 The Fair Trade Commission (FTC)’s suggestion to allow online sales of wine has sparked controversy. / Korea Times |
It wasn’t long ago that Korea seemed to be quickly earning its stripes as a wine-drinking nation. But then the Lehman Brothers fiasco happened and now a growing number of consumers suddenly say they can’t pay that much for fermented grape juice.
As the wine boom turns to gloom, there are increasing grumblings from oenophiles holding the fort, insisting that imported wines are overpriced here.
Indeed, a complicated distribution structure and heavy taxes have forced consumers here to pay a premium for mediocre Bordeaux and Chilean cheapies, which would cost $20 or less a bottle in the United States but nearly as much as a pair of tennis shoes here.
Korea’s free trade pacts with the European Union and Chile made little difference to consumers with the effect of lowered tariffs negated by the complex web of importers and retailers.
Now, the Fair Trade Commission (FTC), which is becoming the Lee Myung-bak government’s unorthodox weapon against inflation, has set its sights on shaving the price tags of wine. The watchdog’s idea is to remove the ban that has prevented wine from being sold and distributed through online shopping destinations, which it says will help rationalize prices and boost sales.
The country had long prohibited liquor from being sold through electronic commerce. But the ban has been lifted on traditional beverages, such as makgeolli and other peasant wines, since April last year to provide extra income sources for struggling agricultural communities.
However, the FTC’s suggestion to expand the freedom to wine sales has touched off controversy. Once wine is sold online, it will become difficult to convince the makers of beer and soju, Korea’s traditional distilled beverages, why they are being left out.
And wine importers and retailers, despite struggling from faltering sales, are uneasy about the idea of price competition triggered by Internet-based rivals. The National Tax Service (NTS) also stands against allowing wine to be sold online, worrying over the fostering of unauthorized trade that is difficult to track and tax.
``The reason that wine is so overly expensive here is because of the complexity in import and distribution channels. Allowing wine to be sold online might be a good approach for deregulating the market and making prices more reasonable,’’ said an FTC official.
An official from the Korea Wine and Spirits Importers Association raised concerns that the debut of Internet-based wine distributors would squeeze small- to mid-sized importers from the market.
``Smaller importers are already struggling to compete with major retailers like department stores, which have been increasing the number of bottles they bring in from direct imports. Online wine sales could be a decisive blow to these companies and the lack of diversity will eventually hurt consumers,’’ he said.
Korea’s wine boom peaked in 2008 when $166.5 million worth of wine was imported. However, after the collapse of Lehman Brothers triggered a worldwide economic crisis, the country’s wine imports were slashed by 32.5 percent the following year to $112.45 million. Wine imports last year rebounded moderately to $132 million.
