Cognac drinkers are coming back

PUBLISHED : Tuesday, 25 May, 2010, 12:00am
UPDATED : Tuesday, 25 May, 2010, 12:00am

When the Hong Kong government reduced its tax on liquor containing less than 30 per cent alcohol in 2008, many of those who had lobbied for its removal hoped that the financial secretary would later follow suit with the tax on spirits - drinks typically containing 40 per cent alcohol or more.

Unfortunately for spirits drinkers, this has not happened. At the same time, the government has not offered any guarantee that the no-tax policy on wine will remain indefinitely.

Spirits in Hong Kong are taxed at 100 per cent of value and the organisers of Vinexpo, who were among the lobbyists for the zero tax rating for wine, still hope that there will be a reduction in the future.

'In Hong Kong, we [will continue to] lobby for the decrease of tax for spirits. Although there is still a levy on spirits, the consumption of Western-style spirits will continue to grow - although at a slower rate - throughout Asia, with Cognac leading Asian consumption,' says Robert Beynat, chief executive of Vinexpo Asia-Pacific.

Although the growth of wine consumption in Asia has been the big story in recent years, historically the region has long been an important spirits market.

Hong Kong was at one point much touted as the biggest consumer of Cognac in the world on a per-capita basis. However, strictly speaking, that honour went to Vatican City.

Asia was for many years the major international market for premium grades of Cognac and blended whisky.

The first of those is now coming back strongly on the mainland and other regional markets after a period in which sales fell. Single malt Scotch whisky is steadily building up a strong, big-spending following, albeit from a small base.

Asia's burgeoning cocktail culture is also creating a steadily expanding market for premium quality white spirits, such as gin, vodka and tequila, and niche products such as liqueurs, bitters and eaux de vie, which is a colourless fruity brandy.

Most categories of spirit and liqueur are represented at Vinexpo Asia-Pacific 2010.

It should come as no surprise in a French-organised show that Cognac is particularly well represented. Well known houses exhibiting include Camus, Frapin, Remy Martin, and Tesseron, while Armagnac is represented by Gelas and Semp? Cointreau is among the classic French liqueurs featured at the show.

'The spirits market is just as important as the wine market,' Beynat stresses. 'According to our figures, world wine sales in 2008 reached US$152 billion and, for the same year, world wine spirits reached US$184 billion.

In Asia, the spirits market is decidedly important because Asia is the world's leading spirits-consuming region, which accounted in 2008 for 50.6 per cent of worldwide spirits consumption.'

Although spirits consumption on the mainland, the world's biggest spirits market, is shrinking,

Beynat believes that the category most affected by this is China-made spirits, which account for 99.3 per cent of total consumption nationwide.

He sees room for growth for Western spirits in general and for cognac and single malt whisky in particular.