Wine trade could fall flat after tax rise

PUBLISHED : Wednesday, 20 March, 2002, 12:00am
UPDATED : Wednesday, 20 March, 2002, 12:00am

The recent rise in wine tax has taken the sparkle out of the SAR's reputation as a regional wine centre, experts say.

Industry leader Robert Beynat said yesterday he could not fathom why Financial Secretary Antony Leung Kam-chung had bumped up the tax from 60 to 80 per cent in the Budget.

The move will put the brakes on wine imports, which have increased 120 per cent in the past 10 years.

Mr Beynat, general manager of Vinexpo, organiser of the world's largest wine exhibitions, said: 'It is a pity. Hong Kong was a hub - a place with good services and infrastructure where you bring goods to nearby countries - but more taxes means the hub is then killed. But the situation can improve if there are not too many taxes.'

He said Hong Kong had a very small market, importing 1.2 million cases of wine a year plus spirits.

Mr Beynat is in Hong Kong to meet traders and importers for the next Asia-Pacific wine exhibition in Tokyo from June 4-6.

The managing director of Ponti Trading, Antonio Koo, agreed with Mr Beynat. 'I think the Government used the tax as a political means to show they have done something to address the deficit,' he said.

'But people will drink less of the expensive wines, so I think they will end up with less revenue than their predicted $70 million, which in turn creates a bad reputation for Hong Kong.'

A Vinexpo study shows French wines are most favoured by SAR drinkers, commanding almost 40 per cent of the market share.

Mr Beynat said French wine was popular around the world because of its history and reputation.

Hong Kong imported more than 10.5 million litres of wine in 2000. Still wines accounted for 68 per cent, the rest comprising sparkling and fortified wines. Wine sales peaked in 1997 and fell back to a plateau in 1999. Imports of spirits have decreased from 419,138 cases in 1996 to 334,404 in 2000.

Mr Koo said the turning point for wine in Asia came in 1993 and 1994, when its health benefits were widely publicised.

'Then all of Asia began to increase consumption, especially French wines, which have since faced competition from Australia and Chile,' he said.

'In the past it was not in the Asian culture to drink wines based on grapes but the internationalisation of cuisine and trade over the years has helped to create a cultural change.'

The East Asian region recorded the world's biggest leap in wine consumption - 68 per cent since 1994.

Taiwanese drinkers led the way with a 105 per cent rise followed by Japan, Singapore, and China.

Mr Beynat said Asia was expected to experience the highest increase in wine consumption, with growth predicted to reach 16.4 per cent by 2006.

Asia has also been a leader in production, with China, Japan and South Korea increasing their output by 53 per cent. From 1994 to 2000, Japan tripled its production and China increased its output by 30 per cent.

Most of the wine consumed in China is produced in the country, but imports should continue to grow with China's entry to the World Trade Organisation, Mr Beynat said.

But he warned the mainland still presented many problems because of its rules and regulations.

Globally, consumption is expected to reach about 22.1 billion litres by 2006, an increase of 5.4 per cent. Production is also predicted to grow by 6.5 per cent.