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New Zealand Trade and Enterprise provides a wide range of standard services and sophisticated solutions that assist
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CONTENTS
1 MARKET STRUCTURE 3
1.1 Market Overview 3
1.2 Market Drivers 3
1.3 Market Potential 4
1.4 Import Trends 5
1.5 Key Players in the Market 6
1.6 Regulatory 8
1.7 Sustainability 8
2 MARKET ENTRY AND DEVELOPMENT 10
2.1 Market Entry Strategies 10
2.2 Points of Differentiation 10
2.3 Long Term Strategic Issues for Exporters to Consider 11
2.4 Distribution Channels 11
2.5 Pricing 12
3 MARKET RESOURCES AND CONTACTS 14
2/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
1 MARKET STRUCTURE
1.1 Market Overview
The population of Hong Kong is seven million comprising 95 percent of Chinese descent,
four percent ‘other Asian’ and one percent European. Wine consumers in Hong Kong are
more likely to be local Chinese familiar with western food and beverage products,
Europeans and expatriates. Hong Kong does not produce any wine due to land
constraints and the high cost of production, hence the market is dependent on imports.
The Hong Kong wine market is estimated to have generated total revenues of US$440
million in 2009, with market consumption volume at 28.7 million litres.1 Wine imports
reached US$520 million in 2009. Total wine imports (including red, white, sparkling and
fortified) over the 2005-2009 period grew from US$89 million to US$520 million,
representing a continuous average growth rate (CAGR) of 55.45 percent.2
Cabernet Sauvignon, Merlot and Shiraz are the three most popular grape varieties for red
wine in Hong Kong. Together they account for around 80 percent of total volume sales. Of
these, Cabernet Sauvignon is the most popular, accounting for around 50 percent of total
red wine sales. For white wine, Chardonnay is the most popular grape type, accounting
for over 60 percent of total white wine sales.3
Macau is a small market with a population of just over half a million people. However, the
gaming sector contributes to an influx of over two million tourists each month.4 Macau
imported a total of US$117.7 million in wine in 2009, an incredible 1,242 percent increase
from 2002 values (US$8.8 million). Just like other Asian countries, Macau is
predominately a red wine market. The ratio of consumption between red wine and white
wine is approximately 100:15.
1
Source: Datamonitor. Wine in Hong Kong to 2014. October 2010.
2
Source: Hong Kong Census and Statistics Department via World Trade Map.
3
Source: USDA Foreign Agricultural Service Gain Report. Hong Kong Imports of U.S. Wine Set New Record. 3/18/2010.
Gain Report Number HK0004. www.fas.usda.gov/gainfiles/200803/146294113.pdf.
4
Source: Government of Macao. Statistics. http://portal.gov.mo/web/guest/info_detail?infoid=86423.
3/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
Hong Kong as a regional fine wine hub. Prices have reduced to more acceptable levels for
consumers, which has encouraged stronger market growth.
French wine is the most popular, followed by Australian wine. Middle aged Chinese tend
to favour French wine, especially red, due to its established reputation. Europeans,
expatriates and the younger or more westernised Chinese tend to drink New World wines,
either because they know the wines, or they perceive wine to be a fashionable product.
However, the growth of wine consumption amongst younger people in Hong Kong may
decline over time as Hong Kong’s birth rate is currently amongst the lowest in the world.
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. Similar
to other Asian countries, Hong Kong is primarily a red wine market. Wine traders and
retailers point out that it is because consumers like the flavour and colour of the wine,
along with the higher perceived health benefits associated with drinking red wine.
The wine market in Macau has benefited from the entry of large hotel and casino
operators since the gaming sector was opened to foreign competition in 2002. Wine sales
started to build in 2002 and experienced dramatic growth following the completion of
major hotel and casino projects in 2006. In August 2008 the Macau Special Administrative
Region Government waived the import duty for wines and the market is expected to grow
further.
5
Source: Datamonitor. Wine in Hong Kong to 2014. October 2010.
4/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
1.4 Import Trends
Total wine imports reached US$520 million in 2009. Strong overall growth can be
observed over 2007 and 2008 as the Hong Kong government first reduced, then
eliminated, wine tariff duties.
Red wine makes up just under 90 percent of all imports, with just under 29 million litres
imported in 2009, valued at US$464 million. Although imports of both white and sparkling
wine have approximately doubled over the past five years, both still represent
comparatively lower import values, US$25 million and US$24 million respectively.
New Zealand’s total wine exports to Hong Kong have grown at a continuous average
growth rate (CAGR) of 40 percent over the past five years. In 2009, white wines
dominated exports at around 60 percent of trade (NZ$5.3 million). The remainder of
exports consisted of red wine at 39 percent (NZ$3.5 million) and sparkling at 1 percent
(NZ$90 thousand), combining to total exports of NZ$8.9 million.
