Imports of U.S. Wine Set New Record

A Lastest News about Food , Beverages and Tobacco in Hong Kong SAR

Posted on: 12 Mar 2012

Hong Kong imports of U.S. wines set a new record at US$70 million in 2011, a surge of 52% over 2010.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 2/24/2012 GAIN Report Number: HK1204 Hong Kong Post: Hong Kong Hong Kong Imports of U.S. Wine Set New Record Report Categories: Market Development Reports Approved By: Erich Kuss Prepared By: Li, Chris Report Highlights: Hong Kong imports of U.S. wines set a new record at US$70 million in 2011, a surge of 52% over 2010. The U.S. is currently the 4th largest wine exporter to Hong Kong behind France, the UK (mainly auction sales) and Australia. In terms of U.S. wine exports, Hong Kong consolidated its position as the 3rd largest market in 2011 after Canada and the UK, up from the 15th largest in 2007, 7th largest in 2008 and 4th in 2009. In addition to being a vibrant local market, Hong Kong also serves as a gateway to wine markets in the region because of its prime geographical location, superior logistical infrastructure and sound legal and financial system. Trade statistics indicated that Hong Kong traders re-exported 19% of wine imports from around the world and retained 81% for local consumption. Exporters of U.S. wine are encouraged to contact ATO Hong Kong or check the ATO Hong Kong website for information on upcoming trade shows and other promotion opportunities. Page 1 of 10 SECTION I. MARKET OVERVIEW Hong Kong wine imports have soared since the Hong Kong Government?s (HKG) elimination of its excise tax on wine in February 2008, making Hong Kong one of the few tax free markets for wine in the world. World wine imports into Hong Kong hit a new record in 2011, reaching US$1.2 billion and 45.5 million liters, representing an increase of 41% and 23% respectively over 2010. The U.S. was the 4th largest wine supplying country to Hong Kong after France, the UK (mainly auction sales) and Australia. According to official Hong Kong Government statistics, U.S. wine imports into Hong Kong reached US$70 million and 4.6 million liters in 2011, a surge of 52% and 29% respectively over 2010. According to official U.S. statistics, U.S. wine exports to Hong Kong have been even greater in 2011, having reached US$124 million for an increase of 41% from 2010. [Note: A thorough examination of the discrepancy between the data sets has not been completed. However, for consistency in comparing U.S. figures with those of other exporting countries, official Hong Kong trade statistics are cited in this report.] Table 1: Hong Kong Wine Imports (Value) (HS Code: 220421) (Source: Calculations based on World Trade Atlas data) s Growth Sha ports v Gros re Re-ex Imports (US$ 11 v 11 v Country Million) 2007 2008 2009 2010 2011 07 10 2007 2011 2007 2011 World Gross Imports 185 341 491 858 1,206 552% 41% 100% 100% Re-exports 68 81 91 165 235 246% 42% 100% 100% 37% 19% Retained Imports 117 261 399 693 971 731% 40% 100% 100% France Gross Imports 99 204 270 495 748 652% 51% 54% 62% Re-exports 51 61 68 119 178 250% 50% 75% 76% 51% 24% Retained Imports 49 143 202 376 570 1069% 51% 42% 59% United Gross Imports 15 22 71 123 161 956% 30% 8% 13% Kingdom Re-exports 3 1 2 3 2 -19% -9% 5% 1% 20% 2% Retained Imports 12 21 69 121 158 1203% 31% 10% 16% Australia Gross Imports 25 32 42 53 70 178% 32% 14% 6% Re-exports 6 7 8 11 19 190% 74% 9% 8% 25% 26% Retained Imports 19 25 34 43 52 174% 22% 16% 5% United Gross Imports 8 17 40 46 70 803% 52% 4% 6% States Re-exports 1 1 2 3 4 331% 45% 1% 2% 12% 6% Retained Imports 7 16 38 43 66 865% 52% 6% 7% Italy Gross Imports 7 10 13 19 27 259% 39% 4% 2% Re-exports 1 2 2 2 2 138% 1% 1% 1% 13% 9% Retained Imports 6 9 11 17 24 277% 44% 5% 2% Switzerland Gross Imports 2 7 8 28 25 1436% -11% 1% 2% Re-exports 0 0 0 0 0 -8% 29% 0% 0% 2% 0% Retained Imports 2 7 8 