Wine in South Korea

PRE-COVID-19 PERFORMANCE

Lower-priced still light grape wine booms as younger drinkers drive growth in takju

Unit prices in wine came under significant pressure towards the end of the review period as increased levels of competition among the country’s leading wine players resulted in the emergence of a small price war in still light grape wine. Although this has placed pressure on category value growth rates, volume sales are rising as lower prices have widened the consumer base for the category.

Seoul Takju Association seeks to dispel the old-fashioned image of takju

Seoul Takju Association remained atop the rankings in wine in South Korea in 2019, with its strong position supported mainly by its ownership of the leading takju brand Jangsu Makkeoli and the successful launch of its new brand Life Makgeolli. This new brand targets younger generations of takju drinkers and its presence on retail shelves has improved the company’s image in the off-trade as its fashionable image, modern labelling and lower ABV are all in line with emerging consumer trends.

Shinsegae L&B leads still light grape wine due to popularity of its economy brands

Shinsegae L&B continued to lead sales in still light grape wine in 2019 and this was mainly thanks to the wide range of products in its portfolio and the strong partnerships that it has maintained with some of the leading distributors and retailers of wine in South Korea. Much of Shinsegae L&B’s success has been built on its ability to push economy wines under private label via the retail chains owned by its parent company Shinsegae Group, including the country’s leading chain of hypermarkets E-mart and the strong discounters chain Traders.

2020 AND BEYOND

COVID-19 impact

On-trade volume sales of wine are expected to fall by 24% in 2020 in light of the impact of COVID-19. This represents a far worse performance than the expected 3% rise forecast for 2020 during research conducted in May 2019, ie before the spread of COVID-19.

Affected products within wine

Sake and champagne are the categories of wine that are expected to have registered the steepest sales declines as a result of the COVID-19 situation. These products have struggled to remain relevant during 2020, which is mainly due to their high prices in comparison with other types of wine and the fact that they are much more likely to be consumed on-trade than off-trade, which made them more vulnerable to falling demand as the South Korean horeca industry faced an extended shutdown at the peak of the pandemic.

Recovery and opportunities

With favourable trends that were evident in the category prior to the onset of COVID-19 expected to remain in effect for the foreseeable future, a strong and rapid recovery is expected for sales of wine in South Korea over the forecast period. Sales are set to remain dominated by the traditional local unrefined rice wine takju, with other types of local non-grape wines such as cheongju (refined rice wine), yakju (medicinal rice wine) and bokbunjaju (black raspberry wine) accounting for a substantial proportion of remaining category sales.

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