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02.29.2008

The Great Sipping Sound of Hong Kong

Mark my words: China is the next big thing when it comes to wine. Wine consumption that is. I've had more than a few Chinese wines that make it clear that they've got a long way to go when it comes to making decent table wine, but when it comes to drinking wine, China is moving up fast in the ranks of wine consumers.

As China mints more millionaires every week, international business hubs like Hong Kong and Shanghai are exploding as centers for spending the newfound wealth of the nation's richest citizens. Increasingly, a share of that cash seems to be spent on wine.

According to various sources that track such figures, wine imports to China have been growing by 50% year over year. Most of the volume of wine is primarily cheaper stuff from Australia and Chile. But increasingly, more affluent tastes are leaning towards top tier wines.

As evidence, you need look no farther than two recent developments.

Last week both Bonham's & Butterfields and Acker Merril & Condit announced they would be holding wine auctions in Hong Kong. These two heavyweights of the wine auction world don't do anything unless they are going to profit from it, and it seems they think there's money in Hong Kong. I'm betting they're right.

Perhaps more meaningful, the governor of Hong Kong has abolished all import duties on wine and spirits. One of my fellow wine bloggers Jim Boyce recently relayed the news on his blog the Grape Wall of China.

Finally, I had dinner the other night with a friend of my wife's from business school who has started a chain of wine bars in Shanghai who says in no uncertain terms that the business is going gangbusters.

If I had any cash lying around I might invest. I'm sure there's some colorful metaphor that would capture the potential that China has as a wine consuming nation, but all the ones that I can think of at the moment are horrible clichés.

What is the sound of 100 million mouths sipping?

Comments (4)

mike wrote:
03.01.08 at 6:04 AM

Alder,

You are so right on this. And I'm afraid too right if my friends who have lived in Hong Kong for the past 15 years are right. The highest end wines are true status symbols and there just aren't enough bottles. You previous and unrelated post on the wines of recession points out another interesting issue. Lots of people are complaining (me too) about the dramatic increase in year over year pricing for most of the top mailing list wines. WIth China minting more and more millionaires, and 2nd growths and easy to find california wines not "good enough" there will continue to be dramatic upward pressure on top burgundies, first growth bordeaux, and the highest end cult cabernets. Too bad I don't have a few million laying around to buy first growth futures. in the current environment they seem like one of the only sure things!

03.01.08 at 10:05 PM

What a great post, as always, Alder. The potential of China is exciting! Recently I was chatting with a wine professional who said that he'd even learn Mandarin to do business there.

Chris Robinson wrote:
03.03.08 at 7:54 PM

Having lived in Hong Kong now for over 20 years I can tell you the celebrations haven't stopped since duty was dropped. Is there any where else in the world with zero duty? The China market is indeed booming but a little re-interpretation is in order. Right now the bulk of fine wine drinkers in China know about 3-4 Bordeaux wines comfortably. They struggle with names and will not order anything they cannot recognize. There are fringes of wine drinkers being educated by wine retailers but this will be slow. So those en primeur buyers who worry about wines shooting up in price over the next few years, trust me it will be many years before anything below super seconds are impacted by this trend. Right now it is Lafite and little else. And let's not forget Russia where Cheval Blanc is the flavour of the decade. As for Burgundies they are not on the radar. Those who think the retail market in China is hot will soon find out some of the realities of doing business in China - competition will emerges almost over night with three stores in the one street where you thought you had a monoply, fakery is a given and this will reduce consumer trust in local outlets and price cutting to move stock is guaranteed as businesses fold. Put your money elsewhere or buy cases of Lafite - and who can do that? Well yes the Chinese!

Mickle wrote:
02.02.09 at 9:53 PM

Yes guys you are right. I am agree with you, my cousin was live in Hong Kong last 3 year.He told me there have some problem in Sipping Sound.

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