Hong Kong helps California winemakers beat recession

Sacramento BeeFebruary 26, 2010 

A drop in tariffs and a growing interest in California varietals is making Hong Kong one of the fastest-growing markets for U.S. winemakers.

Hong Kong's imports of U.S wine — most of which come from California — soared 41% in 2009 over the previous year to $517 million.

The boost helped makers of high-end California wine, whose overall sales have slipped during the recession. Also benefitting are the makers of value wines.

San Joaquin Valley farmers — long known as the workhorses of the grape industry — produced the largest amount of grapes crushed in the state last year. And much of the tonnage is used for lower-priced wines.

A Hong Kong trade official said the consumption of California wine in his country is growing at all price levels.

"We are talking about the full range of wines, from bottles as low as $12 to those that are easily $40 to $50," said Donald Tong, Hong Kong's commissioner for economic trade affairs.

Tong visited with California state officials and business leaders last week to talk about boosting trade between the two countries.

Although most wine in Hong Kong is sold in the grocery stores, wine specialty stores — where mid- to higher-priced wine is sold — make up about 35% of wine-volume sales.

Also, new auction houses have opened in Hong Kong. Last year, 14 wine auctions were held, totaling $64 million in sales.

"We firmly believe that there is room for growth for California wines because the market in Hong Kong continues to increase," Tong said. "And I don't see things slowing down."

Hong Kong now represents the fourth-largest importer of California wines behind the European Union, Canada and Japan.

"Asia's economy is rebounding faster than ours, and we have an excess of high-end wines, so there is a real effort to make these luxury wines available to China, Hong Kong and other Asian countries," said Steve Fredricks, manager partner of Turrentine Brokerage.

Gladys Horiuchi, spokeswoman for the Wine Institute, agreed that Hong Kong represents a growth market for California wine exports.

"It is one of the bright spots in this global recession," Horiuchi said.

Tong said Hong Kong's consumers are increasingly becoming more sophisticated about drinking wine, preferring red varieties such as cabernet sauvignon, merlot and shiraz to white wines such as Chardonnay.

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