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Hong Kong's Wine Market Struggles Amid Sluggish Economy

Hong Kong's wine market continues to face significant challenges, grappling with sluggish retail performance, weak tourism, and an exodus of locals wining and dining across the border.

Recent data from the city's wine imports underscores these difficulties, yet a leading wine importer remains hopeful for a turnaround by the end of the year.

Declining Imports and Volume

According to government data compiled by Vino Joy News, Hong Kong's wine imports in the first five months of the year totaled HKD 2.7 billion (approximately EUR 319 million), marking an 18.14% decrease compared to the same period last year. In volume terms, the decline was more modest, at 0.73%, with imports reaching 13.46 million liters during this period.

“The Hong Kong economy has been sluggish,” commented Bojan Radulovic, General Manager of Links Concept, when speaking to Vino Joy News. “People are being more careful with their spending, especially on things like expensive wines.”

Tourism Decline Impact

Tourism, a major contributor to Hong Kong's wine sales, has also seen a significant decline. According to the Hong Kong Tourism Board, the number of tourists visiting Hong Kong is down by 40% from 2019 levels. As an international hub and duty-free port, Hong Kong heavily relies on visitors to drive demand for premium wines. “With fewer visitors, the demand for premium wines has gone down,” Radulovic explained.

Cross-Border Spending

Another factor contributing to the downturn is the growing cross-border spending patterns among Hong Kong residents. “More and more people from Hong Kong seem to be spending their time and money in places like Shenzhen and Guangzhou on the mainland,” Radulovic noted. “The lower costs and wider selection of goods in those cities are drawing some of the food and drink spending away from Hong Kong.” The recent launch of Sam’s Club online shopping platform in Hong Kong also poses a threat to retail sales, adding another layer of challenge to the local wine market.

Impact on Major Exporters

France, the tax-free wine trading hub’s biggest wine exporter, was hit the hardest by the slump, suffering a 23.2% drop in value during the first five months of the year to HKD 1.6 billion (approximately EUR 189 million), directly leading to the overall drop in value.

Australian wine exports during the period totaled HKD 610.3 million (approximately EUR 72 million), thanks to increased exports in the first two months of the year, as wineries stockpiled wines in the tax-free haven in anticipation of China’s tax removal. Interestingly, in the first two months of the year, Australian wine exports were growing robustly, with still wine exports increasing by 78% and 182.8%, respectively. However, the growth was clipped immediately after China lifted punitive tariffs in late March. In May, the total export value to Hong Kong dropped by 54.3% to HKD 66.5 million (approximately EUR 8 million) compared with the same month last year.

Signs of Recovery

Despite these challenges, there are signs of recovery. French wines, for instance, recorded their first growth of the year in May, up by 2.79%. New Zealand and Spain both registered double-digit growth of 24.9%, while Germany saw the sharpest jump in wine exports during the month, up by a staggering 114.06%.

The uptick and a few upcoming developments in the city have given Radulovic optimism for a market rebound by the end of the year. “I have seen some positive signs like the recent Vinexpo HK event,” he said. “A lot of the wineries we represent were happy with how it turned out. There is still a ton of optimism and expectation around the Hong Kong wine market.”

He also highlighted several upcoming developments that could boost the market, such as the opening of the new Kai Tak stadium and Macallan’s 6,000 sq ft flagship store in Central. Additionally, Sotheby’s Maison is set to open by summer, adding to the city’s attractiveness. “In order to position Hong Kong as a premier wine destination for Asia-specific connoisseurs, the Hong Kong government needs to focus more on increasing the attractiveness of Hong Kong for tourists as well as for corporations,” he emphasized.

Conclusion

Hong Kong's wine market is undoubtedly under pressure from multiple fronts, including economic sluggishness, reduced tourism, and cross-border spending. However, with signs of recovery and new developments on the horizon, there is cautious optimism that the market could see a turnaround by the year's end. For sustained growth, strategic efforts to bolster Hong Kong's attractiveness to both tourists and corporations will be crucial.

Source: Vino-Joy

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