K -Pop might be South Korea’s greatest export, but another ‘pop’ is fast becoming a regular feature in Seoul’s nightclubs – the pop of Champagne corks. Sparkling wine is the fastest growing segment of Korea’s wine market, rising to 19% of total wine imports by value in 2017, compared to 5.5% in 2008. Driving the upsurge are new club openings and cool, young Millennial drinkers.
Red wine still commands the bulk of mass-market consumption, accounting for 64% of wine imports by value and 66% by volume. Evidently consumers are varying their traditional diet of the distilled spirit soju and turning to healthier, lower alcohol alternatives. This list of ‘Who’s Who’ in South Korea’s wine market is compiled using research from a number of sources, including the Korea Trade Information Service Database (KOTIS), the US Agricultural Trade Office in Seoul, and consultation with those who work in the market.
Wine retail sales in South Korea amounted to $500m in 2017, according to KOTIS, with discount stores, known as hypermarkets, responsible for 70%. Department store operator Shinsegae L&B, which operates 150 E-mart supermarkets and 12 Wine & More retail stores, sold $60m worth of wine. The remainder was shared between the 140-outlet HomePlus (operated by MBK Partners), and Lotte Mart, which has more than 115 stores. Department stores and specialised wine shops – Tour du Vin, Sap dor, Wine 365, Hakdong Wine and Wineoutlet Lavin – secured about 10% of wine sales. These off-trade channels cater to the growing number of upper middle-class households consuming wine at home, despite markups that run as high as 40%. Retail sales heavily outweigh restaurant and bar business by a ratio of 80:20, with on-trade markups at three times wholesale. Wine’s high price, which is compounded by the government’s 50% domestic tax on alcohol and considerable distribution costs, makes it a premium product enjoyed by a limited group of Koreans.
Markets, exhibitions and events
To counter wine’s image as a premium product, the local industry is promoting wine as part of everyday life. In the milder spring and autumn months, wine’s lifestyle angle is reinforced at open-air wine markets, where importers set up booths to conduct regular tasting events and the public are encouraged to sample and purchase their wines. Called Jang Teu (와인 장터), the events are similar to European street markets. Walking on the Cloud is hosted by the Sheraton Grande Walkerhill Hotel while the Mayfield Hotel is home to Dionysos Wine & Beer Festival, and Wine and Busker is held at JW Marriott Dongdaemun. These markets complement large exhibitions like Seoul Wine Expo, Daejeon International Wine & Spirits Fair (home of the Asia Wine Trophy), and Wine Meets World (WMW). Many importers also arrange their own tasting events in Seoul, with small importers sometimes teaming up as co-hosts.
Foreign wine importation took off in Korea 30 years ago in the lead up to the 1987 Seoul Olympics. Back then, there were 11 importers; now there are 500 licensed liquor importers, with the top dozen accounting for more than 70% of total imports. The major importers are: Keumyang International, Lotte Liquor, Shindong Wine, Daeyoo Wine, A-Young Liquor Trading, Nara Cellar, Vinideus, Wine 2U Korea, Boa Trading, Handok Wine, Indulge, HiteJinro, and Winenara. In 2017, imports of wine amounted to $210m (or 36.5m litres), led by wines from France, Chile and Italy. The market for wines from the US, Spain and Australia is also healthy. Import values rose 10% last year, but volume dropped 3%, indicating a shift towards premium brands and a decline in bulk wine imports.
Korean importers are a conservative group, asserts wine educator Winston Kim, preferring internationally acclaimed wines that have awards and Parker points. The impact of trophies, medals and even organic certifications is diminished on supermarket shelves, however, because Korean law requires a separate Korean language label on imported wine, which is often placed over medals. These labels do not allow quality claims (such as organic) unless the product has been certified for the claim by a Korean-accredited authority. Kim, who is completing a PhD in international business, laments that the complicated label requirements change frequently with little notice.
