Hong Kong eliminates duties on alcohol

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HONG KONG, Feb. 27 – Hong Kong eliminated the duty on imported wines today, creating cheer amongst much of the population relishing a return to the past as an Asian wine lover’s paradise.

In his annual budget speech, Financial Secretary John Tsang announced that the duty on alcohol would be eliminated, the cuts to take place immediately. The duty had been 40 percent.

As the duty on alcohol is paid on the wholesale cost of wine, Jeanette Paterson, general manager at Watson’s Wine Asia, Hong Kong’s largest wine supplier, said consumers would actually pay around 22 percent less in shops and bars. “We will be phasing our price cuts in three stages so that by next week, all shops will be selling wine at the new prices,” Paterson said. The deal is good for consumers but not for suppliers, she said, who will now feel compelled to sell off stock on which they had already paid 80 percent duty at a discount.

Tsang is expecting this to create a wine trading and distribution market in Hong Kong. “It is expected that by developing the various businesses in Hong Kong relating to quality table wine, our total business volume in trading, storage and auction of table wine may increase by as much as 4 billion dollars,” he said in his maiden budget speech. The government will also remove related administrative controls to facilitate the import, export and storage of alcoholic beverages, he said. Forgoing the duty on alcoholic beverages will cost the government about 560 million Hong Kong dollars a year.

Don St.Pierre, of ASC Wines, Mainland China’s largest wine distributor, commented this afternoon that ASC would be fast tracking the opening of an office in Hong Kong, and expected the territory’s wine drinking to boom, especially at the premium end of the market. He did express concerns over possible problems with the smuggling of wines from Hong Kong into the mainland, and told China Briefing he would be leading a consortium of mainland wine distributors to the Chinese government to lobby for a similar reduction in wine duties in the PRC.