Sector Trend Analysis – Alcoholic beverages in South Korea

June 2019

Executive summary

Emerging demand for premium quality craft beer among South Korean millennials is expected to expand export opportunities for Canadian beer to South Korea in the coming years. However, Canadian companies must be prepared for tough competition from both Korean and international producers.

South Korean consumers are asking for a wider variety, premium beers and international brands. They are slowly pressuring local breweries to launch different ales as well as products with more malt and hops or expand production of their premium-brand lagers.

South Koreans are increasingly concerned about their health. Consumption of alcoholic beverages with a lower alcohol content will drive the market in all categories of alcoholic beverages.

South Korea is a leading market for distilled spirits. The Korean population is taking an interest in more reasonably priced, lower-alcohol content whiskey products, consuming these in bars and at home.

The wine market in South Korea is still in the early stages of development and has a solid growth potential in in the coming years (2018–2022). Also, the health benefits of drinking red wine are highly publicized by local marketers.

Alcoholic beverage megatrends

Drinking is considered an important part of professional life in South Korea and is often encouraged at social and business occasions. In a country where 10-hour work days are the norm, it is common to have drinks with colleagues (known as hoesik) and to relieve stress after work. According to a 2014 study by Euromonitor, "Of 44 countries analyzed by Euromonitor, South Koreans drink 13.7 shots of liquor per week on average, which is the most in the world. The Russians, the second biggest in Euromonitor's sample, down 6.3 shots per week, while Americans consume only 3.3." In terms of retail sales, beer is the most popular alcoholic beverage in South Korea, followed by spirits and wine.

Historical and forecast average consumer expenditure on alcoholic beverages per capitaFootnote 1, at legal purchasing age, US$, fixed 2018 exchange rate
Country 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
South Korea 616.0 682.9 705.4 798.9 2.6 3.2
Canada 1,022.8 1,109.3 1,146.8 1,319.3 2.1 3.6

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Health concerns

Increased health concerns, especially among South Korean millennials, have significant impacts on the spirits sectors and are increasing the demand for products with a lower alcohol content. This long-term trend was promoted by companies and the South Korean government with the 119 campaign: "one drink, one type of consistent alcohol, finished by 9pm." Health concerns among the general public regarding alcoholic beverages are generating strong demand for products with less alcohol. Although drinking is decreasing among the elderly population for health reasons, among the younger generations, the drinking culture is slowly changing from heavy to more leisurely drinking. This, in turn, has led to the increasing popularity of luxury brands and lower-content alcoholic drinks.

Female consumers

South Korean women are gradually becoming a bigger proportion of South Korea's corporate world and senior executives. The female employment rate increased from 46.8% in 1998 to 57.9% in 2018. They are the driving force behind the increase in demand for alcoholic products with lower ABV (low alcohol by volume) content and an increase in the range of flavours offered among beers, spirits and wines.

Solo drinking

There is also a growing culture of drinking solo (called "Honsul "- 혼술Footnote 2) that is leading those in their 20s and 30s who choose to drink to do so at home instead of going out. The proportion of one-person households is getting larger in South Korea and they have become a significant part of the market. The convenience store industry is the brightest spot in the growing solo economy. The beer and liquor industry has begun to adapt to this customer base (millennials) by remarketing flagship products in smaller packaging sizes. For instance, Oriental Brewery released mini-sized Hoegaarden Rosée bottles in an effort to diversify its small-portion lineup and to attract female customers.

South Korean beer market

South Koreans are the 11th largest consumers of beer in the world (Euromonitor International, 2018). Between 2013 and 2017, the retail value of beer sales in South Korea increased at a compound annual growth rate (CAGR) of 5.3%, to reach US$15.1 billion. Over the forecast period, retail beer sales are expected to see a CAGR of 4.8%, to reach US$19.2 billion in 2022.

Historical and forecast top world markets, retail value sales of beer, US$ million and period growth (%) – fixed 2018 exchange rates
Countries 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
World 542,291.2 660,576.2 696,198.6 865,814.5 5.1 5.6
China 66,341.1 84,728.3 91,086.3 121,571.1 6.3 7.5
United States 96,237.7 103,990.7 106,459.6 118,810.4 2.0 2.8
Brazil 30,057.6 42,864.0 45,626.4 61,164.8 9.3 7.6
Japan 37,324.5 37,264.3 37,117.8 37,737.8 0.0 0.4
Germany 30,788.9 31,784.7 32,335.6 34,359.3 0.8 1.5
Mexico 14,439.3 21,587.8 23,712.9 31,554.5 10.6 7.4
United Kingdom 25,906.3 26,761.6 27,599.1 30,906.1 0.8 2.9
Russia 17,129.7 19,646.3 20,361.7 22,625.0 3.5 2.7
Australia 13,153.6 15,443.1 16,579.4 22,050.0 4.1 7.4
Spain 14,621.9 16,314.1 17,156.5 20,882.7 2.8 5.0
South Korea (11th) 12,296.9 15,124.3 15,977.7 19,272.5 5.3 4.8
Canada (12th) 12,671.0 13,477.4 13,852.0 15,831.1 1.6 3.4

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Craft beer

Craft beer in South Korea has seen explosive growth since 2014. One of the main reasons for this growth is that for decades, the supply was homogeneous and dominated mainly by a duopoly: HiteJinro and Oriental Brewery (OB). Over the years, these large-scale domestic breweries mainly brewed a limited assortment of low-priced beer, targeting mass distribution (dry lagers). Young consumers have become fairly bored with the lack of choices and are therefore increasingly likely to try craft and foreign beers. Consumers are slowly pressuring the local breweries to launch different ale beers as well as products with more malt and hops or expand production of their premium brand lager. Craft beers from local microbreweries are mostly ales with unique flavours. Local beer importers are trying to cope with this fierce competition by focusing on priority products in their portfolios. Opportunities lie in products with high brand recognition to offset weak competitiveness against domestic ones.

