1. MAKE AN EXECUTIVE JUDGMENT:
A CASE STUDY ON A WINE AND RELATED
BUSINESS
IN
HONG KONG
Kevin K Tang
A presentation for
E-business strategy in Entrepreneurship by
SME Creativity Centre, August 2013

2. ABOUT SPEAKER
葡萄酒、歷史、藝術、商業、教育共冶一爐; 獲英國葡萄酒及烈酒會院士、歷史
系（比較歷史）碩士學位，英國皇家歷史會院士, 並持有雪來登書院工商管理深
造文憑、澳洲葡萄酒研究院文憑及英國WSET葡萄酒烈酒文憑。
Founder of a wine group, 2 restaurants, and Buyer for a start-up chain of 13 shops, Kevin K
Tang is now Regional Representative for selected merchants and producers. A columnist for 2
wine magazines, Kevin has been teaching wine studies at the Polytechnic University of Hong
Kong since 2006 and also work as an Assessor for WSET UK since 2002.

3. CONTENTS
1.
Background on the business environment
Background to SME, pre and post 2008 market, the portfolio of a Hong Kong Wine
Importer, projections by TDC, China market charts, Hong Kong Wine I/E
figures(TDC source).
2.
Description of the wine business
3.
Identification of key problems
4.
Some executive judgments made
5.
Assessment
6.
Discussion: How would you like to make your judgment on ‘Executive Judgment’?

4. SME BACKGROUND 1
•
Wine SME still in service
•
Founded in 1996, initially with 4 staff
•
Stable and exponential growth from 1996 to 2009: integrated sales business 1996 HK$3M
to 2009 HK$28M; GP % on average 32 to 35 %; NP% from 5 to 8%; staffing in 2008, with
22 full-timers and 6 part-timers.
•
From 2010 to 2013: integrated Sales dropped from HK30M to HK$18M; staffing in 2012:
12 full-timers, 1 part-timers.

5. SME BACKGROUND 2
•
Key events: founded 1996; 2004 development of a wine school; 2006 purchase of 2
western restaurants; 2008 founding of a wine investment company
•
Key facts: wine teaching revenue 30% of the integrated business; restaurants not
contributing in revenue; investment stock value kept stale after 2010.
•
Long product portfolio, over 2000 styles and 30 brands
•
All staff WSET qualified, since 1996.

6. MARKET BACKGROUND 1
•
1997 to 2008
• The players with classic channels: importer/exporter; distributor; retailer(physical
shop)
• Number of Key players below 35; stable, oligopolistic competition
• Key stoppers to market growth
• Market size, product nature, People, Distribution
• Tax and cash requirement; cash flow; government policy
• Wine knowledge and dissemination: mentor and mentee
• Crisis 1997, 2000, 2003, 2008

7. MARKET BACKGROUND 2
• 2008 to now
• Relieve all government administrative costs: no tax(varied between 40 to 90%
on declaration), no certificates of origins, no health certificates
• Everyone bring in every wine.
• Importer/Distributor and retailers are often one person(close to retail price)
• Even for standard IE-distributor-retail frame, more retail are e-shops, in high rise
• E-commerce still infancy: people reluctant to wait; all listed prices are fake for
not angering some other customers who may wish to undercut; payment is very
slow.

8. MARKET BACKGROUND 3
•
World Setting: Wine Futures, Wine Funds, Wine Auctions, RP and other, Wine
competitions, counterfeits.
•
E-tools: Livrex, Wine Searcher
•
Bloggers: trend setters
•
Facebook companies
•
Ordinances: against fax, against emails, against false claims

9. MARKET BACKGROUND 4:
UK AND INTERNATIONAL MERCHANTS
•
Most of the leading UK companies are in Hong Kong
•
Some 60,000 Frenchmen are living in Hong Kong.
•
US Auctions houses have regional offices in Hong Kong
•
China companies carry their ‘representation’ to sell outside their territories to the Hong
Kong market.

10. PORTFOLIO OF A HONG KONG WINE
IMPORTER 2013
•
Estimates from insider 100 to 3000
•
300 to 350; 342 mixed, 52 only wine, according to Debra Meiberg MW, et al 2012
•
Compared to New York City with only 110!
•
Sales team size 1 to 2 persons; less than 10 brands; a game more than a brand
management; a hobby business; China factor(D Meiberg et al 2012)
•
China Importer: 30,000(Jenny Cho Lee MW and Yang et al 2013)

11. WINE IMPORTS FROM 2000 TO 2007

12. PROJECTIONS FROM 2002 TO 2017 ASIA

13. THE PROJECTIONS BY TDCACTRIUM
SOLUTIONS

14. THE PROJECTIONS BY TDCACTRIUM
SOLUTIONS

15. WINE TRADE VALUE TERMS 2011-2013

16. WINE EXPORTS BY MARKETS 2011-2013

17. WINE IMPORTS BY ORIGIN 2011-2013

18. WINE TRADE IN VOLUME TERMS 2011-2013

19. PROBLEMS IDENTIFICATION
•
Pre 2008: cash requirement, professional staff, diversification, profit, growth
•
Post 2008: risk, growth, profit, zero entry barrier, depreciating stock, proliferation of
brands, CDP and how to keep staff, cash flow, exponential growth
•
What is the best for the future of Company?

20. DESCRIPTION OF THE WINE BUSINESS
•
From Oligopolistic competition to perfect competition

21. SOME KEY EXECUTIVE JUDGMENT
•
Sustain Quality and Value as key attributes product strategy; embrace market change as
company culture; ‘to serve our wine community’ as mission.
•
Pre 2008, education, investment, diversification, industry leadership, team expansion and
identification of staff
•
Post 2008, trading and consulting, stock investing, e-tools, full integration with logistics,
new staff(outside wines) and new thinking, team consolidation, intensify training,
downsizing and increasing output.
•
Post 2012: the best way to compete in the new global environment

22. ASSESSING JUDGMENTS
•
The weakness: did not wholeheartedly embrace China as a market. Good for immediate
or short term profit goals, not so good for long term. Wise, but not safe.
•
Investing in restaurants paves for good BD in Food and Beverage sectors, but drains cash
and manpower. Involving in direct investment creates company net worth is good for the
long term, but drains cash in the short and medium term
•
Developing education with Universities gives excellent professional image, but drains
manpower and dilutes vision.
•
Remaining Hong Kong paves for regional development of business.

23. DISCUSSION
How would you make your Executive ‘Judgment?
Thank you.