By Kim Tong-hyung
Staff Reporter
Korea has quickly emerged as a wine-drinking nation in recent years, but the bad economy is now apparently forcing credit-crunched wine lovers to rein in spending.
According to the Korea Customs Service, the country's wine imports through the first 10 months declined for the first time in 11 years since 1998, when the country was suffering from the Asian financial crisis.
Wine imported during the January to October period was valued at $93.4 million, less than 65 percent of the $143.9 million worth of wine brought in during the same period last year.
When converted to volume, wine imports through October reached around 19,096 tons, about 77.6 percent of last year's level.
"I think it is certain that 2009 will be the first year since 1998 to mark an annual decrease in wine imports," said an official at the customs office.
"However, there is a possibility that wine imports will rebound in 2010. With the free trade agreement (FTA) between Korea and the European Union expected to go into effect sometime during next year, bottles from European vineyards may become cheaper, as the 15 percent tariff on wines will be eliminated."
The financial crisis in 1998 decimated wine consumption, with imports totaling just $6.5 million, off 71 percent from $22.8 million in 1997.
However, wine imports have been growing every year since, both in price and volume. Korea imported $166.6 million worth of wine last year - 28,795 tons in volume. This represented nearly a 26-fold increase in value over the decade, and more than an 11-fold increase in volume.
France remained Korea's most popular source this year, with more than $30.3 million worth of French wine imported through October. Chilean wine came in second at $20.3 million, obviously helped by the (FTA) between Korea and Chile that allows Korean consumers a larger choice of good-value bottles.
Italian wine ranked third at $14.6 million, followed by American at $9 million, Australian at $6.53 million, Spanish at $5.26 million and German at $2.34 million.
Although wine consumption has grown in the past decade, consumers have been complaining about high prices, even before the economic slump had them tightening their purse strings.
Imported bottles 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. As a result, the prices of bottles often bloat by three-fold or more when they reach consumers.
With consumers becoming reluctant to pay a premium for wine, importers have been competing to deliver a broader range that delivers a bigger bang for the buck, thus touching off a fierce price war.
The country's three major department store chains ― Lotte, Hyundai and Shinsegae ― are now increasing the volume of direct imports in their wine offerings.