HK wine traders try to offset export drop

A dramatic slowdown in the growth of wine exports to the mainland is forcing traders to come up with new business strategies to maintain Hong Kong's position at the centre of the trade in Asia.

Export growth to the mainland, which had been running at more than 100 per cent in early 2012, dropped to just 6 per cent in April, according to the latest figures from the Hong Kong Trade Development Council.

The drop-off has left Hong Kong traders, who rely heavily on mainland customers to sustain the city's reputation as Asia's wine hub, with a challenge.

In particular, sellers of premium wines, whose clients are mostly mainlanders, are being hit hard and urgently need to explore the market for more affordable wines.

In the first four months of this year, the mainland imported 128 million litres of wine from around the world, 8.8 per cent more year on year but well below last year's 44 per cent growth rate.

During the same period, wine exports from Hong Kong to the mainland - which accounted for 59 per cent of the city's total wine exports - doubled year on year to HK$421 million.

However, the surge came mainly in the first three months, and things changed for the worse in April, with the growth in export value slowing to 5.6 per cent.

Marcus Chan Chun-wang, business development manager of Grand Cru Cellar International, said half his clients used to buy wines costing more than HK$10,000 a bottle. Now many were shifting to those costing less than HK$1,000.

It was going to be a hard year for the industry, and merchants were focusing more on cheaper selections, he said. However, such a change is not without its drawbacks for a cramped city like Hong Kong, given that merchants need more space to stock wines of lesser value in large quantities. The profit margin was also lower, he said.

Paulo Pong, managing director of wholesaler-retailer Altaya Group International, said the company's wholesale division was seeing less growth than in previous years, mainly due to the reduced demand from the mainland. Local consumption did not drop, he said, but shoppers were being more cautious with their spending. Developing the local retail market seemed to be the way to go.

Sales have grown since he opened shops that specialised in specific growing regions including Bordeaux and Champagne, and he planned to launch more such shops in the coming months.