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700 Italian restaurants in Seoul and Italian wines haven’t boomed yet, why?

Well, Tuscany was my first love, my first tasting and my first great wine. And my next. And my next. Indeed, I’ve visited Tuscany more than any other wine region and the flavor of these wines, more than those of Burgundy, Rioja, Barolo or Bordeaux, meander teasingly through my taste memory wherever I might be, whatever I might be drinking… And now I’m drinking Majuang, Korea’s first major wine product and it isn’t glitzy.

00yedfqnw0irx_375x500In 1977 Majuang wine began production in Korea; until 1987 it was the most commonly available type of wine, accounting for around 90% of sales. After that time, foreign wines began to be imported and Majuang’s share of the market dropped to around 15%. Majuang wines are not 100% Korean; they contain wines imported from Europe and Chile mixed with the local product.

m2There are a number of types being made, both red and white, and the number and types of varieties change with time. Majuang is produced at the Gyeongsan Winery by Lotte Liquor, a global business group as well as ‘one of the top 10 global business group in Asia’ which imports 200 wines brands from all over the world, among which numerous are Tuscans.

The top wines are finding new markets all the time as many parts of the world get richer and become interested in the symbols of success and luxury, so French and Italian wines flow into the cellars of the newly wealthy, but Tuscans wines are still affordable, not dirt cheap. They makes appetizing, savoury mealtime reds like nowhere else.

With a population of 49 million people each consuming an average of eight liters of alcohol annually, Korea has long been a desirable market for foreign vintners and with more than 700 Italian restaurants in Seoul, I’m surprised that Italian wines haven’t boomed despite lower tariffs, Yet they have faced stiff taxes….(and a lack of co-ordination among regional marketing bodies in Italy and limited marketing investment in Korea).

Europeans, like myself, know that it’s quite easy to find a decent bottle of wine for the cost of five to ten euros. Well, we are privileged, but the same bottles of wine can be sold for far higher prices in Korea. In fact, the price can be doubled or multiplied several times due to added import tariffs, distribution fees, taxes and mark ups.

Below is an example that shows how taxes and import tariffs are applied to American imported wine as of 2012. The bottle in this example has a value of 10 USD (CIF import value):

• Import tariff: 0%
• Liquor tax: 30%
• Education tax: 10%

A: Initial value: 10 USD
B: Import tariff: A x 0% = 0 USD
C: Liquor tax: (A+B) x 30% = 3 USD
D: Education tax: C x 10% = 0,30 USD
E: Subtotal: A+B+C+D = 13,30 USD

F: Value added tax: E x 10% = 1,33 USD
G: Handling fees for customs clearance: A x 8% = 0,80 USD
H: Total cost of wine at customs clearance: E+F+G = 15,43 USD

I: Importer mark-up (Mark-up is the profit made by a seller, i.e. selling price minus the cost for a product):
• Importer selling to large-scale retail store: Mark-up 15-40%
• Importer selling to wholesaler: Mark-up 15-20%
• Importer selling to luxury hotel: Mark up 40-50%

J: Wholesaler selling price to liquor store: Mark up 15-30%
K: Retailer mark-ups:
Hypermarket stores’ mark-up: 20-30%
Liquor stores’ mark-up: 30-40%
Luxury hotels’ mark-up: 50-200%

The price for the same bottle of wine can stretch from 19-63 USD in Korea.
Source : Exporting wine to Korea – How to get started, Posted on February 10, 2014, by Marcus Sohlberg, in Product Guide, South Korea http://www.export2asia.com/blog/exporting-wine-korea/

The Tuscany I grew up with has changes, the flavor has changed, the way of growing and vinifing has changes, the way of marketing has changed. It has become a hotbed of ideas, experiment and ambition. The wines are richer, deeper, more powerful, but still based on the disarming succulence of ripe Sangiovese. The new Tuscany excites me as I’m endlessly faced with new people, new places, new flavors.

The Fair Trade Commission is now studying the feasibility of allowing wine to be sold online by importers and retailers. As the deal creates political demand for additional reform, it is creating new opportunities for businesses and focusing Korean consumers on wine. That’s something worth raising a glass to. In the meantime, importers and retailers are in a limbo.

VinoVino“It’s very confusing,” said Hong Eun-myung, CEO of Vino Vino, a small retail wine shop in Southeastern Seoul already in competition with department stores, “We don’t know what’s going to happen, I worry that it will benefit the big companies, especially Shinsegae and Lotte”, small independent retail wine shops, may find it harder to compete when it comes to online sales.

Source : Mr. Joshua Hall, a wine writer based in Seoul. He blogs at http://www.winekorea.asia/

Drinking is an important part of South Korean society. It’s how people socialize and get to know each other. These events are known as “hoesik” and involve a lot of alcohol. Once the alcohol starts flowing, it’s not going to stop anytime soon. There are no limits during a “hoesik.” People keep drinking and drinking and all the while shouting “Kon-Bay!”.

Sooner than later, it’ll be “hoesik” time again….

 

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