28 25 1469% -11% 1% 3% Chile Gross Imports 9 12 13 17 18 102% 3% 5% 1% Re-exports 2 2 3 4 5 151% 42% 3% 2% 23% 29% Retained Imports 7 10 10 13 13 87% -7% 6% 1% Spain Gross Imports 3 5 5 7 16 403% 123% 2% 1% Page 2 of 10 Re-exports 0 1 1 1 5 1614% 327% 0% 2% 10% 33% Retained Imports 3 5 4 6 11 275% 81% 2% 1% Germany Gross Imports 1 3 4 9 15 1003% 65% 1% 1% Re-exports 1 1 1 2 3 350% 91% 1% 1% 53% 22% Retained Imports 1 1 2 8 12 1743% 59% 1% 1% New Zealand Gross Imports 4 5 6 8 11 194% 26% 2% 1% Re-exports 0 0 0 1 1 108% 29% 1% 0% 10% 7% Retained Imports 3 5 5 8 10 203% 26% 3% 1% Total from Gross Imports 174 317 470 807 1,160 568% 44% 94% 96% Top 10 Re-exports 66 76 87 144 219 234% 52% 96% 93% 38% 19% Retained Suppliers Imports 108 241 383 663 940 770% 42% 92% 97% Total from Gross Imports 11 24 20 51 46 312% -10% 6% 4% Rest of Re-exports 2 5 4 21 16 542% -24% 4% 7% 22% 34% Retained World Imports 9 20 16 30 30 247% 0% 8% 3% The following graph illustrates the growth of Hong Kong wine imports since the elimination of the wine tax. The table below illustrates Hong Kong wine imports by volume. The growth rate by volume is significantly slower over its surging value in 2011, inferring a rising demand in higher quality and priced wines. Table 2: Hong Kong Wine Imports (Volume) (HS Code: 220421) (Source: Calculations based on World Trade Atlas data) Growth Share Re-export v Gross Imports Country (Liters) 2007 2008 2009 2010 2011 11 v 07 11 v 10 2007 2011 2007 2011 World Gross Imports 20,659,425 27,139,935 32,433,615 36,979,242 45,511,242 120% 23% 100% 100% Re-exports 3,908,206 4,602,240 7,016,799 10,689,151 17,003,991 335% 59% 100% 100% 19% 37% Retained Imports 16,751,219 22,537,695 25,416,816 26,290,091 28,507,251 70% 8% 100% 100% France Gross Imports 6,519,766 8,298,338 10,503,349 13,864,740 18,849,613 189% 36% 32% 41% Re-exports 1,909,463 2,324,981 3,482,744 6,237,573 8,958,238 369% 44% 49% 53% 29% 48% Retained Imports 4,610,303 5,973,357 7,020,605 7,627,167 9,891,375 115% 30% 28% 35% United Gross Imports 198,924 294,973 658,582 762,058 692,959 248% -9% 1% 2% Kingdom Re-exports 16,229 11,884 34,089 34,814 15,499 -4% -55% 0% 0% 8% 2% Retained Imports 182,695 283,089 624,493 727,244 677,460 271% -7% 1% 2% Page 3 of 10 Australia Gross Imports 4,907,165 5,719,646 7,225,087 6,606,813 6,944,673 42% 5% 24% 15% Re-exports 886,487 816,013 1,089,250 1,532,622 2,066,227 133% 35% 23% 12% 18% 30% Retained Imports 4,020,678 4,903,633 6,135,837 5,074,191 4,878,446 21% -4% 24% 17% United Gross Imports 1,863,266 3,625,268 4,102,374 3,600,689 4,630,333 149% 29% 9% 10% States Re-exports 134,125 209,576 523,994 435,169 648,118 383% 49% 3% 4% 7% 14% Retained Imports 1,729,141 3,415,692 3,578,380 3,165,520 3,982,215 130% 26% 10% 14% Italy Gross Imports 940,436 957,298 1,607,617 2,082,687 2,315,483 146% 11% 5% 5% Re-exports 133,560 186,746 315,004 334,375 385,622 189% 15% 3% 2% 14% 17% Retained Imports 806,876 770,552 1,292,613 1,748,312 1,929,861 139% 10% 5% 7% Switzerland Gross Imports 31,826 20,837 68,324 91,961 69,422 118% -25% 0% 0% Re-exports 8,114 0 2,501 166 7,036 -13% 4139% 0% 0% 25% 10% Retained Imports 23,712 20,837 65,823 91,795 62,386 163% -32% 0% 0% Chile Gross Imports 2,675,371 3,733,643 3,350,718 3,783,646 3,563,929 33% -6% 13% 8% Re-exports 408,607 388,052 516,745 518,262 926,908 127% 79% 10% 5% 15% 26% Retained Imports 2,266,764 3,345,591 2,833,973 3,265,384 2,637,021 16% -19% 14% 9% Spain Gross Imports 1,351,834 1,643,648 1,570,414 1,895,022 2,811,236 108% 48% 7% 6% Re-exports 69,083 101,406 158,546 332,155 985,243 1326% 197% 2% 6% 5% 35% Retained Imports 1,282,751 1,542,242 1,411,868 1,562,867 1,825,993 42% 17% 8% 6% Germany Gross Imports 171,470 346,347 416,923 573,171 1,055,783 516% 84% 1% 2% Re-exports 101,440 173,206 129,460 246,244 577,304 469% 134% 3% 3% 59% 55% Retained Imports 70,030 173,141 287,463 326,927 478,479 583% 46% 0% 