South Korean millennials are increasingly looking for greater diversity in their beer products, such as ales, fruit beers and dark beers. Foreign beers are positively impacted by this trend, as foreign beers (pale ale, wheat beer and dark ale) are perceived as premium products. This offers opportunities for Canadian brewers as South Korean millennials want and can afford those premium expensive beers. Foreign beers are currently popular in South Korea and the number of specialized beer shops and cafés are increasing in major cities such as Seoul and Busan. Beer imports have increased as a result of consumers' appetite for different beer varieties and locally produced beer.

Since craft beers are often expensive, craft beer brands focus on consumers with higher disposable incomes. Bars and tap houses selling domestic craft beer have started gaining in popularity over the last few years, fuelling the creation of more breweries across the country. In 2017, the craft beer industry accounted for less than 1.5% of the overall beer market sales in South Korea, with about 81 craft breweries in operation. However, the trend has extended outside of the Seoul districts of Itaewon, Gangnam and Hongdae and across the country. These starters will also be looking for raw materials, which offers opportunities for Canadian producers.

Historical and forecast South Korean retail value sales of beer by category, US$ million and period growth (%) – fixed 2018 exchange rates
Category 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
Beer 12,296.9 15,124.3 15,977.7 19,272.5 5.3 4.8
Dark beer 136.0 427.6 521.3 813.8 33.2 11.8
Lager 12,009.7 14,438.6 15,192.2 18,165.0 4.7 4.6
Premium lager 1,325.3 2,827.5 3,7375.6 5,307.2 20.9 12.0
Domestic premium lager 570.0 372.6 372.8 378.1 −10.1 0.4
Imported premium lager 755.3 2,454.9 3,002.8 4,929.1 34.3 13.2
Mid-priced lager 10,684.4 11,520.7 11,661.6 12,559.0 1.9 1.9
Economy lager 90.5 154.9 298.7 N/C 17.8
Non-alcoholic beer 7.0 9.7 10.5 12.9 8.5 5.3
Stout 144.2 248.3 253.7 280.8 14.6 2.6

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

N/C: Not calculable

The domestic premium lager has significantly declined from 2013 to 2017, with a CAGR of −10.1%. Over the forecast period (2018-2022), growth will be stagnating within the domestic premium lager category as South Korean consumers are choosing imported premium beer instead.

Imported premium beers saw solid growth in recent years (CAGR of 34.3% from 2013 to 2017) due to the increased demand for value consumption; increased demand for products of diversified taste and quality and increased alcoholic beverage consumption among the female population.

Total volume sales of dark beer rose by an impressive 56% in 2017, outpacing the other categories.

Beer prices by category
Category Beer Price
Premium lager Imported brands: Stella Artois, Sapporo, Asahi Super Dry and Pilsner Urquell Above Can$5.58 (KRW4,700)
Domestically produced: Cafri Above Can$4.51 (KRW3,800)
Mid-priced Domestically produced: such as Hite, Max and Cass From Can$3.32 to 4.51 (KRW2,800-3,800)
Economy Domestically produced: Filite Under Can$3.32 (KRW 2,800)

Source: Euromonitor International, 2018

Exchange rate: Bank of Canada, 12/11/2018

Off-trade and on-trade reviewFootnote 3

In 2017, domestically produced mid-priced lager experienced modest growth as it continued to face persistent competition from foreign importers. Aggressive promotional discounts for imported beer and increasing trials of craft beers by consumers (both on- and off-trade) are expected to hamper the performance of domestic mid-priced lager brands. To offset this decline, domestic beer companies are increasingly expanding their portfolios of imported beer brands to maintain their overall market shares.

Historical and forecast South Korean retail value sales on-trade/off-trade by category, US$ million and period growth (%) – fixed 2018 exchange rates
Category Off-trade/on trade 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
Beer Off-trade 3,448.3 4,310.5 4,685.9 6,121.9 5.7 6.9
On-trade 8,848.7 10,813.8 11,291.8 13,150.6 5.1 3.9
Dark beer Off-trade 19.5 104.2 138.1 261.5 52.0 17.3
On-trade 116.5 323.4 383.2 552.3 29.1 9.6
Lager Off-trade 3,366.9 4,097.1 4,432.4 5,719.6 5.0 6.6
On-trade 8,642.9 10,341.5 10,759.7 12,445.4 4.6 3.7
Premium lager Off-trade 261.3 799.2 1,029.2 1,938.8 32.2 17.2
On-trade 1,064.0 2,028.3 2,346.4 3,368.4 17.5 9.5
Domestic premium lager Off-trade 91.8 68.2 68.3 70.2 −7.2 0.7
On-trade 478.2 304.4 304.5 307.9 −10.7 0.3
Imported premium lager Off-trade 169.5 731.0 960.9 1,868.6 44.1 18.1
On-trade 585.8 1,723.9 2,041.9 3,060.5 31.0 10.6
Mid-priced lager Off-trade 3,105.5 3,207.5 3,248.3 3,482.1 0.8 1.8
On-trade 7,578.9 8,313.2 8,413.3 9,077.0 2.3 1.9
Economy lager Off-trade N/A 90.5 154.9 298.7 N/C 17.8
On-trade N/A N/A N/A N/A N/A N/A
Non-alcoholic beer Off-trade 7.0 9.7 10.5 12.9 8.5 5.3
On-trade N/A N/A N/A N/A N/A N/A
Stout Off-trade 54.9 99.5 104.9 127.9 16.0 5.1
On-trade 89.3 148.9 148.9 152.9 13.6 0.7

Source: Euromonitor International, 2018

*CAGR: Compound annual Growth Rate

N/C: Not calculable

N/A: Not available

Companies

South Korea's major breweriesFootnote 4 faced the challenge of losing revenue in the review period, caused by the weak forecast performance (2018-2022) of their domestic premium lager. To alleviate the situation, starting in 2014, they began incorporating imports and distributing a growing number of foreign beers that are very popular with young South Koreans.

