When the government of Macau announced that, effective Aug. 26, it was eliminating import duties on wine and beer, wine industry insiders in Asia were not surprised. In fact, the question most asked was, Why did it take so long?
Hong Kong and Macau are both special administrative regions in the People's Republic of China. With a large business community, Hong Kong has long been a major market for wine, but the local government's decision to eliminate import duties back in February ignited a frenzy—duties had been as high as 80 percent as recently as 2007—increasing retail sales and attracting big-name American and British auction houses.
Macau, which levied only a 15 percent duty, is a tiny market compared with Hong Kong (Macau's population is about 545,000; Hong Kong's is nearly 7 million). Macau imported just over 200,000 cases of wine in 2007, versus Hong Kong's 2.5 million cases.
"I do not believe the elimination of duty will have a great impact for the trade or for consumers living in Macau," said Alan Ho, executive director of Florinda Hotels, which owns numerous Macau hotels including Hotel Lisboa, home to Robuchon a Galera, a Wine Spectator Grand Award winner, and Hotel Grand Lisboa, which houses Best of Award of Excellence winner Don Alfonso 1890. "It is more of a defensive move to keep prices in line with Hong Kong. But Hong Kong has a head start and better trade infrastructure."
In the past decade, Macau has become the gambling mecca of Asia, with its gaming revenues surpassing Las Vegas since 2006. Many Vegas groups have opened large hotels and casinos, including the Venetian, MGM, Wynn and Sands. The growth of the gaming business has not translated into demand for fine dining so far. Top restaurants are often barely full on weekends. The average stay for a Chinese tourist is 1.5 days, with the vast majority of that time spent on gambling floors rather than in restaurants.
But Macau's government may be focusing on the long-term potential for wine and fine dining. "Since Macau plans on becoming the tourist destination for China and the region, the elimination of wine duty can only be good," said Ho.
Patricio de la Fuente Saez, general manager of Links Concepts in Hong Kong, agrees. Links supplies wine to numerous hotels, including Crown, MGM and Sands. "Macau is a polarized market with two extremes—the cheap house wines and the very expensive top wines," he said. "It is the fine-wine end of the market geared toward the high rollers in the casinos that is exciting and growing very quickly."
"Macau will increasingly have entertainment appeal," said Rob Temple, general manager of import firm ASC for both Hong Kong and Macau. "Why people go to Macau is different from why people come to Hong Kong. There is tremendous opportunity."
According to officials in Macau's Consumption Tax Division, the move to eliminate wine, beer and gasoline tax was to counter rising inflation and reduce the tax burden on its residents. "Macau's fast-paced development and rising cost of living inspired us to take action," said one senior government official. "Currently in Macau, the only dutiable goods remaining are tobacco and alcohol over 30 percent."
The recent duty elimination will not have immediate impact on business. "None of the hotels are increasing orders and it is has been relatively quiet the past few months," says Saez. But there is clear optimism for what lies ahead.