2% New Zealand G ross Imports 481,485 636,686 649,447 919,706 1,047,975 118% 14% 2% 2% Re-exports 41,476 29,351 38,183 45,844 68,937 66% 50% 1% 0% 9% 7% Retained Imports 440,009 607,335 611,264 873,862 979,038 123% 12% 3% 3% Total from Gross Imports 19,141,543 25,276,684 30,152,835 34,180,493 41,981,406 119% 23% 93% 92% Top 10 Re-exports 3,708,584 4,241,215 6,290,516 9,717,224 14,639,132 295% 51% 95% 86% 19% 35% Suppliers Retained Imports 15,432,959 21,035,469 23,862,319 24,463,269 27,342,274 77% 12% 92% 96% Total from Gross Imports 1,517,882 1,863,251 2,280,780 2,798,749 3,529,836 133% 26% 7% 8% Rest of Re-exports 199,622 361,025 726,283 971,927 2,364,859 1085% 143% 5% 14% 13% 67% World Retained Imports 1,318,260 1,502,226 1,554,497 1,826,822 1,164,977 -12% -36% 8% 4% The following graph illustrates the growth in the volume of Hong Kong?s wine imports. Page 4 of 10 Outlook for 2012: Hong Kong is the world's largest wine auction center. Its vibrant local market and prime geographic location serve as a platform for growing wine trade in other Asian markets. Hong Kong re-exported 19% by value of its wine imports and retained 81% for local consumption (please refer to Table 1). To help the industry better grasp the business opportunities in the Mainland, the Hong Kong Government (HKG) has signed an agreement with the General Administration of Customs to facilitate exports of wines from Hong Kong to Mainland China. The measures were implemented on a trial basis in Shenzhen in the second quarter of 2010. For more details on these measures, please refer to the following website: http://www.info.gov.hk/gia/general/201002/09/P201002090213.htm U.S. wine is well known in Hong Kong for being a quality product, but at an affordable price. This is partly attributed to the depreciation of the U.S. dollar in the past few years and aggressive promotional efforts by the U.S. Agricultural Trade Office, the U.S. Wine Institute and U.S. wine distributors in the market. Opportunities to increase awareness and sales of U.S. wines are bountiful at the retail and food service level. Wine promotions at leading retail outlets, wine seminars, tastings, food pairings and trade shows are effective means to promote U.S. wines (please also refer to Section VI of this report). Growth of U.S. wine imports was 135% in 2009, slowed to15% growth in 2010 and resumed fast growth at 52% in 2011. The growth variation was due to the economic fluctuation and also keen competition among wine exporting countries. In particular, French and Australian interests strongly promoted their wines throughout the year. Conducting more promotions to increase consumers? knowledge and interest on U.S. wines will help gain more market shares in Hong Kong. Hong Kong wine traders are cautiously optimistic about the wine market. As Hong Kong wine imports have reached a larger base and competition is keen, traders expect a slightly slower growth in wine imports in 2012. SECTION II. COMPETITION French wine still dominates the market, accounting for 59% of total retained wine imports value and 35% of import volume in 2011 (please refer to Table 1 and 2). However, New World wines, including those from the U.S. continue to gain popularity and growth in the market. The growth of New World wines is attributed to the boom of the wine appreciation culture and consumers beginning to realize that they can buy high quality New World wine at competitive prices. It should be noted that wine represents a much larger portion of France?s overall food and beverage exports (~70%) to Hong Kong when compared to the United States (slightly over 1%). Thus French wines may continue to enjoy substantial marketing resources to maintain and grow market share given the relative importance of the wine industry to its overall food and beverage trade. SECTION III. MARKET SECTOR OPPORTUNITIES AND THREATS Consumption