Wine Booms Online in South Korea

The South Korean wine market is showing impressive growth. Behavioural shifts that evolved during the global pandemic, such as drinking at home, ordering and studying wine online, are becoming more widespread. New categories like natural, orange, biodynamic and lower alcohol wine are spiking consumer interest, and the demand for wine education is surging. The increasing popularity of wine amongst younger drinkers indicates additional growth opportunities for brand owners and producers. Louise Hurren reports.

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Daejeon International Wine Festival in South Korea
Daejeon International Wine Festival in South Korea

 

  • A country of 55m people, South Korea is currently the world's 10th largest economy and its population is becoming increasingly wine-curious.
  • The South Korean wine market is one of Asia's largest, flourishing in recent years thanks to Free Trade Agreements with the US, Chile and the EU.
  • South Korean wine imports for 2021 hit an impressive $559m (up 69% in value, 41% by volume year-on-year), following on from the previous record of $330m in 2020.
  • Wine Intelligence (Global Compass 2020) identified South Korea as a top performer: it ranked 2nd in the Top 15 Most Attractive Markets section, up from 10th place in 2019.
  • South Korea's wine drinking population has expanded by almost a million since 2017.
  • The country's wine hub is Seoul, where the bulk of wine is sold: increasing opportunities can be found in Busan and Daejeon.
  • A global leader in technology and innovation, South Korea boasts ultra-fast internet connection speeds and highly efficient e-commerce and delivery services.

 

As a country, South Korea is fast and curious. Although wine is not always seen as a partner to food (beer and soju are popular alcohol choices in traditional restaurants), change is coming. The wine category has benefited significantly from the government changing its stance on alcohol e-commerce in 2020, and consumers are using their smartphones to find information and special deals, making wine choice quicker, easier and more democratic.
 

Online Breakthrough for Imported wine    

Alcohol e-commerce was introduced in South Korea in 2017 but restricted to traditional Korean liquors from small-scale producers. A breakthrough moment came in April 2020 during the global pandemic when the government authorised online sales of imported alcohol.

This new step boosted wines sales thwarted by the shut down of on-trade businesses (restrictions were only lifted in April 2022) and purchases of imported wine rocketed, showing growth of 27 % in value year-on-year in 2020, and 69% in value (41% by volume) in 2021.

Commentators have suggested that imported alcohol e-commerce will be expanded to include home delivery in the near future, but journalist Suzie Chung (Wine21.com) sees this as unlikely, citing South Korea's complicated tax and distribution structure and importers' reluctance for wine pricing to become transparent. 

Currently, imported wines can only be purchased on a click-and-collect basis: wine lovers simply reserve or purchase their wine online and then pick up their purchase in person. Consequently, retailers market their stock heavily by online messaging. Winenara's marketing team uses Korean messaging service KakaoTalk to alert consumers about promotions and to send weekly newsletters with wine-related stories, and their individual outlets use text alerts to push special offers available in store.

S Korea wine market value in US dollars and volume in kg (Source: Professor Jihyung Kim/Wine Business Lab)
S Korea wine market value in US dollars and volume in kg (Source: Professor Jihyung Kim/Wine Business Lab)
S Korean wine market by supplier country value and volume 2021 (Source: Professor Jihyung Kim/Wine Business Lab)
S Korean wine market by supplier country value and volume 2021 (Source: Professor Jihyung Kim/Wine Business Lab)

Pandemic Provides Retail Opportunities 

Retail sales heavily outweigh on-trade business, with the majority (around 70%) made mainly through discount stores.

S Korea wine colour market share by value and volume (Source: Professor Jihyung Kim/Wine Business Lab)
S Korea wine colour market share by value and volume (Source: Professor Jihyung Kim/Wine Business Lab)

Popular Categories and Styles

Wine writer Jesse Jeong confirms that white wine has driven much of the market growth in South Korea, with sales growing significantly. In 2021, imports of white wine grew 61% (volume) and 71% (value), year-on-year. Also noteworthy is the significant rise of New Zealand wines which achieved the highest market growth rate of any country in 2021, with a 133% increase (volume) compared to 2020.

Industry observers note that sparkling wine is one of the fastest-growing segments of Korea’s wine market, representing 17% of wine imports by value in Q2 2022, compared to 5% in 2007. Red wine is still by far the biggest segment, accounting for 66% of wine imports (value and volume) in 2021.

Although traditional Korean alcoholic beverages soju and makgeolli were very much in evidence at the 2022 Daejeon International Wine Festival, they were outnumbered by stands pouring wines from Europe (France is the leading supplier by value), Chile (leader by volume), Australia and the US.

Alongside these traditional selections were dealcoholised wines from the aptly-named NOLO Wine Company, a selection of DEMETER-certified biodynamic wines from France, and Treasury Wine Estates' 19 Crimes range (launched in South Korea in 2019).
 

Insider Insights 

“Koreans adapt and adopt fast, knowledge spreads rapidly and popular trends emerge quickly here. Natural wine has become mainstream, and orange wine is on its way to being established,” says Seoul-based Ian Ashworth of Vineworks tasting room. He reports a recent pandemic-related surge in the opening of convenience stores stocking wine, suggesting that a percentage of purchases formerly made in bars and restaurants has been converted to the off-trade.

French wine importers Mathieu Marchal (Cellar Privée) and Jean-Paul Baurez (Terre du Sud) suggest that younger, more adventurous wine drinkers are looking for lighter-bodied styles with higher acidity. “Jura is huge now,” says Baurez. “Compared to 2013 when I started my business, the market is extremely different. New wine enthusiasts are less faithful, less knowledgeable, and more influenced by text messaging.”