For instance, Anheuser-Busch has expanded its range of products offered in South Korea and in 2018 managed over 18 imported beer brands, such as Budweiser, Hoegaarden, Corona, Beck's, Stella Artois, Leffe and Löwenbräu. One of the tactics used to break into the South Korean beer market was to target female consumers with selected fruit-flavoured products such as Hoegaarden (Rosée) and Kronenbourg (1664 Blanc), which both had some success in South Korea.

Faced with growing competition from foreign brands, HiteJinro has also established import distribution partnerships with some of the leading international beer companies to cope with increased market demand for imported beer.

Market share of the largest companies selling beer in South Korea, breakdown in %, 2013-2017
Company 2013 2014 2015 2016 2017
Anheuser-Busch InBev NV 3.3 56.1 52.7 50.3 49.3
HiteJinro Co Ltd 33.9 30.8 30.1 29.5 27.9
Asahi Group Holdings Ltd 1.1 1.4 2.0 2.3 4.3
Lotte Group 1.7 3.7 3.6 4.2
Tsingtao Brewery Co Ltd 0.3 0.6 1.0 1.9 2.3
Heineken NV 1.1 1.2 1.3 1.3 1.6
Diageo Plc 0.3 0.5 0.8 0.8 0.9
Sapporo Holdings Ltd 0.3 0.4 0.6 0.7 0.9
Suntory Holdings Ltd 0.3 0.4 0.8 0.8 0.7
Molson Coors Brewing Co 0.6 0.7
SABMiller Plc 0.7 0.5 0.5 0.0 0.0
Oriental Brewery Co Ltd (bought by Anheuser-Busch in 2014) 52.4
Others 6.2 6.4 6.6 8.3 7.3
Source: Euromonitor International, 2018

Distribution channels

Types of beer sold by the main distribution channels in Seoul, 2017
Outlet type Type of beer Main company
Hypermarkets Offer a wide range of imported beers but focused mainly on large consumption beers like Stella, Leffe, Hoegaarden, Martens Pils and Duvel for Belgian beers.
  • E-mart
  • Lotte mart
  • Home plus
Supermarkets They mostly sell local beers. Imported specialty beers are rare or very limited. The imported beer brands that are sold in supermarkets are Asahi, Heineken, Super Dry and Hoegaarden.
  • Lotte super
  • GSsupermarket
  • Top Mart
  • Homeplus Express
  • E-mart
  • Goodmorning Mart
  • Kims Mart
Convenience stores Convenience stores have often limited product assortments but are very widespread. Every few streets, you will find a convenience store. They sell mostly local beers. The imported beer brands that may be sold in supermarkets are Asahi, Heineken, Super Dry and Hoegaarden.
  • CVU
  • GS25
  • Seven Eleven
Specialized beer shops The number of specialized beer shops is increasing, especially in neighbourhoods with many foreigners, student areas and trendy areas/places in town. They mostly offer specialty beers from local microbreweries and they focus on foreign specialty beers from Belgium, the US, Canada, the Czech Republic and Germany.
  • Self-Owned
Source: Euromonitor International, 2018

One reason for the rapid increase in the popularity of imported beer is the promotions at specialized shops and convenience stores that offer bundles of beer from around the world and at much better prices. Consumers are increasingly buying imported beers from convenience stores in major cities. Many convenience stores offer imported beers at a discounted price and sold in bundles, such as four cans for 10,000 KRW (US$8.90). Price promotions on imported beer in off-trade outlets are expected to continue during the forecast period (2018-2022).

Channel distributions for beer in South Korea, breakdown in %, 2013-2017Footnote 5
Outlet type 2013 2014 2015 2016 2017
Grocery retailers 97.0 97.0 97.0 97.0 92.2
Food/drink/tobacco specialists 0.1 0.1 0.1 0.1 0.1
Hypermarkets 38.7 39.7 40.4 38.9 32.3
Small grocery retailers 46.7 45.6 45.1 46.7 49.8
Convenience stores 19.4 19.5 20.3 22.4 28.4
Forecourt retailers 0.0 0.0 0.0 0.0 0.1
Independent small groceries 27.3 26.1 24.8 24.3 21.3
Supermarkets 11.6 11.5 11.4 11.3 9.9
Mixed retailers 3.0 3.0 3.0 3.0 7.8
Department stores 3.0 3.0 3.0 3.0 2.8
Warehouse clubs 5.0
Source: Euromonitor International, 2018

Foreign beer in South Korea

South Korea's beer imports have continued to post robust growth in recent years, especially for imported premium lager in response to increased consumer demand for products of diversified taste and higher quality. The international beer export market in South Korea is booming (CAGR of 29.0% from 2014 to 2018) and, among others, North American beers are becoming increasingly popular in South Korea. Emerging demand for premium quality beer offers an excellent export opportunity for Canadian beer; however, exporters must be aware of and be prepared to contend with both domestic and international competitors.

Top beer exporters to South Korea – US$ (Harmonized System (HS) code: 2203)Footnote 6
Country 2014 2015 2016 2017 2018 CAGR* % 2014-2018 Share % 2018
World 111,685,782 141,768,199 181,829,499 262,994,584 309,686,357 29.0 100.0
Japan 33,212,024 41,063,570 51,219,943 71,410,434 78,299,924 23.9 25.3
China 9,117,392 14,215,109 26,382,051 37,738,514 40,911,952 45.5 13.2
Belgium 6,088,508 8,795,351 12,827,873 25,638,881 36,177,416 56.1 11.7
United States 7,345,557 9,055,490 9,727,654 17,406,041 34,572,966 47.3 11.2
Germany 14,566,171 18,802,390 20,107,267 24,581,974 24,589,911 14.0 7.9
Netherlands 14,040,032 12,090,122 15,026,267 19,636,727 21,407,859 11.1 6.9
Ireland 10,413,611 16,261,412 18,546,787 20,716,408 18,453,632 15.4 6.0
Czech Republic 2,313,731 3,355,318 5,831,211 10,291,427 10,522,210 46.0 3.4
Poland 155,322 170,715 143,022 65,931 10,157,046 184.4 3.3
France 1,212,692 2,410,169 6,066,207 14,105,212 8,321,782 61.9 2.7
Canada (25th) 248,145 349,400 313,282 458,543 427,496 14.6 0.1

