A vintage year in Hong Kong

Hong Kong's decision to slash the tax on imported wine has thousands of connoisseurs in the territory raising their glasses in celebration, including alumna Jess Harris.

When Jess Harris graduated from the University of Adelaide in April 2007, she faced some tough career challenges.

Armed with a Bachelor of Commerce in Accounting, the then 22-year-old set out to establish her family's wine importing business in the ultra-competitive Hong Kong market.

Adelaide Cellar Door had already developed a strong, online direct sales customer base in Australia for its premium South Australian boutique wines. But Asia was a whole different ball game.

The duty for imported wine stood at 80%, the company had no brand recognition in Hong Kong, advertising costs were astronomical and Jess faced a massive learning curve in adapting to an entirely different business ethos in the East.

Twelve months later, the picture is looking far rosier.

The Hong Kong Government has slashed the duty on imported wine from 80% to zero in the past year after successful lobbying by local and other wine producers. The news has been welcomed by the thousands of expatriates living in the territory who had become resigned to paying exorbitant prices for wine.

Australia has the second largest share of Hong Kong's wine market, with 17% worth $24 million - behind France, which has a 46% market share.

For Adelaide Cellar Door, the timing couldn't be better.

"The Asian market for wine is on the cusp of a boom and we want to be part of it," Jess said.

"Until now, wine has been a luxury in Hong Kong but with the removal of the duty we hope it will become an everyday item."

Although 80% of Adelaide Cellar Door's customers in Hong Kong are Westerners, or at least educated in the West, part of Jess's challenge involves educating the Chinese market about wine.

"Wine consumption in South East Asia is increasing at approximately 15% per year. Per head of population, it is still well below that of other countries, so there are exciting opportunities for growth.

"As Asian people become wealthier their tastes are becoming more sophisticated, particularly the younger professionals who are being drawn to a wine culture at the expense of spirits and beer."

To make inroads, however, Adelaide Cellar Door needs to become a respected retail brand name in the image-conscious Asian market.

The prohibitive advertising costs and high rents in Hong Kong have forced Jess to adopt a different marketing approach based on extensive networking and sponsorship deals.

At least four nights a week she hosts wine tastings, attends industry events and has become adept at public speaking.

"A year ago I was terrified of public speaking, but now I'm quite used to talking to large groups about our wines."

While the average cost of a bottle of wine is still high - about double that of Australian prices - Adelaide Cellar Door has deliberately kept its prices competitive.

One of their wines, Hahn Catharina Shiraz, was rated among the top five boutique wines exported out of Australia in 2007. They retail it for HK$212 a bottle, whereas normally a wine of that calibre is priced at around HK$600 a bottle (about A$85).

"Our company has grown largely due to word of mouth and the fact that we don't charge through the roof. We had zero customers in Hong Kong two years ago and now we have a database of more than 2000."

Her University of Adelaide degree has helped leverage this success, particularly with budgeting, setting prices and estimating turnover.

"Marketing knowledge is largely acquired on the job, but I have relied heavily on the accounting and finance basics to run the business."

Within the next few years Adelaide Cellar Door plans to establish other franchises in Korea, Japan, Macau and mainland China. ■

STORY CANDY GIBSON