Hong Kong's wine drinkers are opting for cheaper vintages and even switching to beer as retail prices are pushed to the highest levels in the world. The once-emerging wine market has been crippled by the highest tax rate in the developed world at 80 per cent, the fall in the value of US dollar and the economic downturn, sellers say. Those who previously indulged in their favourite drop are trading down to lower-quality bottles and first-time tasters are not even bothering to buy. International Wine Centre director Simon Tam said 90 per cent of wine in Hong Kong cost less than $80 a bottle and was sold at housing estate supermarkets and convenience stores. 'These are the people who are being penalised - average Hong Kongers,' Mr Tam said. 'If they switch to cheaper wines after being used to more expensive ones, they get sick of the cheap taste and move on to something else like beer, which is not very good for you and doesn't go with food.' AS Watson Wine Group general manager Clive McLaughlin, who manages stores Watson's Wine Cellar and ParknShop, said there was a lot of confusion in the market. 'People are spending less . . . they are trading down, which means prices are going up,' Mr McLaughlin said. 'New entrants say they used to buy a certain wine at one price and now it's another price, which means that people either move downmarket or out of the market. 'I am concerned that new entrants in particular are especially deciding to move back out of the wine market.' Mr McLaughlin said it was clear the market had recessed. 'But I cannot say whether there will be closures [of wine shops]. I can only leave that up to the market,' he said. Antonio Koo, managing director of wine importer Ponti Trading, said most wine importers had no choice but to pass on at least a good portion of the cost increase to customers in order to survive. Wellcome wine manager Sean Robson said industry sales had been affected by tough times. 'By putting up the tax, the government has hurt the average guy in the street more than the top-end drinker,' Mr Robson said. Hong Kong wine merchants have formed an action group to fight for a reduction in duty on wine, which was increased in the last Budget. The Hong Kong Wine Industry Coalition says the high price of wine in the territory is damaging the tourism industry and putting people off restaurants. While the territory's duty has increased, the mainland has slashed its rate of import duty on wine to 34.4 per cent and will cut it to 14 per cent by 2004 under World Trade Organisation rules. In Macau, duty is 15 per cent. Graphic: WINE28GET