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

Top fermented beverage exporters to South Korea – US$ (HS code: 220600)
Country 2014 2015 2016 2017 2018 CAGR* % 2014-2018 Share % 2018
World 23,165,742 21,166,250 22,694,718 27,064,122 34,004,267 10.1 100.0
Japan 12,620,022 11,632,509 14,451,017 16,559,094 20,168,396 12.4 59.3
Denmark 1,096,095 1,461,412 1,430,660 1,879,132 3,498,601 33.7 10.3
United States 2,089,537 1,721,238 2,170,598 2,464,957 2,663,074 6.3 7.8
Australia 4,671,807 3,998,899 2,302,512 2,252,398 2,461,261 −14.8 7.2
Spain 38,426 9,520 42,066 61,716 1,307,848 141.5 3.8
Austria 21,935 488,125 751,951 1,171,908 N/C 3.4
Germany 1,565,975 1,111,262 596,630 1,039,976 989,297 −10.8 2.9
Belgium 271,852 301,134 256,421 353,175 506,872 16.9 1.5
Italy 3,992 1,164 10,334 494,356 252,411 182.0 0.7
Taiwan 72,770 176,158 229,150 300,690 221,222 32.0 0.7

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/C: Not calculable

Product launch analysis for beer

In the last five years, 416 new beers were launched in South Korea. Out of these, 251 were new beers on the shelves of South Korean stores. Featured products are increasingly being relaunched with new packaging and breweries are expanding the range of products. Demographic factors continue to impact on package size and design increasingly, while new lifestyle trends generate changes in product preferences. Millennials make the most of their tight budgets by maximizing cost-effectiveness, but they never compromise on taste.

Number of beer launches in South Korea by launch type, from January 2014 to December 2018
Description of this image follows.
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Launch type 2014 2015 2016 2017 2018 Total
New product 72 49 54 42 34 251
New packaging 11 18 32 16 21 98
New variety / range extension 8 16 10 10 16 60
Relaunch 0 2 2 0 2 6
New formulation 0 0 1 0 0 1
Total 91 85 99 68 73 416

Source: Mintel, 2018

Main beer sizes used for new launches, unit pack size (millilitres (ml)), from January 2014 to December 2018
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Unit pack size (ml) Bottle Can
500 ml 147 10
330 ml 21 87
355 ml 31 57
1000 ml 1 7
473 ml 7 1
Other 12 12
Total 229 187

Source: Mintel, 2018

Main packaged beer used for new launches by price (US$), from January 2014 to December 2018
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Price in US$ (group) Bottle Can
1.00 - 2.22 67 23
2.23 - 4.35 107 51
4.36 - 6.48 22 61
6.49 - 8.61 21 30
8.62 - 10.74 7 11
10.75+ 5 11
Total 229 187

Source: Mintel, 2018

Main beer sizes used for new launches by price (US$), from January 2014 to December 2018
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Price in US$ (Group) 500 ml 330 ml 355 ml 1000 ml 473 ml Other format
1.00 - 2.22 51 20 3 5 2 3
2.23 - 4.35 88 40 16 2 4 5
4.36 - 6.48 7 24 34 0 1 10
6.49 - 8.61 5 13 27 0 0 3
8.62 - 10.74 3 6 5 0 1 1
10.75+ 3 5 3 1 0 2

Source: Mintel, 2018

Claims listed on pack of beer products in South Korea, 2013-2017Footnote 7
Description of this image follows.
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  • Premium (86)
  • Environmentally friendly package (41)
  • Limited edition (26)
  • Active on social networks (21)
  • Seasonal (19)
  • No Additives/preservatives (13)
  • Event merchandising* (12)
  • Kosher (9)
  • Organic (9)

Source: Mintel, 2018

*Event merchandising means products that have been launched in connection with or in collaboration with a specific event such as a sporting, musical, cultural or other event.

Examples of beer launches

Hefeweizen
Source: Mintel, 2018
Company Privatbrauerei Eichbaum
Importer Inter K
Brand Stephans Bräu
Store type Convenience store
Date published December 2017
Launch type New product
Price in local currency KRW2500.00
Price in US dollars 2.30

Stephans Bräu Hefeweizen is now available. This German premium beer retails in a 500 ml can.

Lemon Flavoured Wheat Beer
Source: Mintel, 2018
Company Oriental Brewery
Brand Hoegaarden
Country South Korea
Store name CU
Store type Convenience store
Date published August 2017
Launch type New variety / range extension
Price in local currency KRW2700.00
Price in US dollars 2.07

Hoegaarden Lemon Flavoured Wheat Beer is brewed with coriander seed, orange peel and natural lemon juice. The limited edition, seasonal product is described as a combination of Belgian wheat beer and refreshing lemon perfect for the summer, is naturally cloudy and retails in a 500 ml pack.

Paradise Valley Grapefruit Ale
Source: Mintel, 2018
Company The Whistler Brewing Co.
Importer I&J Partner
Brand Whistler Brewing Company
Country of manufacture Canada
Store name Shinsegae Department Store
Store type Department store
Date published May 2015
Launch type New variety / range extension
Price in local currency KRW5800.00
Price in US dollars 5.66

Whistler Brewing Company Paradise Valley Grapefruit Ale is a summer ale with a twist. The product is formulated as a malty blonde with added grapefruit zest, coriander and two kinds of hops. The result is said to be a smooth summer ale with a clean citrus finish and is recommended for afternoon patios. It contains no additives or preservatives, and retails in a 330 ml bottle.

Maredsous Strong Beer
Source: Mintel, 2018
Company Duvel Moortgat
Importer Muos
Brand Maredsous
Country of manufacture Belgium
Store type Department store
Date published October 2017
Launch type New product
Price in local currency KRW5500.00
Price in US dollars 4.88

Maredsous Strong Beer is now available. This high fermentation abbey beer is brewed in accordance with the Benedictine tradition of the community of Maredsous Abbey, and is refermented in the bottle. The product retails in a recyclable 330 ml bottle.

