Wine traders expect rapid bounce back
Vintners have invested heavily in making Hong Kong Asia’s premier hub for quality vintages and anticipate a rapid recovery as COVID-19 recedes.
14 May 2020
With the abolition of wine duties in 2008, Hong Kong kicked off its transformation into the undisputed wine hub of Asia, drawing in traders and experts from across the world. Hospitality and catering-related industries have been under heavy pressure this year as a result of the COVID-19 outbreak but those in the wine industry are bullish that it will quickly revive.
Fine wine expert Simon Tam believes the knowledge, experience and market demand built up over the years will hold Hong Kong in good stead to bounce back strongly from the challenges faced today.
““I believe the wine industry is so well established here, there is no way it won’t come back strongly,” said Mr Tam, Wine Auctioneer at Madison Auction.
Embedded in culture
With so much variety from around the world, drinking and sharing fine wine had become part of the social fabric of Hong Kong, Mr Tam said. Local connoisseurs have a great thirst for knowledge, and with sophisticated cellaring facilities so easily accessible, wine merchants are bringing in scarce vintages with great provenance to stimulate the market.
“With so much going on here, it’s only a matter of time, when public gathering is allowed again, till the market will kickstart with a vengeance.”
He is also impressed by the innovative strategies Hong Kong vendors are employing to reach out to new and existing customers.
“It’s fantastic to see technology being used widely for live streaming of tutorials and tasting sessions,” Mr Tam said.
“At Madison Auction, we’ve found online sales have been very well received. Last year we programmed five (online) sales for 2020, and now in April we’ve already done four. The market is telling us that, yes, we still want to procure and accumulate a wine collection, even though we can’t sit in a ballroom with 100 others bidding.”
Mr Tam said the online platform “is doing the job of an auctioneer at a live auction, bringing wine to life and talking about food and wine pairings”, he said, adding that “we are very encouraged by the results of our online sales”.
Jason Ginsberg and Mandy Chan, married co-founders of Ginsberg+Chan Wine Merchants, are also finding ways to keep their loyal customers on board. Having established their business in 2010, the Canadian couple specialise in rare, older vintages, supplying collectors in Hong Kong and all over Asia.
“Hong Kong really is the hub for fine wine in Asia, and alongside New York, is one of the most important auction markets in the world,” Mr Ginsberg said.
“Sales have dropped, but we are trying to stay positive,” he said of the current crisis. “The main thing is to preserve the business and the team we have.”
Maintaining client base
As wine is a “sentimental” business, staying in touch with their existing clientele is key.
“A lot of our customers are still enjoying fine wine right now, but they tend to be drinking from their collections, and are not replacing them at the moment,” Mr Ginsberg said.
In response, the company has increased its offering of bottles in the more affordable HK$150 to $1,000 range, which is proving successful. Meanwhile, e-commerce is apparently a bright spot. “Our online sales channel has really increased, from less than 2% of our business before, to 10% to 15% now,” Mr Ginsberg said.
“That’s a huge shift in buyer behaviour in Hong Kong, where traditionally clients would call their relationship manager to place an order, or come into the shop to buy.”
Ginsberg+Chan Wine Merchants is also partnering with a local restaurant to offer wine pairings with its food delivery service.
The company runs a shop in the Central business district in the heart of Hong Kong, and the couple hope rents will decline during the current downturn.
Meanwhile, East Meets West Fine Wines (EMW) is seeking to turn the current challenge into an opportunity by “looking at all aspects of our business and, where necessary, building new business processes”, said co-owner Gregory Bielot. “Not only are we creating new opportunities in off-trade retail, direct sales and e-commerce, but we are also looking at how to innovative and best utilise available technology and digital tools. We see this as an opportunity to leverage the new digital environment to improve and innovate all areas of our business.”
Founded in 2003 with its head office in Shanghai, EMW runs offices in Hong Kong as well as other parts of China, including Beijing, Shenzhen, Chengdu, and Macao.) Additionally, it has representative offices in Guangzhou, Chongqing, Suzhou, Hangzhou, Nanjing, Shenyang, Qingdao, and Xian. The company has grown to more than 200 professional employees and provides services to more than 3,500 trade customers across Mainland China, Hong Kong and Macao.
“Today EMW ships wine to over 160 cities across China,” Mr Bielot said. “Over the years we have seen the wine market develop tremendously. We see a future where one day China is the world’s most important market for imported wine.
“Over our almost 17 years’ history we have seen many crises but no doubt this is one of the biggest challenges we have faced,” he continued. “The coronavirus has impacted our business severely as well as the lives of our employees. In addition, we are very sensitive to the negative impact this crisis will have on our clients’ (hotels, restaurants and retailers) businesses. However, EMW has continued to offer delivery to our clients, and is working hard to support our customers and to make decisions that protect the long-term for our employees, our clients, and our supplier partners.”
The company was fortunate to end 2019 in a strong position. This has allowed it to adapt to the changing market conditions and view the current crisis as an opportunity to innovate.
“In the post COVID-19 environment it has become important to have other channels to reach customers who want wine,” Mr Bielot said.
Various collaborations initiated in the second half of 2019, including a charity cooperation with ChickenSoup Foundation, and the launch this year of a new online partnership Wine Warrior, have helped build EMW’s social media presence.
“The results of these programmes were quite successful and helped to create connections to new clients looking for great wine to consume at home,” Mr Bielot said. “In this environment, we are finding the sales volume in e-commerce is increasing each week.”
Despite the challenges, Ms Chan summed up the wine merchants’ confidence in Hong Kong.
“There is no other place in the world with zero import tax on wine and I think we need to all remember what this means … that we’re a city of passionate wine and food lovers, where the calibre of food and beverage is [superb] bar none,” she said.
Mr Tam agreed.
“The spirit of Hong Kong is unstoppable. Look at the speed and velocity with which the city bounced back after issues with SARS [Severe Acute Respiratory Syndrome] and the economic crisis,” he said.
“This is just a temporary slowdown. Nature continues to do its job, growing great grapes, and we have a lot of exciting wines, food, and vintages to look forward to.”
Wine traders from across the globe will head to Hong Kong in November for the HKTDC Hong Kong International Wine & Spirits Fair.
- Food & Beverages
- Hong Kong
- Mainland China