Wine duty abolition spells trouble in Hong Kong

Hong Kong Special Administrative Region (SAR) financial secretary John Tsang has dealt a blow to the territory’s duty-free liquor operators by abolishing duty on wine and beer in his maiden budget speech.

 

The move, which will cost the government a reported HK$560m ($71.9m) in lost revenues, is aimed at establishing Hong Kong as a leading trading centre for fine wines. Although there is no sales tax on alcohol, duty on wine and beer ran at 80% before the announcement.

 

Fine wine merchant Berry Bros & Rudd, which has a store in Causeway Bay, reacted to the decision by cutting its average price of wine by 22%. Managing director Nicholas Pegna said: “Hong Kong now has a golden opportunity to serve as Asia’s undisputed wine hub, which can only contribute business and tourism dollars to the SAR.”

 

Unsurprisingly, Hong Kong International airport liquor concessionaire and border shop operator Sky Connection’s reaction to the news was more muted. Buying and merchandise director Simon Au said: “We are monitoring domestic retailers closely to see whether any adjustment is necessary. It will definitely have an impact on us.”

 

Sky Connection’s wine business has grown in importance in recent years. Top-end French wines have dominated sales with many famous labels such as Château Petrus, Château Margaux and Château Haut-Brion stocked.