When will restaurants do their duty?

PUBLISHED : Thursday, 26 April, 2012, 12:00am
UPDATED : Thursday, 26 April, 2012, 12:00am


Hong Kong, as we are all sick of hearing, is now 'Asia's wine hub', which makes it a bitter irony that a glass of quaffable wine in a restaurant often costs as much as the retail price of the entire bottle.

We all accept, of course, that restaurateurs are entitled to make a fair profit. But we also know daylight - or candle-light - robbery when we see it. It is an infuriating anomaly that, in a town where imports of wine are now completely tax-free, restaurants - particularly those in hotels - charge some of the steepest wine mark-ups in the world.

It also reflects a broken promise. One of the bodies that lobbied most vocally for the removal of the tax was the hotel industry. Ten years ago, in a submission - unsuccessful at the time - to the government opposing the raising of wine tax from 60 per cent to 80 per cent, the Hong Kong Hotels Association said: 'Wine prices in hotels have been a source of complaint by visitors because they compare our prices with their own prices at home, which are free from duty.'

That is misleading, to say the least. Most countries impose import duties on wine, and if the hotels were troubled by complaints about their prices - of which the ad valorem duty was a minor part of the total unless the bottle was of a very high value - they had only to reduce them.

The association continued: 'If society accepts wine consumption as part of personal lifestyle and respects visitors' rights and privileges to such lifestyle, without having to pay excessive wine duty to enjoy them, then there should be greater consideration on the part of the government to seek alternative revenue to meet their budgets.'

The implication of that statement is clear, despite the mangled English. It is that if the tax were to be removed, the price of wine in hotel bars and restaurants to consumers would be significantly reduced. It took a few years, but eventually the Hong Kong government did its bit. So, when will the hotel industry honour its obligations? A pretty safe bet would be never.

In 2007, after the wine tax had been cut from 80 per cent to 40 per cent, the Bills Committee of the Legislative Council noted: 'Apparently, the reduction in duty on alcoholic beverages has not been reflected in the [on-premise] retail prices of the alcoholic beverages concerned', and asked the hotels association why.

The evasive answer in full can be found in the Legco archives (legco.gov.hk), but the gist of it was that reductions were being made - no, really, they were - but it would take time for this to become apparent because old taxed inventory had yet to be sold.

The association also said: 'As new imports and purchases of alcoholic beverages from importers and suppliers after the reduction in duty on alcoholic beverages, are also subject to increases in import prices and the Hong Kong dollar has depreciated against most currencies, the impact of these factors has resulted in some cases, in a lower reduction in retail prices of alcoholic beverages supplied to our hotels after the reduction in duty on alcoholic beverages.' Yeah, right.

The Hong Kong dollar had, of course, depreciated because of its peg to the US dollar. And yet hotel restaurant prices for American wines, which were entirely unaffected by currency fluctuations, didn't come down, either. At the time, I asked some food and beverage (F&B) managers why that was. I received no answer.

There was, of course, no subsequent discounting to speak of - even when the tax came down to zero. Some of those F&B professionals probably miss being able to blame the taxman for what was always flagrant overpricing.

With a small number of honourable exceptions - mostly Chinese restaurants, which often have BYO arrangements on the premise that the core business of a restaurant is selling food - Hong Kong outlets charge as much for a bottle or glass of table wine as they can get away with.

Very expensive wines have become somewhat cheaper in restaurants, although they are still seldom marked up by less than 100 per cent, and HK$24,000 isn't a bad return on pulling the cork from a bottle that cost only HK$12,000 to acquire. Many places mark up more ambitiously than that.

But the people who were put off ordering wine in restaurants when the hotels association was complaining about the tax weren't outraged that they were paying HK$36,000 rather than HK$24,000 for a bottle of exceptional wine. They were outraged at paying HK$100 or more for a glass of something ordinary when they suspected the entire bottle it came from cost the restaurant operator about half that.

Now people know what many of the wines on restaurant lists cost at retail because many more of them can be found on supermarket shelves, and information is easy to find on the internet.

'There is nothing worse than spotting bottles you've carefully selected for your list on the shelves of the bottle shop downstairs or, worse, the supermarket,' an anonymous F&B professional tells Debra Meiburg MW in her Guide to the Hong Kong Wine Trade.

In other words, if the public know the real value of what the restaurant is selling, they will have a good idea of how much they are being fleeced.

At the top end of the list, let the buyer beware. I have no special objection to fine wines being subject to what is basically a luxury tax - albeit one going into private rather than public coffers. Decent wine at a modest price with a meal, however, is not a luxury. It is a requirement of civilised life. 'A meal without wine is like a day without sunshine,' wrote Jean Anthelme Brillat-Savarin.

There are many decent inexpensive wines for everyday drinking by people who don't aspire to be connoisseurs, but feel a meal is nicer with a glass of something.

In the restaurants of the countries where wine is made, it is usually priced accordingly. And they should be in 'Asia's wine hub', as well.