Ipsos Business Consulting supports Wine's Link Hong Kong IPO

Ipsos Business Consulting has conducted an independent market review of the Hong Kong wine industry in support of alcoholic beverage supplier Wine Link’s recent IPO on the HK exchange.

As a precursory step in its recent offering on the GEM board of the Hong Kong Exchange (HKEx), Wine’s Link, a Hong Kong-based wine distribution and retail firm with a focus on premium red wines, engaged Ipsos Business Consulting to undertake an independent research study on the local market with respect to historical and forecasted trends.

The Ipsos analysis calculated that the total market value of alcoholic beverages in Hong Kong reached over HK$17.3 billion in 2016, rising from 2012’s figure of HK$14.4 billion with a compounded annual growth rate (CAGR) of approximately 4.7%. This they expect to increase to 5.7% over the 2017–2021 forecast period, with the current market at HK$18.3 billion in 2017 hitting HK$22.8 billion by 2021.

Ipsos Business Consulting, which is the management consulting arm of the global market research agency, has 20 consulting hubs worldwide, with 12 located in East and Southeast Asia. The firm provides fact-based consulting and market intelligence across numerous industries, including healthcare, agribusiness, construction, energy and the automotive sector, with services ranging from business and go-to-market strategies to innovation scouting and sales and marketing support.

Led by Peter Snell, Ipsos’ CEO of Business Consulting who is based in Hong Kong, the firm claims over 100 successful local IPO engagements, preparing comprehensive due diligence reports and prospectus support for scheduled offerings from the retail, manufacturing, tourism, education, and transportation sectors among others. Further IPO contracts from this year so far include Twintek, a building materials contractor, as well as the Cantonese full-service restaurant group Dragon King.

The burgeoning wine market

The wine market in Hong Kong and mainland China continues to grow at a rapid clip, driven by a shifting demand for premium and collectable reds and exceeding almost all expectations. Indeed, a draft IPO report from 2015 cites Ipsos projections for the alcoholic beverage market of Hong Kong at a forecasted CAGR of 2.5% from 2015 to 2019, to reach a worth of HK$16.8 billion in 2017 – some HK$1.5 billion shy of the current landscape as assessed by the consulting firm in conjunction with the Wine’s Link listing.

According to this previous report, HK$3.5 billion of the total market sum projected for 2019 would be attributable to red and white wine, at respectively HK$2.68 billion and HK$916 million, with a combined projected CAGR of 5.3% (2015-2019) following the recorded growth period of 10.3% in the preceding 2010–2014 period. Imports rose a staggering 401% in 2009 alone, in response to the government’s elimination of all import duties and taxes for the sector.

An Ipsos survey paper from 2012 noted that nearly half of 18-24 year-old bracket of Hong Kong’s drinking-age population had never consumed wine, while 58% of respondents in the top income bracket indicated that they were regular wine drinkers as compared to the overall population average of 24%. These two demographics are likely set to further impact the market in years to come.

Recent research from Big Four firm KPMG predicts that millennials with an eye for luxury goods will soon become the biggest consumer retail spenders in China, while a separate survey report from strategy giants McKinsey & Company has revealed that the increasingly wealthy Chinese population will be looking to trade up to more expensive brands in the fast-moving consumer goods (FMCG) market.