Hong Kong, ten years later

Friday, 21. December 2018 - 11:30

Photo by Annie Spratt on Unsplash

This year Hong Kong officially celebrates 10 years as a tax-free haven for wine and Asia’s major wine trading hub. Much has changed over the past decade: Hong Kong has zoomed past both London and New York to become the world’s wine auction capital. Hong Kong’s number of wine importers per capita is probably unmatched in the world, although since wine importers no longer need to be licensed, it’s a hard fact to prove. The one thing that has remained in sadly short supply is affordable neighbourhood wine bars and bottle shops, although even that has started to change.

Numerous industry insiders agree that what was once a market dominated by Bordeaux, toujours Bordeaux, is developing in several interesting new directions. As Linden Wilkie of The Fine Wine Experience says: “This is an industry making progress on all fronts.” 

The top end
While Burgundy has clearly supplanted Bordeaux as the collectable of choice for the under-60 Hong Kong collector, interest in other collectables has remained niche until now.

However, Wilkie points out that in certain exclusive circles, Grosses Gewächs German Rieslings – particularly those from Rheinhessen superstar Weingut Keller – have entered the same league as top Grand Cru white Burgundies. 

Top offerings from Tuscany and particularly Piedmont – once the perpetual also-ran in the world of collectables – are also gaining in popularity. Roland Müksch, chairman of the Hong Kong Wine Society, observed that the marketing efforts by Italian luxury producers are starting to pay off in terms of both visibility and auction prices. The 36-year-old society, Hong Kong’s oldest, has found its members ever more enthusiastic about Italian tastings, particularly those featuring wines of substantial age. 

Bojan Radulovic, chief sommelier of The Peninsula Hotels group, has observed his patrons expressing more interest in US wines, particularly Californian Cabernets, as the latter have taken a turn towards more restrained, “earthy” styles. Trade issues between China and the US have, if anything, pushed collectors to come to Hong Kong for duty-free Napa icons, says Jonathan Mather, general manager of greater South China, Hong Kong and Macau for ASC Fine Wines. Radulovic sees a growing interest among his customers in expanding their wine horizons. The demand for wine by the glass – still very much an underexploited area of most wine programmes in the city – is shifting rapidly towards more premium offerings. For this Radulovic credits Coravin, which allows for a broader and more frequently changing selection. 

However, tempting as it is to get swept up in the narrative of rapid diversification, other voices are more grounding. “Our client base has pretty stable preferences,” says Hugo Poon, wine specialist at Quintessentially Wines. Also, while the collectors’ market seems buoyant – recent auction results from the major houses have been staggering – even avid collectors are taking a moment to reflect: “The private client market in Hong Kong has slowed down in recent months given the current volatility in global markets,” says Caroline Que, senior sales manager of Burgundy specialist Goedhuis & Co Hong Kong. Those who are opening their wallets are wary of overpaying; despite a proliferation of expensively decorated luxury wine outlets, most collectors purchase directly from merchants rather than pay prices that reflect the city’s exorbitant retail rents. 

A break from orthodoxy
The development of a healthy mid-market is, meanwhile, a trend in and of itself. Only within the past five years or so has interest in wine trickled down from the fine wine sphere to the broader populace. Francesca Martin of branding consultancy Nimbility remarks that younger consumers are after unique products: wines made in lesser known regions or using unusual grape varieties or techniques hold more appeal than the branded wines their parents drink. The preferred setting also seems to be trending towards the casual, with unconventional efforts like Detour – a coffee bar by day, an organic wine bar three nights a week – drawing more customers than many conventional wine bars did mere years ago. 

Ian Wong, proprietor of boutique importer Cork Culture, concurs, reporting that he sees an increased interest in skin-contact wines. Perhaps as a consequence of the popularity of collectable Burgundy, even the mid-market has developed an “insatiable thirst” for Pinot. However, much of this enthusiasm for the alternative has, as ever, equally benefited competitor products like craft beer, sake and artisanal spirits. Martin of Nimbility notes several wine importers are expanding their portfolios with spirits in particular. 

The key to this market seems to lie in food, a route wine importers and producers have tried to push for years, but which has brought limited success until now. Sabrina Hosford, head of sales and marketing for Summergate Hong Kong and Macau, sees Riesling – typically considered an ideal pairing partner for delicate Cantonese cuisine – finally starting to gain real traction. Food and wine pairing menus, another under-utilised tool in the sommelier’s arsenal, are ever more popular, says Radulovic of The Peninsula group. 

The new raft of hip, genre-bending Asian and Asian fusion restaurants such as HAKU, along with more casual choices like Moyo, Uma Nota and the veteran Yardbird, has boldly thrust wine into increasingly unorthodox pairings. James Suckling Wine Central, a showcase for 500 of the critic’s top-scored wines, takes this to new extremes, successfully pairing iconic wines of the world with notoriously wine-challenging Korean food. Wallace Lo, sommelier at HAKU, remarks that his job has become much more enjoyable, with more scope to create a “personalised” selection for his wine list and more diners getting used to “using a somm.” 

In Hong Kong’s low-regulation wine market, a larger volume of wine importers’ business is direct to consumer than is seen – or permitted – elsewhere. Debra Meiburg’s 2012 Guide to the Hong Kong Wine Trade noted that 37% of importers’ volume was direct sales, nearly as much as the 42% sold through the on-trade, with the balance likely to have shifted even further toward direct sales since then. However, because of the on-trade’s widespread acceptance of bring your own bottle (BYOB), much of that volume is still being consumed in restaurants, which are at least able to earn the corkage. The ubiquity of BYOB has however likely stunted the growth of wine bar culture, with only a handful like the stalwart natural wine bar La Cabane a Vin and encyclopedic (if exclusively French) LQV demonstrating much longevity. 

Further down
The entry level of the market is perhaps the least dynamic segment in recent years, with mass market channels for wine such as supermarkets largely unchanged. This could be because of Hong Kong’s inherently stable supermarket duopoly, though of course it is understood that the ParknShop camp has a stronger wine focus than the Dairy Farm camp, given the former’s ownership of Watson’s Wine. E-commerce, the ongoing major story of the mainland Chinese wine market, has had a less obvious impact in Hong Kong despite a handful of promising entrants to the space, including Cru (formerly Slurp.asia), Wineview, WineDirect and more. Meanwhile the Chinese e-commerce giants JD.com and Alibaba have not focused their wine efforts on the Hong Kong market. Many speculate that this is because most residents live within a stone’s throw of a wine shop, but a definitive answer remains elusive. 

To summarise, the past few years have seen the market growing from a collectable French wine monoculture into something more vibrant and sustainable. Many in the trade celebrate this shift as finally delivering on the promise made 10 years ago that Hong Kong would one day become a truly global wine city. 
Sarah Heller MW