by Jonathan Mather
While Chinese consumers slow their purchases, Hong Kong’s wine market is in freefall due to ongoing unrest and the US-China Trade War.
Imports of wine into China are down 41% YOY Jan to Aug, which tracks the 64% decline in re-exports from HK YOY according to a recent HKTDC study.
The HK wine market is taking the brunt of both sides, high inventories based on past consumption combined with dropping local and re-export demand from HK and PRC consumers alike. The 28% drop in HK imports Jan to Aug vs 2018 don’t account for the ongoing protests in HK as most of those orders delivered through August would have been placed in May-June ahead of European winery summer holidays.
One major retailer has commented off the record that wine category sales declined by over 30% YOY August and still slipping. Several major importers have stated that sales are “far below expectations” “Back to 2012 levels” or “we have given up on the budget, just focus on surviving”.
Chinese consumption patterns are also changing with source countries of imports on the move, at home consumption on the rise and the evolution of regional taste preferences.
Australian imports have made big inroads on the due to a combination of factors including import duty waiver, successful marketing campaigns and well accepted color and taste.
While France still leads, China is emerging as a desireable source of quality wines. Production levels have fallen in Chinese wineries at the same time as a new crop of quality producers have been winning awards. Hopefully this means that producers are trading quality for quantity, not a guarantee by past results.
Consumption has started to shift to in-home entertainment and drinking for health/beauty. Economic concerns combined with high markups and sometimes limited choice in restaurants and bars to encourage consumption at home.