Patterns Driving the Market Page 5 of 10 Most consumers believe that drinking about two glasses of wine a day is beneficial to health and that is a major influence on the boom of the wine market in Hong Kong. Trade statistics revealed that Hong Kong consumers prefer red wine to white wine. In 2011, gross imports of red wine were US$1.17 billion, constituted over 96% of total wine imports into Hong Kong. In contrast, gross imports of white wine were only US$37 million (3% of total wine imports). Wine traders and retailers pointed out that it is because they like the flavor of the wine, the color of the wine and more perceived health benefits associated with drinking red wine. Cabernet Sauvignon, Merlot and Shiraz are the three most popular grape varieties for red wine in Hong Kong. Together they accounted for around 80% of total volume sales. Of these, Cabernet Sauvignon is the most popular, accounting for around 50% of total red wine sales. For white wine, Chardonnay is the most popular grape type, accounting for over 60% of total white wine sales. Sales Channels Hong Kong?s retail markets, such as supermarkets, specialty stores and convenience stores, account for approximately 60% of the wine sales in terms of volume, and 40% in value terms. The reminder is sold through the restaurants and bars. Generally, wine mark-ups are high in the food service market, resulting in prices being three to four times higher than in the retail market. Retail Market Supermarkets account for the greatest share of wine volume sales among retailers, accounting for 50% of all retail sales. The two largest supermarket chains ? Wellcome Supermarkets and ParknShop (each has over 250 outlets), because of their large turnovers, usually import wine directly from overseas suppliers to reduce middlemen?s mark-ups. Therefore they can price their wines more competitively to their customers, who are generally more price-conscious and rank wine quality, country-of-origin and age as secondary for importance in selection. Wine specialty stores account for 35% of wine retail sales. Watson?s Wine Cellar is largest wine specialist in Hong Kong with 20 outlets. Specialty stores serve a consumer group who pay more attention to wine quality, country of origin, and age, rather than just price. Wine specialty stores offer greater opportunities for moderate and high price point U.S. wine. Other high-end retailers such as Oliver?s, Three-Sixty, Taste, Market Place by Jasons?etc that also carry higher priced wines, but at a much smaller scale due to their fewer number of outlets. Restaurant and Bar Price points of wine sold in restaurants and bars vary according to the overall price point of the outlet. A glass of low-end wine normally costs between US$4-9, whereas a medium- end one costs US$8-20 and a high-end one costs US$20 and above. As is the case almost Page 6 of 10 anywhere, the higher-end the restaurant, the more premium the wine it will serve and vice versa. Restaurants in Hong Kong normally charge a high mark-up on wine consumption. Restaurants that allow customers to bring their own wine charge high corkage fees around US$25-38 per bottle. Since the abolishment of the wine tax in February 2008, many restaurants and hotels have launched more wine-tasting classes and special promotions. These activities have supplemented sales promotions at the retail market in an effort to spread the wine appreciation culture and increase the demand for more fine wines. U.S. suppliers of high price point wines should expect more opportunities and target this market segment. SECTION IV. PRICING Retail Price Segments The abolition of its wine tax has created intense competition in the Hong Kong wine market, placing downward pressure on retail prices of wines. A study of the wines available at the two largest local supermarket chains revealed the 61% of the red wines on offer were