Wine Country Real Estate Blog

Hong Kong is under going a population change, as it becomes increasingly older, with dual income, “empty nester” families.  The increased disposable income for these families, combined with the government’s abolishment of its 40% excise tax on wine on February 27, 2008, is good news for real estate for Wine Country Real Estate. 

There have been 4 significant changes to the Hong Kong tax rates in the last 5 years, which resulted in lower wine prices.  These tax changes are part of a larger move by the government to encourage investment and ensure Hong Kong’s economic competitiveness. They are predicted to continue to encourage the development of Hong Kong as a regional wine trading and distribution hub.

Fortunately, American and South African wines have seen the largest price reductions in Hong Kong.   The European wine prices have not faired as well, however, France leads all statistics for high end Chinese Wine Consumption.  The abolishment of tax on wine has also led to increased imports of high-value wine.  

In addition to this, wine in Hong Kong and the rest of China has become “a social status symbol especially among the newly formed middle classes in China.”  According to more than one analyst, “The demand for wine is increasing at extremely high speed.”  With lower prices, and a growing demand from the Chinese Consumer, many are gambling on the fact that Hong Kong will eventually become one of the world’s largest wine auction centers.

Additionally, it’s important to note that in the last five years, Chinese wine consumption has doubled.  According to VINEXPO research the forecast for 2014 is for Chinese wine consumption to grow by a further 19.6%, reaching 127 million 9-litre cases by the end of the period.   Again, from a pure ROI and EBIT Investment Opportunity for Chinese investors, purchasing Vineyards and Wineries makes sense.

At that point, China will be the 6th largest wine consuming country in the world. (VINEXPO – The iwsr / 21 February 2011)

Consider this,  Asia’s recent appetite for fine wine brought record auction sales in October of 2010 when Three bottles of 1869 vintage Chateau Lafite-Rothschild sold for 1.8 million Hong Kong dollars each (US$232,692 according to the WSJ) – the highest amount sold for wine at auction world-wide.  On October 3, 2011 The Southeby’s Luxury Wine Auction highest seller was 1988 Domaine de la Romanée Conti.  12 bottles of The globally sought after Burgandy sold for $116,346.

The California Wine Institute is doing it’s part to promote our Napa Vineyards and Sonoma Wineries to the Chinese.  In July the San Francisco based Institute participated in a Virtual Wine Tasting, involving California Vintners and a select group of lifestyle media representatives in Shanghai.  The video conferenced tasting was part of the Institutes $300,000 branding campaign for California Wines in China, and in Shanghai there were bus wraps, subway bulkheads and light boxes, and luxury shopping mall billboards promoting our wines!

This spring, the Wine Institute completed a four-city trade mission to China with 27 California winery delegates, representing 68 wineries and 95 California wine brands, the largest California winery representation ever.  The 2011 China Tour included visits to Shanghai, Chengdu, Guangzhou and Shenzhen.  Of the  U.S. wine exports to China, 90% come from California, that represents $45 million in sales during 2010, a 27% increase from the previous year.

Other trends associated with the Chinese Wine Phenomenon?  Expert Jeannie Cho Lee says to expect to see more Chinese Women involved in the process.  “Women will play a greater role in both the wine trade and on the consumer side. More women are buying wine, and within the trade, there are more female sommeliers, wine CEOs and executives emerging in Asia. Look at markets such as Japan, where women are one of the most significant buyers in the Japanese market. As the wine market matures in Hong Kong and China, this will happen there, too.”  Another change?  Women may be leading the way to more White Wine Consumption in China as report after report indicate that it’s more common now to see women ordering White Wine with their fish.

Additionally, some analyst believe that the great Chefs in Wine Country might experience a change too!  With travel, and more exposure to other cultures, many expect to see more cross over from Japanese inspired dishes with wine pairings, to a fusion with Chinese ingredients like sea cucumber and abalone.  Who knows, it might be a hot topic at November’s Flavor! Napa Valley™, November 17-20!

If you’d like to learn more about Napa Valley Vineyards for sale and Sonoma Wineries available, contact Mark Stornetta 707-815-8749 – I have a unique connection to this land, to the art of wine making, to the history of the Appellations, and the value of vineyards for sale in Napa and Sonoma.