Ventures Dialogue

Hubert Li is one of the lucky ones. Since opening the Hong Kong Wine Vault almost two years ago, he has been able to turn his passion for wine into a profession.
Mr Li’s wine-storage facility in Wong Chuk Hang, just outside the Aberdeen Tunnel, covers 30,000 square feet, spread over five floors, with three of those floors currently in use. The Vault, at present, has about 40 clients and some 150 cellars, with a total capacity of about 150,000 bottles.
A private collector, Mr Li was running out of space when the Hong Kong Government removed all duties on wine last year. A dinner table conversation with some like-minded friends soon led to a business built on what they saw as a golden opportunity.
“We originally started the business for our own use,” Mr Li explains. “But we have expanded because demand for such facilities has been so great. My partners had quite a lot of wine stored abroad, but the removal of the wine tax meant they wanted to bring it all here, so they could see it and sample it when they wanted.’’

Spawning Ideas

Mr Li says removing the wine duty first brought more attention to the wine industry – and then people started to think more about how they might become involved.
“It has made a huge difference in terms of interest and opportunities,” he says. “Without it, we never would have started our business.’’

The Vault’s clients, he says, have been actively expanding their knowledge of wine as quickly as they’ve been expanding their cellars.
“Our customers are highly knowledgeable about their wine and really demand good wines and safety for those wines,’’ he says. “It is very important that wine not be moved around, and people in Hong Kong now can have their collections close to them. The industry here is booming; it has so much potential for development.”

Beautiful Numbers

Wine industry figures support Mr Li’s claims of rapid growth. Overall auction sales alone in the city last year totalled US$27 million, coming in behind the US$100 million spent in New York and the US$33 million sold in London. And there are predictions that Hong Kong will surpass the British capital in sales by the end of this year.
Hong Kong’s Financial Secretary John Tsang can only see things expanding.
“Looking ahead, we have signed various Memoranda of Understanding with prominent wine-producing countries, including France, Australia, Spain, Italy and Hungary,’’ he says. “This will help us tap their expertise in developing wine-related business in terms of trade, tourism, staging exhibitions, promoting wine education and wine appreciation.
“All this is a good start and a great example of how low taxes – or, in this case, no taxes – can generate global interest and stimulate economic activity.’’

Fine Wine Hub

Gregory De’eb, General Manager of Crown Wine Cellars, Hong Kong’s first wine storage facility, agrees.  “Put simply, the developments recently have really cemented Hong Kong’s position as the third major rare and fine-wine centre in the world, behind, of course, New York and London,’’ he says. “Without any doubt, we are Asia’s fine wine capital.’’

Mr De’eb has been with Crown for seven years and has seen, first-hand, the growth of the wine industry in Hong Kong. Back then, Crown was the only operator offering cellaring, in the Deep Water Bay Drive bunker. But Crown’s business has since rapidly expanded.
“There has just been an explosion in the industry,’’ he says. “Originally, we just had Crown Wine Cellars one, the underground facility in Shouson Hill. By May last year, we had opened number two, our wine-storage facility. By August, we had opened our third, and we have just opened our fourth.
“It took four years to get to the first stage and now look. That’s how quickly things are moving. And it is not just us, we have seen our rivals going through the same metamorphosis.’’
Mr De’eb says the expansion of the storage side of the industry has led to benefits across the board.

Building Blocks

“A lot of the wines flowing into Hong Kong are not for consumption,’’ he says. “And strange as that may sound, that is a good thing. They are coming in for wine storage, for wine cellaring, and that has meant a much greater need for an expansion of the industry. The wine has to be kept somewhere, and you have to then support that industry, through things like transport, more staff, more space. It has been another brick in the wall in terms of the local economy, and a whole lot of people are benefiting from that.’’

This report appeared in the September 9, 2009 issue of Hong Kong Trader, a Hong Kong Trade Development Council publication.

Photo by Mr T in DC