Singapore is muscling in on Hong Kong’s status as Asia’s hottest wine market. A growing number of wealthy collectors and wine drinkers in southeast Asia have spurred record sales, luring western wine merchants to set up shop in the island nation.
The Chinese government‘s austerity drive – which has hit sales at drinks companies Diageo and Rémy Cointreau – and a proliferation of wine merchants in Hong Kong are benefiting Singapore’s status as a wine hub, according to Berry Bros. & Rudd, the London-based wine merchant.
At the same time, a growing number of millionaires in Singapore coupled with emerging interest from buyers in neighbouring countries such as Indonesia are prompting some bullish sales projections.
Berry Bros predicts that its Asia businesses will account for half its global sales in five years’ time, up from 15 per cent currently.
Southeast Asia alone, which accounts for 3 per cent of global sales, is projected to grow to 15 per cent of the global business, and to comprise 30 per cent of the Asian business within five years, from 20 per cent now.
“People have always looked at Singapore as a small market rather overshadowed by China, Hong Kong and Japan. But people are realising that it's not just an interesting market by itself, it’s a hub for southeast Asia too,” said Simon Berry, chairman of Berry Bros.
The company opened a Singapore sales office a year ago, and UK rival Corney & Barrow followed suit a few months later.
Singapore-based wine buyers “know their wines,” said Nicholas Pegna, director of southeast Asia for Berry Bros. “It’s an informed customer base that we’re talking to”.
Buyers are both longstanding collectors and new enthusiasts drawn from the ranks of Singapore’s increasing number of millionaires, many of them entrepreneurs from southeast Asia and mainland China.
According to research company WealthInsight, the number of US dollar millionaires in the city-state doubled in the five years to 2012, to more than 183,000. It projects that by 2017 Singapore will be home to 291,000 millionaires.
In another sign of the city-state’s growing importance as a wine hub, logistics company CWT is investing S$200m (US$163m) in building what is believed to be the largest wine storage vault in the region in Singapore.
Spanning 750,000 sq ft, it will be able to hold 10m bottles – double the almost 5m-bottle capacity of Berry Bros’ three storage facilities in London.
“It’s very ambitious,” acknowledged Loi Yan Yi, CWT’s director of marketing. “We felt that there was demand not only within Singapore but also the region.
“A lot of collectors from places like Indonesia and Singapore who might store in Geneva or London would prefer to have their wines closer to them,” she said.
Mr Pegna, who worked at the company in Hong Kong for 15 years before moving to Singapore, said Hong Kong was now “an overcrowded market”, with more than 2,000 wine merchants in a territory with a population of about 7m.
Singapore has a population of 5.3m but has only about 100 wine merchants. “That – and the austerity measures out of China – give you an indication that Hong Kong is set for a period of contraction”.