Marketing an Australian Wine to Hong Kong Wine Market Essay

Marketing an Australian Wine to Hong Kong Wine Market - Essay Example The growth in Hong Kong wine market is attributed to the abolishing of the duty on wine by the Hong Kong government. About 40% of the US$ 1.3bn worth of wine traded annually in London is bought by consumers in Hong Kong and China (Franz, 2008). Similarly, according to Parker (2010) a glass of wine raised by a Hong Kong resident is likely to have come from the Australian vineyard. The Australian wine industry considers Hong Kong as a major market. Because of the abolition of duties and taxes on wine in Hong Kong, exports from Australia to Hong Kong has increased manifold. Australia is an important source for high quality beverages including wine for Hong Kong’s restaurants. Hong Kong’s strategy to become the hub for wine trading in the Asian region presents opportunities for the Australian wine producers and for providers of wine-related services, like storage and auctioning (Dfat, 2010). Hong Kong enjoys locational advantage as far as wine auctions in the region are con cerned. The total wine auction sales in the region reached $160 million and now along with the United States, Hong Kong has become one of the two most important centers for wine auction (Hong Kong Digest, 2011). This is the reason that Australian wine makers, Brown Brothers, are eyeing Hong Kong to market its products. Hong Kong has the potential to influence trends in the region through events such as Wine and Spirits Fair which attracts audience from mainland China and other countries. Brown Brothers offers the most seasoned and diverse ranges of quality wine. Decrease in taxes makes cheaper wine popular (Asia Travel Tips, 2011). The Hong Kong youth between 21-28 years would prefer cheaper wines as they are yet to be established in life. Thus this study aims to evaluate marketing of wine to this segment. An external environmental analysis would help Brown Bothers understand and formulate the marketing strategy for Hong Kong. The external environment can be analyzed based on the po litical, economical, socio-cultural and legal environment, along with the wine sector in Hong Kong. Wine sector in Hong Kong Hong Kong’s alcoholic beverage market faced distortions because of the excessive duties on wines and spirits (APCO, 2010). The prices were artificially high and the local residents as well as the expatriates were forced to choose lower-quality beverages which impacted consumer choice. Hong Kong had very high level of taxation on wines compared to its neighbors and this increased illegal smuggling of alcoholic beverages. This caused loss of government tax revenue. The Hong Kong Wine & Spirits Industry Coalition (HKWSIC) used the services of APCO to represent the views of the consumers and the industry. Study and presentation of the results by APCO forced the Hong Kong government to abolish the taxation on wine products. External environment analysis Political environment Hong Kong is governed by the Basic Law of the Hong Kong Special Administrative Regio n of the People's Republic of China (Dfat, 2010). Hong Kong is a Special Administrative Region and is a capitalist society enjoying high political stability. It has an ‘executive-led’ system inherited from the British Colonial Administration. The Chief executive is appointed by Beijing after election and has the power to initiate legislation (Dfat, 2010). There is limited democracy as it still follows the Basic Law approved in 1990.