Buoyed by predictions of steady (albeit modest) growth, international interest in Korea’s wine market is positive. Despite the challenging economic environment, Korea’s wine imports during the past three years averaged 5% annual growth. Wine imports are likely to continue their steady rise as more Koreans opt for wine for health reasons (in the case of older Koreans) and in pursuit of a trendy lifestyle (younger Koreans). Opportunities are believed to be strongest for low- to mid-priced wines.
Even so, 500 importers in a small market is unsustainable and industry insiders warn against jumping into business with the wrong partner. About a third of importers go into administration every year. Companies looking to enter Korea should do their research when selecting an importer and choose one that shares their values. Then, be patient. Korea is a young market and results cannot be expected overnight. It is also important to have people on the ground and visit Seoul regularly to meet customers and listen to their needs, rather than relying solely on an import partner for representation. The most successful wine companies in Seoul are those that have invested time, money and people there.
Korea’s fine dining scene is not only racking up awards and Michelin stars for its menus, but also its sommeliers. This year’s Korea Sommelier of the Year Minseok Kyung oversees the wine list at innovative Korean Michelin two-star restaurant Jungsik. 2017’s winner, Wook Tae Han, is responsible for the wine program at Michelin two-star Kwonsooksoo. Paul Eun, manager at Top Cloud 52 and wine list manager for all three of Seoul’s Top Cloud restaurants, is an award-winning sommelier and wine judge who has turned his experience to educating and training new sommeliers.
Seoul’s five-star hotels are home to some equally impressive talent. Yong Jin Yoo oversees the wine list at Sheraton Grande Walkerhill. Sommelier and beverage manager at the Four Seasons, Hotel Ian Seo, said he differentiates his hotel’s wine offering from supermarket shelves by focusing on an ever-changing list of small-production artisan wines and a substantial by-the-glass list. He is part of a generation of sommeliers who are advancing Korea’s wine culture by diversifying away from Bordeaux and Champagne-heavy lists to broader offerings. On-trade channels account for 10% to15% of wine sales, a rate that has stagnated due to high costs and a lack of affordable choices.
The growing number of wine professionals in Korea’s fine dining scene, coupled with the growth of wine culture, are driving demand for specialist courses. The WSA Wine Academy has historically dominated the education scene. Wine Vision School, established by Moonsong Bang in 2008, is another famous education provider. There are also a number of independent educators such as Jin Ho Son, who brought his French wine knowledge back to Korea. Jun Cheol Kim learned winemaking in California and returned to make wine in Korea before starting his own wine school. A former teacher at Academy du Vin Seoul, Man Hong Kim, opened Manon Wine Academy. And a former principal of the WSA Wine Academy, In Soon Lee, struck out on her own to offer expert wine instruction.
Media and peer-to-peer influencers
Korea has a nascent wine journalism culture with a dedicated food and wine magazine, Wine Review. Online publications include wine21.com, which has been publishing wine news and opinions since 1998, wineok.com (run by Vicky Jung, editor-in-chief since 2010), and sommeliertimes.com. Peer-to-peer wine communities are another source of information and reviews. Wine enthusiasts connect through communities facilitated by naver.com, South Korea’s leading internet search engine.
South Korea at a glance
South Korea is the third largest economy in Asia and the eleventh largest in the world, however its manufacturing sector is feeling the effects of competition with China. Hiring is slowing and so is consumption. Still, South Korea’s economy remains one of the world’s most prosperous and stable: it avoided the Asian financial crisis of the late 1990s and recession in 2009. It’s very open for both foreign trade and investment and has a number of free trade agreements in place, including with the EU and the US. The market is dominated by chaebols, or family owned conglomerates, such as Samsung, Hyundai and Lotte, which sells wine. Recent corruption scandals have focused public attention on these companies and Bloomberg reports that regulators and investors are looking at them closely. South Korea has one of the world’s fastest broadband networks, its citizens are some of the most technologically savvy, and it’s an early adopter economy; consumers are keenly interested in trends and innovations.
Currency: South Korean won
GSP: $1.411 trillion
GDP per capita: $27,538.81
(Source: World Bank, 2016)