priced below US$13, 30% were priced between US$13-26 and only 9% were priced above US$26. As for white wines, 68% were priced at below US$13, 29% were priced between US$13-26 and only 3% were priced above US$26. To see a list of popular wines available in the Hong Kong retail market and their retail prices, please visit the websites of the two leading supermarkets and the leading wine specialist: Wellcome Supermarket http://shop.wellcome.com.hk ParknShop http://www1.parknshop.com/WebShop/Home.do Watson?s Wine Cellar http://www.watsonswine.com (Note: Retail prices of wine you can find on their websites are based in Hong Kong dollars and US$1 equals to approximately HK$7.8.) SECTION V. MARKET ACCESS For information on Hong Kong?s import regulations on wine, please refer to GAIN Report #HK0033. (This report is available at: http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx) SECTION VI. ENTRY AND MARKETING STRATEGY For new-to-market wineries that wish to enter the Hong Kong market, the following approaches are recommended: One-on-one meetings with potential importers: Most local importers are interested in meeting new-to-market exporters in a private environment. A list of local wine importers is Page 7 of 10 available by contacting our Agricultural Trade Office in Hong Kong. Exhibiting in a local trade show: There are trade shows in Hong Kong for U.S. wine exporters to showcase their high quality wine to buyers from Hong Kong, Macau, China and the region. For information on Hong Kong?s major food and beverage trade shows in 2012, please refer to GAIN Report #HK1147. (This report is available at: http://gain.fas.usda.gov/Lists/Advanced%20Search/AllItems.aspx) Participating in wine promotional activities: The Agricultural Trade Office in Hong Kong organized, co-organized with other U.S. wine promotional associations or participated in promotional activities such as seminars, wine tastings, receptions, food pairings and trade shows to promote U.S. wines. You can contact our office to check out the dates of confirmed activities and see if you may be able to participate in those activities. Below please find some photos taken at these activities for your reference: Opening of US Room @ Hong Kong Wine Center Virtual Wine Tasting Promoting US wine at HOFEX US Wine Day at HOFEX Page 8 of 10 In-store Promotions on US wine US wine at Hong Kong Wine & Dine Festival US wine tasting at ATO Hong Kong Hong Kong Int?l Wine & Spirits Fair US wine at Great American BBQ Introducing US wine to university students SECTION VII. KEY CONTACTS AND FURTHER INFORMATION U.S. wine suppliers, traders, exporters?etc seeking marketing information pertaining to food and beverage import regulations, promotional opportunities, trade inquiries and marketing assistance are welcomed to contact ATO Hong Kong at: Page 9 of 10 U.S. Agricultural Trade Office Hong Kong 18 St. John's Building 33 Garden Road, Central Hong Kong Tel: (852) 2841-2350 Fax: (852) 2845-0943 E-mail: ATOHongKong@usda.gov Website: http://www.usfoods-hongkong.net The Wine Institute of California also has a local representative in Hong Kong who assists its members in promoting U.S. wines in Hong Kong and Macau: Wine Institute Mr. Phillip C. Holloway Ringe Marketing Service Limited Room 401, Dannies House 20 Luard Road, Wanchai Hong Kong Tel: (852) 2366-3089 Fax: (852) 2722-6300 E-Mail: ringe@netvigator.com Page 10 of 10
Posted: 12 March 2012

See more from Food , Beverages and Tobacco in Hong Kong SAR

Expert Views    
Food and Agricultural Import in Hong Kong SAR   By Foreign Agricultural Service
Duties on Distilled Spirits   By Foreign Agricultural Service
Food and Agricultural Import Regulations and Standards   By Foreign Agricultural Service
HRI Food Service Sector   By Foreign Agricultural Service
Food and Agricultural Import Regulations and Standards   By Foreign Agricultural Service