Exporting Wine to Korea – A Complete Guide

Suggestion: Watch the 10 minutes video tutorial before reading this article

Korea has one of the fastest-growing eCommerce markets in the world and its population gets an increased appetite for foreign products.

As a result, the imports of wine has skyrocketed since 2000 and the trend won’t change for a long time to come it seems like.

With that said, selling wine in Korea requires that you do due diligence first, learning about the market, trade fairs available, and more. In this article, I cover a wide range of topics about how you can sell wine in Korea as a foreigner.

Topics covered:

• South Korea’s Wine Market
• Trade fairs for Wines
• Shipping and packaging of wines to Korea
• Import Taxes and tariffs
• Labeling of wine bottles

South Korea’s Wine Market

Wine imports increase with double digits on an annual basis in Korea and red wine is dominating the imports with a market share of (just over 71%). With that said, white-and sparkling wine gets increasingly popular as well.

Thus, producers of red, white, or sparkling wine all have great export opportunities and to enter the Korean market.

The same as for other Asian countries, wine has previously been considered a luxury product and consumed by a small part of the population, primarily wealthy people. Prices of wine can be increased significantly due to added import taxes, tariffs, and customs fees.

The majority of the consumers are elder people in their 50-60’s. In general, they have higher disposable incomes. With that said, wine is becoming popular among younger people too, even if beer and soju still dominate the market.

Worth mentioning is that younger females start appreciating wine and you could target this consumer segment. Younger people are generally more exposed to Western culture and trends.

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Trade fairs for Wines

I recommend you to visit one or more trade fairs if you’re are serious about entering the Korean market and want to widen your network.

As a beginner, it’s not that easy to identify the most interesting wine fairs though, without a helping hand. Looking where fairs are held, Seoul is the city you should aim for.

The majority of fairs are held there and it’s the center for business and attracts the most buyers and interesting business people.

Korea’s Wine Market Has Become One of the Most Attractive

According to reports, Korea’s wine market

Seoul international wine and spirits expo (SIWSE)

Seoul international wine and spirits expo (SIWSE) is one of the biggest trade fairs for wine products in Korea and if you ever go to Korea to exhibit wine, this one should be at the top of your list.

The fair attracts around 30,000 visitors per year allowing you to meet plenty of potential importers or distributors. A great benefit of visiting the fair is also that it focuses on wines and spirits only.

In fact, it’s the only fair in Korea, specializing in just wines and spirits.

Products on display:

• Red wine/ White wine/ Rose wine/ Sparkling wine/ Fortified wine
• Beer/ Whiskey/ Vodka/ Brandy/ Cognac/ Rum/ Gin/ Tequila/ Japanese sake/ Chinese spirits
• Wine cellar/ Accessory/ Glass/ Ice maker
• Cheese/ Olive/ Bakery/ Ham/ Seafood/ Chocolate/ Snack/ Coffee
• Production equipment/ Microbrewery/ Transport/ Storage/ Shipping/ Packaging/ Interior

Application and fees

You can submit your application online and in English, it can’t be more convenient than that. Let’s have a look at the complete process from the submission of your application till the time the fair is over:

• You submit the initial application (the deadline is 14th of February)
• You submit a second application that includes services you want to add (for instance: interpreters, phone, internet, and furniture for your booth)
• You pay a deposit – half of the total booth fee to be paid one week after you submitted the application
• You submit the essential application (The deadline is 16th of March)
• Full payment is required (The deadline if 16th of March)
• You arrange and prepare your booth (Preparation to be done 15th of April, two days before the exhibition starts).
• Your goods arrive on 16th of April
• The exhibition is held (From 17th – 19th of April)
• The exhibition has finished and you bring your stuff from the booth (19th of February)

In general, the booth sizes are rather limited at trade fairs. But what can you expect from a fair that attracts tens of thousands of people and have several hundreds of exhibitors from all over the world? The booth size at this fair is 9 square meters and the price per booth stretches from 2800 USD to 3300 USD depending on what extra material you want (those can be seen above). You must pay for internet, electricity and phone calls in addition to the above costs.

