Chile, France Locked in Wine War Here

By Kim Tong-hyung
Staff Reporter

Chilean wines have played the role of regent in the absence of a French king. Montes Alpha or 1865 are tantalizing taste buds of Koreans not just for their taste.

However, with an impending free trade accord between Korea and the European Union expected to trim the prices of ``Old World'' wines on local shelves, the French are gearing to fight back against their bulky ``New World'' foes, including the Americans and Australians.

Whatever the outcome of this renewed wine battle, the winners are likely to be Korean customers, who have grown tired of paying decent money for what are often generic and watery drinks.

French wine had enjoyed more than a decade of supremacy here until last year, when Chilean wine topped sales, forcing the first change in the No.1 spot since 1993.

More than 6,610 tons of Chilean wine was imported by Korea in 2008, followed by 5,454 tons of French wine, 4,785 tons of Spanish wine, 3,939 tons of American wine and 3,506 tons of Italian wine, according to Korean government figures.

Koreans have been developing an affection for Chilean wine since a free trade agreement (FTA) was signed between the two countries in 2004, and the trend is expected to continue, as credit-crunched wine drinkers reel in their spending and look for more inexpensive bottles.

The French still crushed other competitors in revenue, collecting more than $65.73 million here, compared with the $29.71 million generated from Chilean wine sales, benefiting from the popularity of their globally-renowned premium brands.

However, importers are concerned about French wine developing a reputation that it's only for serious wine drinkers and trophy hunters and isolating itself further from casual wine drinkers.

Local wine lovers have longed complained about the heavy taxes imposed on imported bottles, which are tagged with a 15 percent duty and a further 30 percent liquor tax and a 10 percent education surtax, all before importers and retailers look for their margins.

The complicating pricing structure makes it difficult to predict how much of an effect the Korea-EU FTA will have on European wine prices here.

It's estimated that the FTA will make European wines about 10 to 13 percent less expensive, although the sliding value of the Korean won against the euro could mean that an immediate effect is unlikely.

``I think the FTA's effect on European wine prices will be manifested about a year later, as importers must also deal with their volumes in inventory and then agree on a pricing structure with retailers at different levels,'' said an official from Keumyang International, the country's biggest wine importer.

The Korean wine market has been growing at a fast clip in recent years, with wine imports increasing from 8,053 tons in 2001 to 31,810 tons in 2007. However, the economic downturn apparently dented the growth in 2008, when wine imports totaled 28,795 tons.

thkim@koreatimes.co.kr

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