Hong Kong on-trade yet to reap rewards of spirits tax reduction
Enrico Ho, vice president of the Hong Kong Bartenders Association (HKBA), reveals the extent to which the new tax rate on spirits has trickled down to on-trade pricing. Rebecca Lo reports.
In October 2024, Hong Kong Chief Executive John Lee announced a shift in government policy that would see the import tax on alcoholic drinks drastically reduced.
Under the new system, spirits with an ABV of 30% or higher have seen a tax reduction from 100% to 10% for the part of the bottle priced above HK$200.
Despite the most favourable business environment in decades, HKBA vice president Enrico Ho said he has seen no noticeable difference in consumer uptick 10 months in.
Ho, who is also assistant director of food and beverage at The Royal Garden hotel group — including Italian restaurant Sabatini’s second outlet in central Hong Kong — said the majority of suppliers are “holding expensive stock they acquired prior to the cut”, meaning “they need to recoup their investment” before reducing prices in line with the tariff reduction.
“As they run out and can take advantage of the cut when they re-stock, we may begin to see price reductions in the industry,” he explained.
However, Ho does believe that if price cuts are passed on to the consumer, the impact will be positive. He said: “Will this attract more people to indulge in cocktails made from top shelf spirits as savings are passed onto customers? I think the likelihood is high but we’re not there yet.”
He is also hopeful about the benefits it will bring to the local auction market, as “rare and fine spirits aficionados can secure better prices for their collections”.
In his dual roles, Ho has his ear to the ground. Having begun his career as a bartender, he oversees education and training at HKBA, including the association’s ongoing IBA Professional Bartenders course to encourage more young people to enter the industry.
But the on-trade continues to struggle with dwindling numbers of fresh talent. Even more worryingly, Ho has observed a reduction in the number of patrons frequenting bars.
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Even if the government completely eliminated its import spirits tax for all price points, cost may not be the main factor driving bartenders and customers away.
Ho attributed the dire straits partly to the impact of Covid-19: “During the pandemic, a lot of establishments closed. Young people subsequently transitioned out of the city’s F&B [food and beverage] industry and never returned. It became a vicious cycle: the lack of talent meant not enough staff to man bars, which led to bar closures continuing today. We’ve all seen the news reels: staff showed up to find locked doors with no explanation why they were out of jobs. Fresh grads entering the workforce see this trend and shun the industry as they feel it offers zero job security.
Salaries are another factor. “F&B hours are long, demanding and physically exhausting,” Ho explained. “Smiling while navigating dark and tight spaces with heavy tray of drinks all night long is tough, yet the compensation is low compared to, say, banking or IT. There’s no tipping culture in Hong Kong, which means their salary is what young people live on.”
When it comes to patrons, Ho sees a number of factors keeping drinkers away from venues. “People who used to continue in bars after dinner will now go to a residential clubhouse or private club’s ‘party room’. The latter is very popular in Shenzhen — only a 14 minute train ride away.
“Along with drinks, party rooms offer numerous activities ranging from karaoke to mahjong. Plus, patrons can order whatever they want to eat from outside venues on their apps. A dozen family members of friends can book a party room and each spend HK$100-$200 — a very reasonable price for an evening out.”
However, the eve-optimistic Ho has seen a silver lining emerging recently.
Hong Kong’s Bar Leone was awarded the top spot on Asia’s 50 Best Bars 2025, joining a tally of five Hong Kong bars making the list. Other recent accolades included Leo Ko from Alibi in Hong Kong’s Cordis hotel named as World Bartender of the Year at the World Cocktail Championship 2023.
“These achievements have given us encouragement and momentum to continue pushing our efforts to bring back bar culture to the city,” said Ho. “We hope we can continue to build upon their successes.”
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