The abolition of taxation on wine in 2008, and subsequent efforts by the Hong Kong government to create a wine hub, are well recorded. De-regulation of the market meant that it became unnecessary to obtain an import licence, resulting in a proliferation of new importers and distributors – and note that in Hong Kong, importers, distributors and retailers are usually a single entity covering all three functions.
Paulo Pong, of Altaya, is also a partner in a high-end restaurant group, so many wines listed by Altaya automatically turn up on some of those lists.
Hong Kong is a mature market, with an extraordinary range of wines available, in a scene including many niche, specialist importers. Entering the market has never been easier, but achieving brand recognition may be harder than ever – as is making a decent profit. Bordeaux is still king, backed up by an increasing interest in Burgundy. Italy, Australia, USA and Chile are prominent.
Per capita local consumption is creeping up. As Julien Froger of high-end importer L’Imperatrice commented, the number of young people in their 30s spending very high sums on wine per month is incredible – and they drink what they buy, too. For the first time, the Chinese are drinking at home, as opposed to only in restaurants. Traditionally, Chinese have brought their own wine to Chinese restaurants, paying corkage, so wine lists have tended to be on the sloppy side. This is changing, with the hosting of wine events seeking to attract the wine-savvy crowd. Corkage levels are increasing, while wine lists slowly improve. At the more fashionable restaurant end, Froger notes that with the overall growth and development in the broad F&B sector, more “funky” wines are in demand.
Tom Chamberlain, Slurp.asia Ltd
Just a few years back, the wine market was resistant to buying online. That has slowly changed, and it’s Slurp.asia that’s been partly responsible. “We set out our stall from the start to bring a different, a possibly more exciting proposition,” says managing director Tom Chamberlain. He had been working with slurp.co.uk for less than a year when, in late 2010, he found himself in Hong Kong to set up an operation. Growth was rapid, from an initial database of less than 100 customers to, four years later, over 10,000, with up to 100 orders placed each day. There are nine full-time employees.
He took the decision to eschew Bordeaux in favour of wines he believed delivered quality and value from other regions, particularly mature wines. “I remember we had great success early on with d’Arenberg The Dead Arm 2002 – we sold a pallet of it, all to eager, young, local Hong Kong wine drinkers. We were selling this perfectly mature, highly rated, iconic complex and balanced wine for under HK$300.00 ($38.50) per bottle. That set the tone and we have never looked back.” Chamberlain made an early decision to incorporate Slurp.asia Ltd as an independent company, which meant the demise of slurp.co.uk did not affect the Hong Kong operation.
Chamberlain’s mantra is simple: quality, diversity and value, delivered with the backdrop of a broad-based supply network comprising merchants, vineyards, private collectors and brokers across the world. Critically, he opted to lease his own warehouse and handle all logistics internally. “When dealing with a sensitive product and such a wide variety and large volume of orders it is essential to retain control.” There are some mainland Chinese customers, but all the business is transacted in Hong Kong, and China is not a key focus. They are, however, setting up an office in Singapore this year, and eyes are on other south-east Asian countries.
The original model heavily supplemented the wines Slurp.asia Ltd imported with those from the lists of some of Hong Kong’s major importers and distributors (including Jebsen, Altaya, Summergate and Links Concept). At the peak, 4,000 wines appeared on the website; today there are around 500 wines. Private customers account for 80% of the business and remain the key focus, though Chamberlain says he has just been awarded his first “by the glass” listing in a new chain of bars rolling out in Hong Kong.
Julien Froger, L’Imperatrice
L’Imperatrice, established five years ago, is probably the most important niche wine buyer in Hong Kong, eagerly embraced by, among others, members of the exclusive Hong Kong Wine Society. It focuses on high-end French wine, some fine German and Austrian labels, with about 1% of cult wines such as Screaming Eagle and Kistler. The core business is hard-to-source Burgundy.
Owner Julien Froger started to learn about wine while studying at catering school in France, but became hooked while doing work experience in Burgundy with Nicolas Potel, as part of his business school studies. Froger moved to the UK in 2003 to work in the purchasing department of a fine wine company. In late 2009 he decided to move to Hong Kong and start up his own business. It was at the point when Asian wine lovers were buying Bordeaux en primeur, as well as older vintages, and interest in Burgundy was weak.
Froger kicked off with a handful of Burgundy producers with whom he had a good relationship. Private buyers were used to buying their fine wine in the UK because it was cheaper, so the key, says Froger, was to establish a core of reputable producers, import their wines direct to Hong Kong, and charge prices equivalent to those in the UK. Froger says “perfect provenance” was to become crucial in a market plagued with counterfeit issues. “The wines would travel less, and clients would have their wine allocations secured for longer.” All sales are conducted over the Internet – but with very personalized service – as Froger says his clients never go to wine shops.
