Hong Kong wine dealers raise a toast to falling euro and mainland China market recovery
Hong Kong’s wine trade is on the rebound, as businesses toast the falling euro and recovery of the mainland Chinese market.
The value of wine imports grew 21 per cent year-on-year to HK$1.56 billion in the first two months of this year, according to the Census and Statistics Department. Imports from France, the biggest source market, also climbed 21 per cent to HK$824 million.
During the same period, total wine exports – a majority to mainland China – jumped 42 per cent from last year to HK$482 million.
That was after wine imports slumped in 2012 and 2013, before a slight recovery last year when imports increased by 5.1 per cent.
The depreciation of the euro against the Hong Kong dollar has made European wines much more appealing to local consumers, according to Paulo Pong Kin-yee, managing director of wine wholesaler Altaya Group.
“Prices are now 10 to 15 per cent cheaper than at the end of last year and we are immediately passing on this discount to our clients, so they are taking advantage,” he said. “We have not seen such active trading, especially for mature Bordeaux, for a while now.”
Combining the price adjustments over the past two years and the cheap euro, some wines are now more than 50 per cent to 70 per cent cheaper than their peak price, he said.
Altaya Group had an optimistic outlook for local wine sales – if the momentum in the first quarter continued, this year would be one of the best for Bordeaux since the slump in 2012.
In the wake of the euro’s depreciation and sluggish demand for luxury goods, watch brands including Patek Philippe, Tag Heuer, Panerai and JLC are cutting prices by up to 10 per cent. Dior and Chanel also adjusted prices for some of their bags, while Prada is considering a similar move.
Hong Kong Trade Development Council economist Wenda Ma also expected wine imports to pick up pace this year.
Mainland China’s appetite for wine was affected in 2013 due to the central government’s austerity plan instituted in late 2012, she said. It recovered last year as demand from mainstream consumers, rather than government officials, caught up.
Auction houses echoed the sentiment. At Acker Merrall and Condit’s March auction in the city, 22 per cent of the HK$45 million in sales came from mainland buyers, double the usual percentage. The auctioneer attributed the growth to the launch of simulcasts of the Hong Kong auction in Beijing and Shanghai.
Also in March, Christie’s fetched HK$26.6 million in its first wine sale in Hong Kong this year, beating the pre-sale estimate of HK$20.8 million.
Tim Triptree, head of sales with Christie’s Hong Kong wine department, saw renewed interest in the Bordeaux region, while demand for burgundy remains steadfast.
“For regular drinkers, the weak euro is a good time to trade up and try releases that you may normally not. In terms of the auction market, we continue to see good demand, in particular for great vintage years. For example, Bordeaux wines make for exceptional drinking and with the euro, prices for Asian collectors are looking attractive,” he said.
As for current market trends, Triptree said vintage champagne is gaining a foothold, while Italian wines are making their way up the ranks at auctions.
Looking globally, the Liv-ex Fine Wine 100 Index – which represents the price movement of 100 of the most sought-after fine wines – was up about 3 per cent from July last year.
“After four years of consecutive declines, the market certainly feels to be in a better place. We are 33.6 per cent from the peak, so we do have a long way to go get back to the highs of 2011. However, the change in sentiment does feel real,” Liv-ex director Justin Gibbs said.
As the euro weakens US dollar-based buyers are being encouraged to take advantage.
“While this includes Hong Kong and Chinese buyers, the bigger impact seems to have been in the United States itself, where buyers have been absent from the market for many years,” he added.