Hong Kong looking to be world's wine storage hub

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Indy Lifestyle Online

Thomas Chu's nondescript factory looks like any other in the suburbs of Hong Kong, but it will be a key driver in the city's bid to lead the world in an emerging industry - wine storage.

"Hong Kong is definitely leading the way in the wine industry," said Chu, president of the Supply Chain Solutions, a firm that has turned seven vacant factories in Hong Kong into wine warehouses.

The city's wine imports have skyrocketed while mainland Chinese snap up vintages at eye-popping prices - a bottle of 1869 Chateau Lafite-Rothschild fetched a world-record price of 232,000 US dollars at auction last month.

The southern Chinese financial hub is now the world's second largest centre for wine auctions, having overtaken London, and trailing only New York.

Auction house giant Sotheby's raised 14.3 million dollars from just two wine auctions in Hong Kong last year, almost double the figure raised by eight wine sales held in London by late October.

But a lack of storage place in the densely populated city of seven million prompted entrepreneurs to turn vacant factories - whose owners have moved to mainland China to cut costs - into wine warehouses.

The fledgling business was a key theme at the third annual Hong Kong International Wine and Spirits Fair last week, which drew hundreds of exhibitors from around the globe.

"There are a lot of global importers and wineries, they understand that the Asian market is very important," Chu told AFP from his headquarters in the outlying Shatin district.

"In order to penetrate the market, they need a good wine facility to protect the quality of their wine so this is why in the last five to six years, the growth of wine storage in Hong Kong has been very fast."

Chu's facility has been transformed from a printing factory into a wine warehouse equipped with motion detectors, chiller rooms, humidity monitors and automated temperature control.

The businessman started his venture in 2008, at a time when Hong Kong was establishing itself as a global wine hub - after scrapping all duties on wine and beer that year.

A new quality programme launched last year has so far certified 16 wine storage facilities - half of them are factories-turned-wine warehouses.

Hong Kong's potential in the wine business has been boosted by its "ideal geographical location, world-class airport, global transportation connectivity and transparent custom procedures," according to the city's trade agency.

"(These) are all assets that work towards Hong Kong becoming a wine storage and distribution centre," Parker Robinson, corporate communications manager for the Hong Kong Trade Development Council (HKTDC), told AFP.

The Council does not have figures estimating the size of Hong Kong's wine storage industry.

But total wine exports have grown by 52 percent to 113 million dollars in the first three quarters this year, compared to the same period a year ago, according to HKTDC figures. Imports rose by 72 percent to 599 million dollars.

Most Hong Kong wine exports were into China after the city and Beijing reached a deal on improving custom procedures to ease the flow of trade.

Gregory De 'Eb, a pioneer in Hong Kong's wine storage, says the regular auctions held every few weeks - which have become a phenomenon in the city - helped to "set the trend" in boosting his industry.

De 'Eb started his Crown Wine Cellar seven years ago - carved out of a former World War II military bunker - but few thought the idea would fly.

"It was 100 percent scepticism those days, even among Hong Kong people," said the former South African diplomat.

"But nobody realised how much experience we have and at least 15 percent of the world's rare and fine wines were owned by Hong Kong people, even back in year 2000," he added.

His cellar, which only keeps rare and fine vintages including a bottle of 1869 Chateau Lafite, serves clients ranging from collectors to university students.

"The Hong Kong wine storage industry is going to explode."