Gangnam Pale Ale
Source: Mintel, 2018
Company Beersum
Importer Beersum
Brand Craftbros x Fuggles & Warlock
Country South Korea
Store name E-mart
Store type Supermarket
Date published November 2017
Launch type New product
Price in local currency KRW3980.00
Price in US dollars 3.57

Craftbros x Fuggles & Warlock Gangnam Pale Ale is said to have a balanced flavour with notes of tropical fruits such as orange, grapefruit and passionfruit, and caramel from roasted malt. The product retails in a 355 ml bottle.

Original Czech Dark Lager
Source: Mintel, 2018
Company Tradicni Pivovar v Rakovniku
Importer Dong-A International Trading
Brand Cernovar
Store name Home Plus
Store type Supermarket
Date published September 2017
Launch type New variety/range extension
Price in local currency KRW3590.00
Price in US dollars 3.17

Cernovar Original Czech Dark Lager is now available. The product retails in a 500 ml can.

South Korean spirits market

The country is the 10th largest spirits market in the world, and South Koreans consumed approximately US$11.3 billion in retail value sales of spirits in 2018. Between 2013 and 2017, retail value sales of spirits in South Korea increased by a compound annual growth rate (CAGR) of 2.5%, to reach US$11.3 billion. Over the forecast period, the value of retail sales of spirits is expected to increase to US$19.2 billion in 2022.

Historical and forecast top world markets, retail value sales of spirits, US$ million and period growth (%) – fixed 2018 exchange rates
Country 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
World 435,907.1 532,087.1 571,195.1 760,248.7 5.1 7.4
China 125,729.0 147,903.6 167,717.2 268,260.2 4.1 12.5
United States 62,668.9 73,610.4 77,072.0 92,341.6 4.1 4.6
India 28,179.2 33,617.5 35,893.2 44,862.9 4.5 5.7
Japan 22,182.6 26,268.6 27,700.3 33,827.7 4.3 5.1
Russia 14,046.9 16,630.4 17,628.8 22,216.4 4.3 6.0
France 18,499.0 18,852.7 19,112.1 20,324.6 0.5 1.5
Germany 17,496.7 18,228.9 18,702.3 20,299.8 1.0 2.1
United Kingdom 13,895.9 15,846.7 16,670.9 19,733.3 3.3 4.3
Brazil 7,883.4 10,610.4 11,375.3 15,865.5 7.7 8.7
South Korea (10th) 9,972.8 11,022.5 11,286.8 12,332.8 2.5 2.2
Canada (13th) 6,713.5 7,905.5 8,242.1 9,777.2 4.2 4.4

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

When it comes to foreign liquor in South Korea, blended Scotch whisky is the main product consumed. It accounted for 22.2% of the South Korean spirits market in 2018. Per capita, South Korea is the world's top consumer of super-premium whisky (aged 17 years or over). However, blended malt Scotch consumption is rapidly declining with a forecast CAGR of −8.0% from 2018 to 2022. Blended malt will represent 13.3% of the spirits market share in 2022, which is a drop of 8.9%.

In contrast, there is a heavy and growing demand for single malts over blended malts. They will show the strongest sales growth within the whiskey category in the coming years with a CAGR of 9.0% from 2018 to 2022. However, they will still account for less than 5% of the spirits market in 2022.

Due to growing health concerns among young consumers (21-34 years old), sales of spirits (including whiskies) with an alcohol content below 40%, are set to intensify in terms of value and volume over the forecast period (2018-2022). The local market's key players have moved on to low-alcohol spirits by releasing new products to capture this growing consumer segment. Footnote 8

Historical and forecast South Korea retail value sales of spirits by category, US$ million and period growth (%) – fixed 2018 exchange rates
Category 2013 2017 CAGR* % 2013-2017 Share % 2017 2018 2022 CAGR* % 2018-2022 Share % 2022
Spirits 9,972.8 11,022.5 2.5 100 11,286.8 12,332.8 2.2 100
South Korean spirits[1] 6,074.5 7,537.8 5.5 68.4 7,862.9 9,059.2 3.6 73.5
Maesilju 89.7 65.5 −7.6 0.6 70.3 87.7 5.7 0.7
Shochu/soju 5,896.6 7,390.3 5.8 67.0 7,711.0 8,890.3 3.6 72.1
Other traditional spirits 88.1 81.9 −1.8 0.7 81.6 81.3 −0.1 0.7
Whiskies 3,300.8 2,841.5 −3.7 25.8 2,752.3 2,469.3 −2.7 20.0
Bourbon/other US whiskey 59.3 51.9 −3.3 0.5 48.7 31.4 −10.4 0.3
Blended scotch whisky 3,049.2 2,450.4 −5.3 22.2 2,291.5 1,645.1 −8.0 13.3
Single malt scotch whisky 192.3 252.9 7.1 2.3 273.2 386.2 9.0 3.1
Other whiskies N/A 86.3 N/A 0.8 138.9 406.7 30.8 3.3
White spirits 241.6 280.5 3.8 2.5 294.7 364.5 5.5 3.0
Gin 46.5 44.3 −1.2 0.4 51.4 56.9 2.6 0.5
Vodka 195.1 236.1 4.9 2.1 243.3 307.7 6 2.5
Tequila (and mescal) 139.6 164.3 4.2 1.5 172.2 206.8 4.7 1.7
Liqueurs 117.6 106.9 −2.4 1.0 109.1 126.2 3.7 1.0
Bitters 78.1 54.4 −8.6 0.5 52.0 48.5 −1.7 0.4
Other liqueurs 39.5 52.5 7.4 0.5 57.1 77.8 8 0.6
Rum 52.6 52.6 0 0.5 57.0 68.5 4.7 0.6
Dark rum 39.2 39.4 0.1 0.4 43.0 52.6 5.2 0.4
White rum 13.4 13.2 −0.4 0.1 14.0 15.9 3.2 0.1
Brandy and cognac 46.1 38.9 −4.2 0.4 38.6 38.2 −0.3 0.3
Brandy 3.4 1.0 −26.4 0.0 1.0 0.9 −2.6 0.0
Cognac 42.7 37.9 −2.9 0.3 37.7 37.3 −0.3 0.3

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

1: The local South Korean hard liquor industry mainly produces soju. In terms of processing, soju is the outcome of diluting a high-alcohol base liquor with various added flavours. Soju is usually about 18% to 25% ABV and can be found at every restaurant, supermarket and corner store. Hand-crafted or high-end soju has a much higher ABV. A majority of locally bottled whiskey products in South Korea are also blended from imported whiskey.

