Running head: TABLE WINE INDUSTRY AND MARKET IN HONG KONG 1

Table Wine Industry and Market in Hong Kong

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TABLE WINE INDUSTRY AND MARKET IN HONG KONG 2

Table Wine Industry and Market in Hong Kong

Introduction

The PESTLE framework will be used to analyze Macro-environment marketing

factors that affect consumption, distribution, and price of wine products in Hong Kong. Micro-

environmental market analysis provides information on market boundary analysis and includes

specific consumers, consumer trends and, industry supply chain (Tiefenbacher & Townsend,

2019). An organization should understand and apply PESTEL factors to enable them to grab

opportunities and predict threats.

The PESTLE factors

Hong Kong is a highly inhabited Centre with a closed economy that enhances

international trade and finance in China. The Hong Kong government is creating a stable and

sustainable political environment to enhance trade completion against other economic regions.

Wine consumption is a major trade opportunity in Hong Kong; therefore, the government

supports the table wine importation to Hong Kong by preventing political barriers (Tiefenbacher

& Townsend, 2019). Also, it offers tax incentives by lifting wine duty stimulates consumption to

enhance wine export. Hong Kong political policies have dependable political policies such as

low taxes and contract laws increasing its global financial integration.

Economic factors deal with the local Hong Kong economy which is high with low

inflation contributing to the high GDP per capita. Hong Kong's economy lacks the

manufacturing sector hence depends on China’s export and import for financial growth. Hong

Kong has been offered freedom on the movement of capital which when coupled with its global

financial integration enhances international trade and investment (Taylor & Taylor, 2017).

Therefore, the Hong Kong economy is growing with favorable import and export trade.
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Social-economic factors involve income and consumption culture. People from

different regions come together to work in the wine industries in Hong Kong, which enhances

diversity, appreciation and wide consumption. According to Morrison & Rabellotti (2017), this

brings new trends in the wine industry which enhances success in marketing, sophistication and

international market success of wine in Hong Kong.

The Technological changes affect the marketing of wine therefore, the Hong

Kong city prefers importation of wine rather than importing grapes and manufacturing wine in

the city (Chui, 2018). The wine industry is resistant to changes related to wine manufacturing,

but uses marketing technological interfaces that are specialized and interface to add to the

customer’s experience. The technological advancement has mostly been adopted to enhance the

customer experience in the wine industry.

Legal factors are government dealings that affect international business; Hong

Kong enhances doing wine-related business in different countries by lifting wine duty and

abolishing restrictions and licensing on wine import, storage, and distribution which enhances

marketing (Santoro, 2015). This enhances wine consumption among the public by observing the

laws of conducting business or driving under the influence of alcohol.

Hong Kong is densely populated; therefore the public is keen on

environmentalism which involves recycling. The wine industry insists on bottle collection and

recycling without putting more effort into the process because the wine is imported (Chui, 2018).

Also, local industries find it cheaper to use new bottlers rather than transport and recycle the old

wine bottles. Therefore environmentalism does not affect wine consumption and marketing in

Hong Kong as the industries are not in the recycling business.

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Types of table wine

Table wine is fermented from grape juice to produces different types of wine

which serve a different group of market. The market for each brand is different and Hong Kong

highly consumes table wine, therefore, it has the largest sales revenue

The table wine is the most consumed brand of wine in Hong Kong mostly in

lounges by itself. It is highly consumed therefore it is produced in large volume to meet

consumption Ice wine is fermented from the juice of grapes picked while frozen on the vines and

is consumed as dessert after a meal ((Karhunen & Kunc, 2016). The consumption of ice wine is

small but growing in Hong Kong. Champagne is table wine fermented a second time to produce

carbonation and is reserved for special occasions. Champagne is considered a luxury item

therefore many people in Hong Kong prefer it to sparkling wine. Sparkling wine is essentially

champagne made outside the Champagne region of France and maybe artificially injected with

carbon dioxide (Anderson et al., 2017). It is consumed for special occasions. Brandy is made

from distilled wine and is consumed by itself or with a meal. Fortified wine is a wine with

another spirit added and is also consumed as dessert after a meal. For example, sherry is white

wine fortified with brandy.

Categories of table wine

The table wine has four categories that are active in the Hong Kong market. They

are ultra-luxury table wine that is highly-priced because the brand equity has been built for

centuries. The Luxury table wine is vintage that is limited to high prices, premium consumer

table wine is pricy but below luxury table wine and consumer table wine is the cheapest and their

prices are comparable to beer (Karhunen & Kunc, 2016).

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Industry Supply Chain

The industry Supply Chain indicates the table wine exportation and the market

channels through which the consumers acquire the wine for consumption (Chui, 2018). The

Hong Kong table wine is reaches the consumers through importation, wholesaling of retailing.

The table wine strategic groups consist of other competitive firms and organizations that provide

the table wine to consumers through different channels with overlapping price and product

ranges.

Strategic groups

The strategic groups include auction whereby the table wine price is extreme with

new records (Santoro, 2015). The conglomerate off-trade consists of the wine store and grocery

shops with centralized distribution. Independent off-trade is small or medium SME enterprises

that are involved in importing activities. On-trade involves consumption of the table wine on-

site in bars or lounges; re-exportation involves re-exportation of the table wine imported to Hong

Kong for consumption to other areas. The strategic variables in the table wine market and

industry are pricing which indicates the differences among the table wine products while

distribution shows the barriers for moving the wine in Hong Kong.

Consumer Trend

The table wine consumer and industry trends are similar in all strategic groups.

Hong Kong consumers prefer red wine over other types (Chui, 2018). The decision of

consumption by the public forms the trend which is influenced by awards and reviews a certain

type of wine has. French wine is a highly consumed wine in Hong Kong, making it a dominant

wine trend. Lastly, the small bottle's trend of wine is not being considered for consumption as

they are believed to be an inferior brand of table wine.

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References

Anderson, K., Nelgen, S., & Pinilla, V. (2017). Global wine markets, 1860 to 2016: A statistical

compendium. University of Adelaide Press.

Chui, M. S. (2018). To Explore the Effectiveness of Digital and Experiential Marketing in

Attracting Customer Participation in the Hong Kong Wine and Dine

Festival. Nang Yan Business Journal, 6(1), 21-46.

Karhunen, H. B., & Kunc, M. (2016, February). The Chinese Premium Wine Market after

Bordeaux: Opportunities for Port Wine. In 9th Academy of Wine Business

Research Conference (p. 645).

Morrison, A., & Rabellotti, R. (2017). Gradual catch up and enduring leadership in the global

wine industry. Research Policy, 46(2), 417-430.

Santoro, P. (2015). Succeeding in the Chinese market of wine.

Taylor, S., & Taylor, M. (2017). The Aroma of Opportunity: The Potential of Wine

Geographical Indications in the Australia-India Comprehensive Economic

Cooperation Agreement. In The Importance of Place: Geographical Indications

as a Tool for Local and Regional Development (pp. 81-107). Springer, Cham.

Tiefenbacher, J. P., & Townsend, C. (2019). The Semiofoodscape of Wine: The Changing

Global Landscape of Wine Culture and the Language of Making, Selling, and

Drinking Wine.