Source: Hong Kong Census and Statistics Department, via World Trade Map
5/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
Source: Hong Kong Census and Statistics Department, via World Trade Map
Source: Hong Kong Census and Statistics Department, via World Trade Map
6/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
With wine exports of US$88.9 million, France was the most significant supplier to Macau,
followed by Australia (US$7.1 million) and Portugal (US$6.5 million) in 2009. New Zealand
exports made up less than one quarter of a percent of the exports to Macau in 2009 with
exports totalling only US$269 thousand.
6
Source: Hong Kong Census and Statistics Department, via World Trade Map
7/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
1.6 Regulatory
Duties and tariffs
Hong Kong is a free port. Duties are only levied on four groups of commodities –
hydrocarbon oil, liquors, methyl alcohol and tobacco, irrespective of whether the product
concerned is locally manufactured or imported. It is duty free to import wines into Hong
Kong.
Licensing and registration requirements
Import licences, issued by the Hong Kong Customs and Excise Department, are required
for alcoholic liquors with an alcoholic strength above 30 percent by volume measured at a
temperature of 20ºC. As the alcoholic strength of grape wines is below 30 percent, a
licence is not required to import them into Hong Kong.
Labelling requirements
Labelling requirements for wine, liqueur wines, sparkling wines, aromatised wines, fruit
wines, sparkling fruit wines and other drinks with an alcoholic strength by volume of 10
percent or more as determined under section 53 of the Dutiable Commodities Ordinance
(Cap 109) (L.N. 85 of 2004; L.N. 139 of 2004) are exempted from Schedule 3 of the Food
and Drugs (Composition and Labelling) Regulations, except paragraph 3 (see details on
the website - www.cfs.gov.hk/english/food_leg/food_leg_cl.html#6).
Quotas
No quota systems exist for products imported into Hong Kong.
Hong Kong as a gateway to China
With the long trading history between Hong Kong and China, some wine importers in
Hong Kong have already established operations in China. As China has different labelling
requirements, wines in the low to medium price band tend to be imported directly into
China rather than re-exported from Hong Kong as label compliance is labour intensive
and costly. Wine shipped from Hong Kong to China will attract all the usual charges levied
upon entry into China such as duty, VAT and consumption tax.
1.7 Sustainability
Hong Kong remains heavily dependent on imported food products, and in this context
‘local’ production is not seen as a sustainability issue. Sustainable packaging is not
commonplace in Hong Kong, nor marketed as such. Attractive packaging, especially for
products which are sold as gifts, remains popular and is seen as a key factor for success
in the Hong Kong market. There have been some recent efforts to educate the Hong Kong
public on the need for sustainable packaging. Community campaigns have focused mostly
8/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
on recycling expensive packaging (e.g. tin boxes for moon cakes during the Mid-Autumn
Festival) instead of encouraging local people to opt for sustainable packaging.7
Together with the Ministry of Foreign Affairs and Trade, New Zealand Trade and
Enterprise provides regular updates on sustainability issues in the Hong Kong Market. To
view these updates, go to the Doing Business in Hong Kong page on NZTE’s website:
www.nzte.govt.nz.
7
Source: Ministry of Foreign Affairs and Trade with New Zealand Trade and Enterprise. Sustainability Market Intelligence
July 2010 Quarterly Report. www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Food-and-
beverage/Documents/FB%20Sustainability%20report%20for%20Hong%20Kong%20July%202010.pdf.
9/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
2 MARKET ENTRY AND DEVELOPMENT
2.1 Market Entry Strategies
French wine is well received in the market due to its long established reputation. Most
wine importers in Hong Kong maintain French wine as their main business line with “New
World” wines added to their portfolio for diversification. At present, New Zealand wines are
not widely known in the market – a factor of New Zealand’s relatively low profile and Hong
Kong being predominantly a red wine market. Although New Zealand has a strong
reputation for its white wine among regular consumers of white wine (especially sauvignon
blanc), few local Chinese wine drinkers are aware of it.
Most New Zealand wineries produce boutique wines and their lead product tends to be
priced at a premium. Consumers in Hong Kong are only willing to pay for premium wines if
the product is known or perceived to be of premium quality, as well as having a “famous”
label. As a result it will take time and investment for New Zealand brands seeking to
establish a premium positioning.
The Australians, French, Chileans, Californians and Italians are considered the most
active players in the market. Their wine promotion organisations and governments
undertake a lot of promotional activities into both the retail and HRI (hotel, restaurant and
institutional) channels in Hong Kong. A few Australian and South African brands targeting
the retail sector are regularly advertised in newspapers and magazines.
