduling the first wine auction to be held in Hong Kong in a decade. Frank Martell, Bonhams' International Director of Fine & Rare Wines, said the wine duty exemption had opened up a new dimension in the trade, investment and enjoyment of wine as a culture.

"I feel strongly that Hong Kong will prove to be the centre of trade for fine and rare wines in the east," he said. "Given the sophistication and advanced appreciation for the best goods in the world, it is easy to see that Hong Kong will soon join London and the United States as a major player on the global wine scene."

US wine merchant Acker Merrall & Condit will hold what it claims to be Asia's largest ever wine auction. The May 31 auction in Hong Kong will include "cream of the crop" wines estimated to fetch more than HK$39 milliion (US$5 million). "Hong Kong is ready to run on the fast track to becoming a global wine hub, alongside New York and London," said John Kapon, President of Acker Merrall & Condit.

Sales at Berry Bros. & Rudd boomed following the announcement. "I don't think I can recall a busier day in 11 years," said Sales Director Simon Staples. Nicholas Pegna, the firm's Hong Kong Managing Director, said the tax cut had lowered wine prices by an average of 22 per cent. "A bottle of wine will now be cheaper in Hong Kong than anywhere else in Asia," he said.

Platform for trade

In order to provide a platform for trade, the Hong Kong Trade Development Council (HKTDC) announced it would hold the city's first wine expo. The Hong Kong International Wine Expo will be held from August 14 – 16 at the Hong Kong Convention and Exhibition Centre.

The expo will host wine dealers, cellars, producers and suppliers of related services from Hong Kong, Asia and the rest of the world. Exhibit categories will include liquor and beverage products, equipment and services required for wine production, and wine accessories.

"By organising the expo, we hope to create a one-stop platform for exhibitors and buyers to meet and explore business opportunties in the booming markets of Asia and the Chinese mainland," said HKTDC's Assistant Executive Director Raymond Yip.

Asia's wine market is expected to grow between 10 to 20 per cent per annum over the next five years with the Chinese mainland and Hong Kong, Taiwan, Singapore and Korea leading the charge. The consumption value in Asia (excluding Japan) is expected to double, reaching HK$130 billion in 2012 and jumping to HK$210 billion in 2017.

The Chinese mainland is expected to be the key driving force for Asia's growth. By 2017, it is expected that the mainland alone will import HK$7 billion worth of wine which tops all other Asian countries.