N/A: not available

Off-trade and on-trade review

Compared to previous generations, young South Korean professionals (21-34 years old) are increasingly drinking foreign beers, soju and vodka in modern clubs and bars (on-trade channel). Demand for high-end hostess bars is decreasing, as is the demand for aged whisky, which was mainly consumed by the previous generations of businessmen in those places. However, as women are gradually becoming a bigger proportion of South Korea's corporate world and senior executives, the number of host bars in South Korea is growing. Healthier drinks with lower ABV (low alcohol by volume) content and more "mixable" spirits, such as gin, vodka and low-ABV whiskies, are sold in these venues.

In major cities like Seoul and Busan, a new wave of themed cocktail bars are opening while the consumption of white spirits is on the rise. The growing popularity of vodka and the cocktail culture in general in these cities offers international distillers growth opportunities for "mixable" products. Other hard liquors have also reported strong sales in bars and dance clubs targeting young drinkers recently.

A significant portion of annual sales of imported premium spirits (off-trade channel) takes place during a limited number of holiday seasons, including Lunar New Year's Day (celebrated on February 5 in 2019) and Korean Thanksgiving Day.

Historical and forecast South Korea retail value sales on-trade/off-trade by category, US$ million and period growth (%) - fixed 2018 exchange rates
Category Off-trade/on trade 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
Spirits Off-trade 1,855.2 2,098.6 2,169.8 2,436.8 3.1 2.9
On-trade 8,117.6 8,923.9 9,116.9 9,896.0 2.4 2.1
Other spirits Off-trade 1,545.2 1,823.8 1,900.7 2,181.0 4.2 3.5
On-trade 4,529.3 5,713.9 5,962.2 6,878.2 6.0 3.6
Whiskies Off-trade 274.2 239.2 232.8 212.3 −3.4 −2.3
On-trade 3,026.6 2,602.3 2,519.5 2,257.0 −3.7 −2.7
White spirits Off-trade 20.6 23.3 24.1 30.5 3.1 6.1
On-trade 221.0 257.2 270.6 334.1 3.9 5.4
Tequila Off-trade 1.0 1.3 1.3 1.7 6.8 6.9
On-trade 138.6 163.1 170.9 205.1 4.2 4.7
Liqueurs Off-trade 6.7 5.0 4.9 5.1 −7.1 1.0
On-trade 110.9 101.9 104.2 121.1 −2.1 3.8
Rum Off-trade 1.0 1.0 1.1 1.2 0.0 2.2
On-trade 51.6 51.6 55.9 67.3 0.0 4.7
Brandy and cognac Off-trade 6.5 5.0 5.0 5.0 −6.3 0.0
On-trade 39.6 33.8 33.6 33.2 −3.9 −0.3

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Channel distributions for beer in South Korea, % breakdown from 2013 to 2017
Outlet Type 2013 2014 2015 2016 2017
Grocery retailers 99.0 99.0 99.1 99.1 99.1
Food/drink/tobacco specialists 0.2 0.2 0.2 0.2 0.2
Hypermarkets 51.0 51.2 51.3 53.5 55.1
Small grocery retailers 28.8 28.5 28.0 27.5 28.5
Convenience stores 14.0 14.5 15.0 16.4 17.5
Independent small groceries 14.8 14.0 13.0 11.0 11.0
Supermarkets 19.0 19.1 19.6 17.9 15.2
Department stores 1.0 1.0 0.9 0.9 0.9
Source: Euromonitor International, 2018

Companies

The health and wellness trend will increasingly play an important role in the marketability of low-alcohol spirits (marketed products with less than 40.0% alcohol) in South Korea, especially for whiskies. For instance, it is worth noting the success of Golden Blue, a local whiskey brand launched in 2009, initiated by a medium-sized local distiller in Busan.

Market share of the main spirits product brands in South Korea, % of retail sales value breakdown, 2013-2017
Category Brand Company name 2013 2014 2015 2016 2017
Spirits Chamisul HiteJinro Co Ltd 27.9 29.1 28.1 28.0 27.3
Choumchorum Lotte Group 8.7 9.6 9.4 9.9 9.9
Joeunday Muhak Co Ltd 7.5 9.1 9.0 8.9 8.7
Charm Soju Kumbokju Co Ltd 4.9 4.8 4.8 4.7 4.3
Windsor Diageo Plc 7.5 6.6 6.3 4.8 3.5
Liqueurs Jägermeister Mast-Jägermeister SE 50.0 42.8 36.3 8.1 17.1
Kahlúa Pernod Ricard Group 11.4 12.5 13.8 15.2 15.7
Bols Lucas Bols BV 8.1 8.8 9.8 10.8 11.3
Agwa Babco Europe Ltd 5.1 10.9 11.2 10.8 10.2
Cointreau Rémy Cointreau Group 7.4 7.0 7.9 8.4 8.8
Whiskies Windsor Diageo Plc 22.6 21.8 22.0 17.7 13.6
Golden Blue Golden Blue Co Ltd 1.8 4.4 6.6 8.6 8.8
Imperial Pernod Ricard Group 16.8 12.8 10.5 8.9 7.4
Macallan Edrington Group 2.3 2.6 3.0 3.4 3.7
Scotch Blue Stuart Brewery 5.8 5.3 4.6 3.7 2.9
Gin Bombay Sapphire Bacardi & Co Ltd 63.8 62.8 62.1 57.9 52.7
Beefeater Pernod Ricard Group 12.0 12.2 11.0 11.0 12.6
Tanqueray Diageo Plc 7.2 6.6 7.0 6.4 8.2
Gordon's Diageo Plc 2.7 2.7 3.0 3.1 5.6
London Dry Gin Kooksoondang Brewery Co Ltd 1.0 0.9 0.9 0.8 0.9
Vodka Absolut Pernod Ricard Group 49.7 49.2 48.1 33.4 34.8
Smirnoff Diageo Plc 10.2 8.9 8.6 9.7 8.7
Grey Goose Bacardi & Co Ltd 3.1 2.5 2.0 2.3 1.7
Finlandia Brown-Forman Corp 1.4 1.4 1.2 1.4 1.4
Ciroc Diageo Plc 1.5 1.7 1.3 0.8 0.5
Source: Euromonitor International, 2018

