South Korea is the world’s 15th largest economy with a population of 50 million. The economy grew by 6.1% in 2010 and in the previous year, though hard hit by the GFC, South Korea was one of the few OECD countries to record growth (0.2%). 

The Korean Government has placed substantial effort in creating an improved investment and trade climate. The country continues to present opportunities for international producers as more FTAs come into effect 

The Korea-Chile FTA contributed greatly to the rapid success of Chilean wines in Korea. The gradual reduction of excise duties and an eventual total exemption of import tax gave Chilean exporters a clear advantage in tapping into Korea’s trendy and savvy market while the younger consumers had access to quality wines at reasonable prices. Since the Korea-EU FTA ratification in July 2011, the consumption of EU products including wines has been on the increase, fuelled by importers’ aggressive marketing drives in a discerning consumer market with rising disposable incomes to match. On the watchlist is the imminent Korea-Australia FTA.

South Korea is currently within the top 5 wine consuming countries in Asia. Its wine market which felt the impact of the 2009 GFC is now showing a renewed momentum of growth presenting opportunities for international producers.

In terms of import volume, as at 2011, Chile, Spain, France and Italy rank first to fourth in that order. Argentina and New Zealand in particular saw large increases in volume, 33.9% and 39% respectively. Australian wine imports slipped by 11% due to the high Australian dollar although market sentiments express an upswing with the imminent Australia-Korea FTA. 

In terms of import value, France, Chile, Italy and the US ranked first to fourth with most other countries seeing their wine exports to Korea increase compared with the same period in the previous year.

The imported liquor market stood at a value of US$435million in 2010 up 13% from 2009. As at August 2011, the market was worth US$303 million, up 5.3% year-on-year. Within the liquor market, whisky accounted for 53%, (down 11% since Y2006) wine 26% (up by 3%) and beer 10% (up by 4.4%). While liquors with a high percentage of alcohol has traditionally occupied over 50% of the market, the market shares of wine and beer have noticeably increased. 

The Korean wine market grew rapidly from 2000-2007 (10% p.a.) before the global financial crisis forced a negative downtown in the ensuing 2 years. Consumers turned to “value wines” as an option to “premium wines”.

Since 2010, the wine market has been on the rebound along with the general economic recovery. The import volume as of August 2011 was 17,265,748 litres, up 5.7% from the same period of the previous year. In dollar terms, its value is expected to reach approximately US$127million by the end of the year, up 20.79% from last year, an indication of a steady recovery from the GFC. 

The recovery of the mid to high priced wine sector appears to be faster than that of lower-priced wines. The import volume of red wine as of 2011 grew by 10.9% year-on-year, accompanied by a 24% increase in the import value. The import volume of white wine however, dropped 9.5% but the import value grew by 2.5%. The preference of red wine may be largely attributed to the perceived benefits of drinking red wine for its health benefits. Sparkling wine, which is yet to entrench itself as a dinner table staple, grew by over 40% year-on-year in both import volume and value. 

While Koreans’ per capita wine consumption in 2010 (approx. 1 litre) is markedly low compared to the consumption of other alcoholic beverages (approx.28 litres of Soju or 50 litres of beer) the Korean wine market exhibits high growth potential.

The strong growth of the wine market in recent years has encouraged large enterprises such as LG, Lotte, Shinsegae, Hyundai, hypermarkets and hotels who used to buy wines through importers, to buy directly from wineries to reduce the number of distribution channels and hence be able to offer a better price to consumers. (Source: Korea Wines & Spirits Importers Association)