Today, L’Imperatrice officially represents more than 30 wine producers in Burgundy, including names as illustrious as Domaine Leroy, Domaine Anne Gros, Domaine Sylvain Cathiard, small growers in Champagne, and some iconic French estates. Prices range from HK$100.00 up to, just recently, HK$1m for a nebuchadnezzar of Mouton Rothschild 2000.
Jeremy Stockman, Watson’s Wine
Watson’s Wine (formerly known as Watson’s Wine Cellar) was launched 16 years ago in Hong Kong’s Central district, and today operates 26 branches. It emerged on the market at a time when there were few independent, dedicated wine stores that not only offered fine wine but also fine service. Watson’s Wine runs branches in the Central Business District, trendy locales such as Soho, and more ‘local’, residential centres such as Taikoo Shing and Sai Kung.
Watson’s Wine is part of the A.S. Watson Retail group which also owns one of the two leading supermarket chains in Hong Kong, ParknShop (the other being Wellcome). As Stockman explains, this multi-tier model allows them to source wine offering value at any price point. “We taste every wine and strive to find interesting wines at the right price,” he says. This might mean, for example, that Elderton or Penfolds has one range in ParknShop, and their top wines in Watson’s Wine.
On the wholesale side, Stockman says they try to offer different wines and this is possible since many producers have a range specifically made for the restaurant sector, brought in exclusively for on-premise. “For example, we have Burgundy producers like Domaine Fontaine-Gagnard who produce ten premier cru whites, so we use some in retail and some for particular restaurant clients.”
The shelves of Watson’s Wine are striking for their commitment to New World wines alongside France, with good provision from Italy and Spain. “France is still number one, but we see great interest for many of the best wine regions around the world.” Price points for the supermarkets centre on HK$100.00, $150.00 and $200.00, while in Watson’s Wine they are much higher. But, says Stockman, it is important to note that all Hong Kong consumers look for value. “When you spend HK$50.00 or $500.00 or $5,000.00 you are looking for the best wine for your budget: this is a sign of a mature and appreciative market.” He notes that while the very top end might be slackening, at all other levels demand persists. “Hong Kong consumers are very savvy and they are spending the same but are trending toward value: so a first growth customer may now drink a value second growth.”
Eric Desgouttes, Kerry Wines
Established just four years ago, Kerry was always destined to be a major player on the Hong Kong market. One member of the local wine community has commented that once they’ve secured a couple more big brands, they will be a powerful force indeed. They will also likely be big in China: the parent company also owns the Shangri-La hotel chain, with multiple properties in mainland China (as well as owning the South China Morning Post, the flagship English language newspaper in Hong Kong). In the chair sits Eric Desgouttes, a former sommelier, who also used to work for Watson’s Wine. He has a very strong team around him.
The company concentrates on the private and off-trade market, and on-trade channels account for about 35% of business. Kerry Wines is defined, says the very well-connected Desgouttes, to its selection process whereby it directly imports from many boutique and/or family-owned vineyards. Names include Jacquesson, Roberto Voerzio, Giuseppe Quintarelli and Ken Forrester. Kerry Wines also stresses its impeccable sourcing of fine wines to ensure proper provenance, storage and transportation, particularly in view of the extreme weather faced in Hong Kong. Desgouttes believes that China will become a big player in the HK$200.00 to $1,500.00 range, but that “Hong Kong is still very much the sourcing place.”
Gavin Jones, Jebsen Fine Wines
Born and educated in England, Gavin Jones has worked in the wine industry for more than 20 years. Jebsen launched its wine division in Hong Kong 23 years ago (though has been active in the market for more than 100 years in other industries), and Jones has worked there for about 15 years. He is credited with spearheading the substantial development of this wine group from a somewhat modest wine importer and distributor into a wine portfolio which includes winery and vineyard investments.
The company would be widely regarded as the leading independent wine merchant in Hong Kong, with substantial distribution across all channels. That said, Jones comments that Dairy Farm and A.S. Watson import more wine, which they sell directly through their retail chains. Jebsen is the exclusive partner of many important wine (and spirits) brands including Bollinger, Baron Philippe de Rothschild, Marchesi de’ Frescobaldi and Robert Mondavi Winery. “Being privately owned, we have the luxury of taking a longer-term view on our different businesses and how to develop them and build the brands/categories.”
Though Jebsen is huge in China, Jebsen’s Hong Kong success is based on a highly focused business model concentrating on the dynamics of the internal market, regardless of neighbouring markets. Hong Kong remains a very important window for global brands, says Jones, adding that many spirit brands invest in Hong Kong outlets frequented by mainland Chinese tourists, in an effort to demonstrate how popular and established their brands are.