Foreign spirits in South Korea

South Korea's imports of consumer-oriented distilled spirits (HS2208) totalled US$215.3 million in 2018, and have been declining steadily since 2014 with a CAGR of −3.9% (2014-2018). Whiskey was by far the most imported consumer-oriented distilled spirits into South Korea, accounting for 71.9% of total imports in value in 2018. The United Kingdom remained the dominant supplier of whiskey to South Korea, accounting for 92.9% of total whiskey imports in value. Canadian spirits exports to South Korea remain marginal, but Canadian spirits exporters are becoming increasingly noticed.

Top spirits imports from the world (combined) to South Korea – US$, 2014 to 2018
Category 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Spirits total (HS: 2208) 252,767,371 239,541,684 218,147,403 205,352,112 215,287,969 −3.9
Whiskies (HS: 220830) 198,282,856 188,127,597 166,010,407 152,574,946 154,882,944 −6.0
Ethyl alcohol of an alcoholic strength of < 80% vol. (HS: 220890)[a] 12,797,935 15,343,765 17,737,686 19,504,265 21,343,088 13.6
Liqueurs and cordials (HS: 220870) 22,598,133 19,324,665 16,912,976 16,874,005 19,362,811 −3.8
Vodka (HS: 220860) 10,340,436 7,864,057 7,911,110 7,327,610 8,885,139 −3.7
Spirits obtained by distilling grape wine or grape marc (HS: 220820) 5,037,864 5,312,582 6,078,211 5,596,446 6,186,528 5.3
Gin and geneva (HS: 220850) 1,759,221 1,636,154 1,529,825 1,629,302 2,351,095 7.5
Rum and other spirits obtained by distilling fermented sugar-cane products (HS: 220840) 1,950,926 1,932,864 1,967,188 1,845,538 2,276,364 3.9

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

a: South Korea has maintained relatively stable imports of distilled spirits in recent years, largely due to strong demand for soju, a low-priced local liquor partly blended from imported high-alcohol spirits.

South Korean imports of Canadian spirits – US$, 2014 to 2018
Category 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Spirits total (HS: 2208) 308,007 362,671 1,772,534 1,745,747 2,283,444 62.5
Whiskies (HS: 220830) 225,140 262,790 1,634,168 1,601,039 2,008,850 70.0
Vodka (HS: 220860) 59,474 24,173 32,741 40,068 139,655 23.8
Liqueurs and cordials (HS: 220870) 23,257 75,470 105,011 104,375 133,950 52.2

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

Korean imports of whiskies by category – US$, 2014 to 2018
Category 2014 2015 2016 2017 2018 CAGR* % 2013-2018
Whiskies (HS: 220830) 198,282,856 188,127,597 166,010,407 152,574,946 154,882,944 −6.0
Scotch whisky (HS: 22083010) 192,037,209 174,942,732 130,751,949 97,302,189 95,667,481 −16.0
Other whiskies (HS: 22083090) 1,356,251 8,454,368 30,836,731 49,605,079 53,352,716 150.4
Bourbon whisky (HS: 22083020) 4,878,851 4,719,921 4,401,916 5,588,300 5,788,566 4.4
Rye whisky (HS: 22083030) 10,545 10,576 19,811 79,378 74,181 62.9

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

Korean imports of whiskies by major exporters (HS: 220830) – US$, 2014 to 2018
Country 2014 2015 2016 2017 2018 CAGR* % 2013-2018
World 198,282,856 188,127,597 166,010,407 152,574,946 154,882,944 −6.0
United Kingdom 192,033,132 181,704,130 157,827,633 143,067,740 143,907,611 −7.0
United States 4,979,701 4,789,739 4,485,877 5,851,629 5,952,898 4.6
Canada (3rd) 225,140 262,790 1,634,168 1,601,039 2,008,850 72.8
Japan 225,453 269,925 527,433 568,063 1,053,814 47.0
China 488,963 667,212 855,242 791,146 863,580 15.3
Ireland 245,721 305,182 488,840 448,352 672,386 28.6
France 15,524 14,814 70,136 26,298 234,723 97.2
Taiwan 764 104 101,231 90,546 229.9
Philippines 19,203 38,480 29,698 33,352 46,798 24.9
Myanmar 10,810 3,458 15,039 13,486 N/A

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/A: not available

South Korean wine market

The country is the 25th largest wine market in the world, and South Koreans consumed approximately US$2.4 billion in retail value sales of wine in 2018. Between 2013 and 2017, retail value sales of wine in South Korea declined slightly, posting a compound annual growth rate of −0.7%. Over the forecast period, the value of retail sales of wine is expected to increase to US$2.7 billion in 2022. The wine market in South Korea is still in the early stages of development, considering the amount of overall alcoholic beverage consumption in the market. However, it has strong long-term growth potential.