Time and place

Date: April 17th (Thursday) – 19th (Saturday), 2014
Venue: COEX Hall C, Seoul, KOREA
Scale: 7,776 ㎡
Exhibitors expected: 200 companies from 20 countries
Visitors Expected: 30,000

Seoul Food & Hotel

Seoul Food & Hotel is one of the biggest food fairs in Korea and was visited by almost 41,000 people in 2013. The fair is located just 20 minutes from Seoul in the city of Goyang and attracts professionals from all over the world.

If you visit Seoul food & Hotel, you can be sure to find the following products:

• Meat.
• Wines & spirits.
• Tea & coffee.
• Cheese & dairy.
• Organic food.
• Health products.
• Baby food.

Application & expenses

The application can be printed from the website, filled in, and sent to the organizer’s email address. You pay for the area rented and the equipment needed.

The extra equipment can be carpets, walls, phones, interpreters, and tables for instance.

Time & place

Date: 13-16th of May, on annual basis (Application deadline January 31st)
Venue: KINTEX, Daehwa-dong
Ilsan-seogu, Goyang-si
Gyeonggi-do, Korea

Shipping and packaging of wines to Korea

There are two ways of transporting commodities worldwide – by air freight or sea freight. Wine bottles are heavy and the most suitable freight option is for sure sea freight.

Though, due to various circumstances, there are times when air freight is the better choice. I recommend you to use air freight for the following scenarios:

• If you plan to exhibit a low amount of bottles at a trade fair or similar
• If you send product samples for testing
• If you send product samples to be checked by potential importers or distributors
• If the importer’s demand increases rapidly and there’s not enough time to use sea freight

Wine bottles are fragile and require robust packaging. In addition, the price for a wine bottle can stretch up to several hundreds of dollars. I guess you understand the importance to use sturdily packaging in order to prevent crushing bottles.

In fact, many shipping companies have packaging requirements and regulations that exporters must follow (can be found on UPS’ website).

Make your own analysis and evaluate what packaging that suits your products better, from a cost and quality point of view. Bear in mind that the packaging needs to meet the requirements set by your shipping company.

Import Taxes and tariffs

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 markups.

Calculation Example:

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.

Labeling of wine bottles

A separate Korean label is required on imported wine bottles and the label is usually attached by the importer prior to customs clearance, in the duty-free warehouse.

The following information must be included on the label:

• Product Name
• Country of origin
• Product Type (e.g. Grape wine)
• The name, address and phone number of the importImporter‟s name, address, and phone number
• Date of bottling
• Alcohol percentage and volume
• Name of major ingredients (e.g. Grape)
• Name of the place where the product can be returned if any problems
• Information regarding storage
• Name of food additives used (e.g. Sulfur Dioxide)
• Health warning clause
• Warning clause to prevent liquor sales to minors
• The name of the distributor needs to be included on bottles sold in retail stores

In addition to the above, the label cannot include a picture of fruits if the wine contains synthetic flavors.

Keep in mind that non-compliance with labeling regulations is often one of the most common reasons for rejections at customs. This is something we see in China, for example, where the AQSIQ and CIQ manage import inspections.

It’s important that you get help from a third-party that can help you create the labels and further register the labels prior to exportation.

The tolerance of the alcohol percentage can be 0,5% (e.g. if your label states that the wine contains 13% alcohol, it can contain 12,5% to 13,5% alcohol).

Summary

Korea is a promising nation that will enjoy a population increase along with GDP growth in the coming decades. countries like Japan, on the other hand, will suffer from a large population decrease.

In the 1970s, Korea had a similar GDP per capita as Thailand and the Philippines, but the nation has grown into becoming one of the most developed in the world.

Nowadays, plenty of renowned multinationals like Hankook Tires, Hyundai, Samsung, LG, and more have entered the international market.

Its wine market is the second-most attractive according to research and just behind the US. As such, if you plan to sell wine in Asia, Korea should definitely be on your list.

By stocking products in Korea, or perhaps Hong Kong, you also have to plenty of other rapidly-growing countries in the region, including China, Southeast Asia, and India.

The 21st century is Asia’s century and exporters who enter the markets early can gain a competitive advantage in terms of brand awareness and market knowledge.