Chan Jun Park (director of the Asia Wine Conference) confirms that consumer interest in wine is showing healthy growth, illustrated by attendance numbers for the Daejeon International Wine Festival: 80,339 visitors in 2022 compared to the previous, pre-Covid edition of 2019 where 51,689 ticket holders enjoyed three days of food, wine and musical performances.

Entering the Market 

Korean law requires a separate Korean language label on imported wine. Wine can only be imported to South Korea through a licensed alcoholic beverage importer, and the top ten leading importers reportedly account for over 70% of total imports.

Names to know include A-Young FBC (founded in 1987 when importing alcohol into South Korea became legal), Shinsegae L&B, Tiger International (part of the SPC Group) and the Hyundai Group's newly-founded Vino H, headed up by CEO Kibeom Song, winner of the Korea National Best Sommelier Contest 2019.

Importers may sell directly to wholesalers, retailers (restaurants and liquor stores), or individual consumers (but only via their own wine shops). They are not allowed to purchase from other importers or from wholesalers. They can supply hotels, restaurants, department stores and convenience stores, plus restaurants and boutiques within their own group.
 

Tax and Duties 

South Korea applies a complicated tax and duty system to imported alcoholic beverages, and the combined effect of local liquor taxes, education tax, VAT, logistics costs and distributor mark-ups make imported wine a premium product enjoyed by wealthier consumers. However, South Korea's Free Trade Agreements with many wine-producing countries in the EU as well as Chile and the US brings the tax on wine down to a total of 46.3% - a comparatively low rate when compared with the 156% applied to brandy, vodka and whisky. 
 

Leading Suppliers 

As noted above, New Zealand wines are the latest runaway success story, but France continues to be viewed as the reference for wine quality. Thanks to the Korea-EU Free Trade Agreement (FTA) ratified in 2015 there is no import duty on French and other EU-origin wines, but increasing competition from value-oriented suppliers has seen France's market share decline in recent years. The country may benefit from the demand for sparkling wine.

Italian wines have shown solid growth in recent years (Italian cuisine is popular and Italian restaurants can be easily found in most cities), and the increased interest in white and sparkling wine may represent an opportunity for Italian producers.

Spain sells a large amount of bulk wine to Korea for bottling and blending, while Chile remains a leading supplier and has a solid value proposition. Australian wine has had mixed fortunes in recent years due to strong market competition and currency exchange rates, but is reported to be recovering.

US wine exports to Korea more than tripled following the 2012 implementation of the KORUS FTA. This success is attributed to accessibly-priced red wines from large-scale suppliers sold through hypermarkets and franchise restaurants. Smaller, quality-focused producers have also done well, selling premium brands to wealthier, wordly wine drinkers. 

Suzie Chung, wine writer for Wine21.com
Suzie Chung, wine writer for Wine21.com

Key opinion leaders include Lee Jae-hyung (Jay Lee) who creates fun videos in English for his YouTube channel Wineking (310k subscribers and over 26.7 million total views); French-Korean wine entrepreneur Sarah Soo Kiang Henriet (now head of marketing at retailer Winenara), and Suzie Chung (blogger, wine writer for Wine21.com and influencer with naver.com, Korea's largest web portal).

Educators 

The wine education market in Korea is thriving and lockdown encouraged widespread adoption of online studies. Prof. Kyungja Eom is a certified sommelier who lectures at Sejong Cyber University, teaching a four-year degree course covering wine and spirits, food and wine pairing, wine tasting and service. The university continued to provide lessons online throughout the lockdown and saw a 60% increase in sign up across all courses: “the pandemic made studying online more acceptable,” notes Eom, who emphasises that the internet has long been Koreans' go-to information source.  
 

Sommeliers 

The country has a lively sommelier community. Conversations with members of the SAK (Sommelier Association of Korea) and the Korea International Sommelier Association (KISA) reveal that many have studied in Europe and visited major wine regions on familiarisation trips.

Hongsik Kwon, President of the SAK (Sommelier Association of Korea)
Hongsik Kwon, President of the SAK (Sommelier Association of Korea)

Prior to the pandemic, on-trade channels accounted for 10%-15% of wine sales in South Korea. Covid-related restrictions were only lifted in April 2022 so it is early to draw conclusions, but observers confirm that the fine dining scene is slowly coming back to life and with it, the careers of the country's leading wine servers.

Daejeon Wine Festival
Daejeon Wine Festival

Shows, Exhibitions and Events 

Many Korean importers visit the long-established trade shows such as Vinexpo Asia (Singapore, May 23-25, 2023), Vinitaly (Verona, April 2–5, 2023) and Prowein (Dusseldorf, March 19-21, 2023).

A number of wine trade meetings focused on the South Korean market will be organised by Break Events/Tasty Wines in 2023, including three sessions online and a physical show in Seoul (June 8-10, 2023). A delegation of South Korean sommeliers and importers will be attending Break Events' VinOmed trade show (Montpellier, October 24-25, 2023).

Key wine trade events in Korea include the annual Seoul Food & Hotel Show (www.seoulfoodnhotel.co.kr) (May 30–June 2, 2023), and the Daejeon International Wine Festival: this event is open to both trade and consumers and runs concurrently with the Asia Wine Trophy competition, the Asia Wine Conference and the Asia Sommelier Competition.

 

This article was written using information from sources including the Korea Trade Information Service Database (KOTIS), Wine Intelligence, Chan Jun Park, Prof. Jihyung Andrew Kim (Wine Business Lab, Professor at Hanyang Women's University, Seoul), Junghwan Byun (BLCC Wine Academy), Jesse Jeong (winein.co.kr), Kjungya Eom, Ian Ashworth (Vineworks) and consultation with wine trade members working in the market. 

 

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