Insights from Master of Wine Rhys Pender into Hong Kong wine market

Master of Wine Rhys Pender shares his insights into BC wines and impressions of the Hong Kong wine market post a recent visit to host a wine seminar co-organised by British Columbia Wine Institute (BCWI) and The Drinks Business Hong Kong.  Read full article below:

Citation: Rhys Pender MW, BC Report – The Hong Kong Market, WineAlign, November 2016

I’ve just returned from a whirlwind trip to Hong Kong where I delivered a seminar on BC wine alongside Rupert Millar, Managing Editor of The Drinks Business magazine. This seminar was put on by the British Columbia Wine Institute (BCWI) as part of their export strategy. According to Laura Kittmer, Media Relations Manager with the BCWI, the seminar was a key strategic move. “With a focus on developing export markets and gaining international recognition for the Wines of British Columbia, the BCWI was thrilled to partner with the Drinks Business, a leading global drinks trade publication with a worldwide reputation, to showcase premium BC VQA wines to key wine influencers, trade and media in the Hong Kong market."

For me, this was a chance not only to share some knowledge about the BC wine business but also to get a brief and intense snapshot of the Hong Kong wine market, see what this culture thought of BC wines, and think about BC wine and its place in key markets around the world.

You might ask why BC would need to look at exporting wine when our local 100% BC-grown wines still only make up about 17% of wine sales in the province. Surely it is more important to grow the market share within the province and then across Canada before tackling the rest of the world? There is some merit to this argument, but those who are pushing the boundaries for quality wine don’t want to stop with the local market. To be truly recognized as a quality wine you have to stand up against the quality wines of the world and part of that is to be represented in the top wine markets of the world. In my opinion, the BCWI strategy is a good one.

Canadian wine has a few image problems. When you travel the world and mention “Canada” and “wine” together you usually get one of two responses. One is “icewine”; the other is “Canada makes wine?” Our loyal local consumption is great but does little to spread the word about the exciting things happening in the BC wine industry. This needs to change and we need to get out there with our best wines to show the world what we can do. Building a reputation abroad helps to strengthen it at home. With recent visitors like Decanter’s Steven Spurrier and Wine Spectator’s Matt Kramer, amongst many others, there is critical interest in BC wine, but we can’t just sit back and wait for it to happen.

Production is small in BC so we will never sell huge quantities of wine into export markets. That is not the point. What we can do is build a reputation as one of the upcoming, interesting, quality wines of the world. Think of the wine lists that the world’s top sommeliers are putting together. These professionals like to have a representation of diverse, interesting, quality wines from all corners of the globe and they love introducing their regulars to something new and exciting. Sounds like a good fit for BC wine to me.

My visit to Hong Kong was an interesting test of how BC wines are perceived in a unique market with a unique culture. I found there were a lot of misconceptions about BC wine. Not surprisingly, few understand much about the climate in the Okanagan and Similkameen Valleys. Being so far north, we are expected to have a very cool climate. We are on the edge of where grape growing is possible but without understanding the rain shadow effect and the hot, dry, summer heat with huge diurnal swings you will never understand the wines. Consumers seem to expect only icewine and light, fruity whites and while these styles do well in BC, it is missing most of what is happening and a huge range of styles that are possible. The people of Hong Kong were surprised. Surprised by the grape varieties BC can grow, the style of wines that are produced and the quality. Once you explain the unique climate and how, with the exception of parts of neighbouring Washington State, there is nowhere else like it in the world, they begin to see the possibilities for making excellent wine in BC that doesn’t taste like it is from anywhere else.

This unique climate in BC naturally gives wines the attributes of intensity, freshness, fruitiness and structure. This kept coming up when eating, and I ate a lot of the local Cantonese food in Hong Kong. I realized just how well nearly all BC wine can pair with this cuisine of many flavours and textures. All you really want when pairing with the local food was a wine with freshness, crispness and fruitiness – BC wine’s natural qualities. It made me come up with a kind of tagline we could use when hitting the export markets that summarizes BC wine in just two words – Natural Freshness.

We need to simplify BC wine to something as simple as Natural Freshness because the more you try to explain it the more complicated it becomes. We make too many styles from too many grape varieties. Eating is different in Asia and usually consists of many different dishes all put on the table at once. Consumers in Hong Kong and all over Asia can’t pair every dish on the table to different wines as there are simply far too many flavours and textures to work with. They put a couple of bottles out and people just drink what they want. What they told me is they want wines with natural freshness, wines that are going to pair well with nearly everything on the table. I can see BC wines having a real place at the Asian table, giving customers that freshness they are looking for.

Quality BC wines are not cheap, but they are also not expensive when compared with similar quality levels from other established wine countries. In key markets like Hong Kong, and many of the other top wine cities around the world, people are willing to pay for quality. Again, BC wines fit this need well. The question is how to get the wines to market and build a sustained presence. This is the big challenge; with most sales happening domestically it is hard to get wineries to focus on export. Most of the wine that has gone into Hong Kong has come in dribs and drabs, often a one-time order or imported by someone who doesn’t specialize in wine. Wine needs a long-term plan, sustained effort with time spent in the market, a sales presence on the ground, and regular follow up. Otherwise it will be difficult to build any momentum.

The Hong Kong market has grown immensely since they dropped import taxes on wine in 2008. According to InvestHK, imported wine has increased in value from USD$367 million in 2008 to USD$1.38 billion in 2015. This resulted in a huge rise in the number of importers, but number of importers who are wine specialists and devoted long-term remains a question mark. There is a great opportunity for an importer to develop a portfolio of many of the top BC wines and build a strong presence for the wines in quality restaurants, as well as direct to consumer. Retail in Hong Kong is apparently being squeezed out as importers can sell directly to whomever they want. The way online wine sales are ramping up in Hong Kong could well change the way the wine world does its business, rendering the importer/wholesaler/retailer system obsolete.

All of this shows the potential BC wine has on the global scale: never to be big, but to build a reputation as some of the top wines of the world. That would strengthen the success of the business both at home and abroad.

Rhys Pender MW