Targeted wine tastings and promotions are common forms of profile raising and brand
building in Hong Kong, especially for New World wines. With greater awareness and
reputation in the crowded Hong Kong market, even in small niches, New Zealand brands
can better position themselves in their chosen segments and build up acceptance among
the trade and consumers to realise desired price points.
New Zealand wineries may also choose to exhibit at trade fairs as a vehicle to identify
importers for the Hong Kong and China market or to gain more exposure for their brands.
Importers targeting the HRI sector usually run wine tasting activities to promote their
products to clients. Retailers communicate with their customers via the internet, e-mail or
direct mail outs. They also run wine tasting activities in their stores.
New Zealand wineries with an interest in the Macau market should also consider focusing
on the hotel, restaurant and institutional sector as consumers are more likely to be familiar
with New Zealand wine and more importantly, willing to pay a premium.
10/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
instead of attempting to compete directly with larger wine producers in mainstream
segments.
Re-export
Macau and
China
HRI Customers
Importers Consumers
Exporters
Retailers
11/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
Wine retailing in Hong Kong is mainly through supermarket chains and specialty wine
shops. There are over 750 supermarket outlets and 170 wine shops. Less experienced
wine consumers usually buy their wines from supermarkets and base their purchase
decisions on price. Wine connoisseurs predominantly purchase from wine shops due to
the wider selection of varieties, sources and labels. They also buy their everyday drinking
wines, usually in cases, direct from importers for a greater discount. As premium fine
wines are mostly sold in the retail sector it retains the greater market share by value.
There are approximately 13,250 eating establishments in Hong Kong. Consumers are
more likely to drink wine at functions, business dinners and wedding banquets. They also
like to order wine when they dine out. The HRI sector consumes more wine by volume
than the retail sector but less by value as restaurants tend to pour cheaper wines as their
house wines.
Wine is available in both European and Chinese restaurants in Hong Kong. Fine dining
and high end Chinese restaurants tend to feature mid to premium range wines while
family and casual restaurants offer low to mid range products.
Macau wine distributors source wines from wineries as well as Hong Kong importers.
They may import directly from wineries if the label is popular and is targeted at the
mainstream market. Distributors tend to import boutique wines via Hong Kong importers
as it is more cost effective to purchase a selection of different wine labels and varieties.
More importantly, they do not need to commit to a large volume of stock from a single
winery. The timeframe to ship wines from Hong Kong to Macau is half a day.
2.5 Pricing
The younger generation of Chinese generally has limited disposable income to spend on
luxury products such as wine so they are more inclined to consume wines under HK$100
(equivalent to NZ$20 or below). Chilean and Australian labels are strong at this end of the
market so tend to be popular with these consumers.
Most expatriates and people who are well exposed to the western dining culture enjoy
wine and know how to recognise and appreciate quality wines. They tend to be executives
with reasonable incomes. This group is more inclined to spend between HK$100 and
HK$350 per bottle (equivalent to NZ$20 to NZ$70). The wines consumed by this group
are more diverse in terms of varieties and countries of origin. As New Zealand is a
boutique wine producer, this segment is a good fit for New Zealand wine.
The high income middle aged group has a higher disposable income to spend on wine.
Labels, perceived quality and the prestige factor are far more important to these
consumers than price per bottle. This group will pay HK$350+ per bottle (equivalent to
NZ$70+) for wines they like, usually the more premium French wines.
12/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
Profit margins for importers and retailers are approximately 30-40 percent and 30-50
percent respectively in Hong Kong.
For Macau, wines imported from Portugal tend to be at the lower end of the market with
import prices averaging between MOP30 (US$3.75) and MOP40 (US$5) per bottle.
French wines imported into Macau are mostly premium fine wines and the average import
price was MOP679 (US$84.88) and MOP392 (US$49) per bottle for red wine and white
wine respectively. Australian wines imported into Macau were primarily low to mid range
with an average import price per bottle of MOP93 (US$11.63) for red wine and MOP53
(US$6.63) for white wine.
13/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010
3 MARKET RESOURCES AND CONTACTS
ASSOCIATIONS
Hong Kong Trade Development Council www.hktdc.com
Census and Statistics Department of Hong Kong www.censtatd.gov.hk
Macao Trade and Investment Promotion Institute www.ipim.gov.mo
Macau Department of Census and Statistics www.dsec.gov.mo
TRADE EVENTS
HOFEX 2011
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14/ Exporter Guide | HONG KONG AND MACAO | Wine Market Profile | November 2010