Historical and forecast top world markets, retail value sales of wine, US$ million and period growth (%) – fixed 2018 exchange rates
Geography 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
World 291,853.7 342,541.6 360,869.1 447,909.6 4.1 5.6
China 55,567.0 71,138.6 76,619.4 102,246.4 6.4 7.5
United States 40,179.0 46,259.1 48,086.1 55,301.7 3.6 3.6
France 28,633.4 29,665.5 29,984.3 32,095.7 0.9 1.7
United Kingdom 18,762.4 19,670.2 20,107.9 22,220.5 1.2 2.5
Italy 14,840.7 16,108.9 16,723.8 20,587.8 2.1 5.3
Japan 17,395.8 18,216.0 18,531.3 20,291.3 1.2 2.3
Germany 14,437.9 14,759.7 15,085.9 16,528.6 0.6 2.3
Canada 8,370.5 10,014.3 10,620.9 13,232.5 4.6 5.7
Australia 7,036.9 8,617.1 9,282.1 12,385.2 5.2 7.5
Russia 6,082.6 7,027.2 7,472.5 9,610.0 3.7 6.5
South Korea (25th) 2,458.1 2,388.9 2,446.6 2,750.0 −0.7 3.0

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Despite a steady decline in wine sales in South Korea between 2013 and 2017 (CAGR of −0.7%), the market is promising for foreign products. The wine market declined from 2013 to 2017 mainly because consumption and sales of traditional Korean wines (Takju, Cheongju, etc.) have declined as older generations consume less or in smaller quantities. Their performance strongly affects the growth of the whole category. Traditional Korean alcoholic beverages are considered outdated by the younger generation in terms of taste and packaging.

One of the tactics used to break into the South Korean wine market was to target female consumers with aggressive promotional campaigns to promote the health benefits of red wine. Red wine is perceived by female consumers as a healthier option than other alcoholic products, as it is low in alcohol and calories. The South Korean red wine market is expected to continue to grow steadily in the coming years.

The sparkling and rosé wine market grew at double-digit rates between 2013 and 2017 and will experience strong growth over the forecast period. Sparkling wine and rosé are increasingly popular with millennials and especially with female consumers, who are the driving force behind this growth.

Historical and forecast South Korea market, retail value sales of wine by main categories, US$ million and period growth (%) – fixed 2018 exchange rates
Category 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
Wine 2,458.1 2,388.9 2,446.6 2,750.0 −0.7 3.0
Non-grape wine[1] 1,401.7 1,182.4 1,190.1 1,230.4 −4.2 0.8
Bokbunjaju 93.7 79.1 77.4 72.0 −4.1 −1.8
Cheongju 223.5 222.2 227.7 250.1 −0.1 2.4
Sake 257.1 239.1 245.6 280.8 −1.8 3.4
Takju 543.3 489.6 481.7 446.7 −2.6 −1.9
Yakju 284.1 152.4 157.7 180.9 −14.4 3.5
Still light grape wine[2] 944.8 1,022.8 1,055.8 1,250.6 2.0 4.3
Still red wine 790.2 855.8 891.9 1,101.0 2.0 5.4
Still rosé wine 7.2 22.5 25.3 36.1 33.0 9.3
Still white wine 147.4 144.4 138.6 113.5 −0.5 −4.9
Sparkling wine 111.5 183.8 200.7 269.0 13.3 7.6
Champagne 41.5 61.5 64.8 79.7 10.3 5.3
Other sparkling wine 70.1 122.2 135.9 189.4 14.9 8.7

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

1: This category of wines can be made from a variety of other products, including cereals/rice, as well as from a wide variety of fruit flavours (e.g., plum, apple, rhubarb). Its alcohol content is usually between 15% and 25% ABV.

2: Still light grape wine is the total sum of still red, white and rosé wine. Light wine is so called because of its alcohol content, which usually falls into the 8%–14% ABV bracket and thus excludes fortified wine. Semi-sparkling wines are included here (these are sparkling wines that contain no more than 2.5 atmospheres of carbon dioxide).

Off-trade and on-trade review

The retail price of imported wine in South Korea is quite high because of high distribution costs and tight government regulations. As a result, wine is still recognized as a premium product among the general public, and is consumed by a limited population. The high-end bars, restaurants and hotels are still too expensive for many South Koreans. They prefer to shop for wine at supermarkets (Lotte, Costco, E-mart, Homeplus). The same shoppers are expected to drive significant growth in the low- to medium-priced wine category in the next few years.

Average pricing of wine in South Korea – Can$, off-trade volume – % breakdown
Category Pricing 2013 2014 2015 2016 2017
Other sparkling Wine Under $17.74 (KRW14999) 35.0 37.9 40.0 41.0 40.3
From $17.75 to $23.66 (KRW15000 to 19999) 23.7 23.8 24.0 24.5 25.0
From $23.66 to $29.58 (KRW20000 to 25000) 27.1 24.5 23.0 21.2 21.0
From $29.59 to $41.40 (KRW25000.01 to 34999) 7.5 7.3 7.0 7.5 8.0
From $41.41 to $47.32 (KRW35000 to 40000) 3.7 3.5 3.0 2.8 3.0
Above $94.64 (KRW80000) 3.0 3.0 3.0 3.0 2.7
Total 100.0 100.0 100.0 100.0 100.0
Still red wine Under $17.75 (KRW15000) 5.0 5.9 6.9 7.5 8.0
From $17.75 to $23.66 (KRW15000.01 to 19999) 22.6 23.0 23.5 24.0 24.5
From $23.66 to $35.49 (KRW20000 to 29999) 26.5 27.0 27.5 27.4 26.7
From $35.50 to $47.32 (KRW30000 to 39999) 27.2 26.5 25.5 25.0 25.5
From $47.33 to $70.98 (KRW40000 to 59999) 18.1 17.0 16.0 15.5 15.0
From $70.99 to $94.64 (KRW60000 to 79999) 0.3 0.3 0.3 0.3 0.2
Above 94.65$ (KRW80000) 0.3 0.3 0.3 0.3 0.2
Total 100.0 100.0 100.0 100.0 100.0
Still rosé wine Under $17.74 (KRW14999) 12.2 12.3 12.5 12.6 12.8
From $17.75 to $23.66 (KRW15000 to 19999) 13.5 13.7 14.0 14.3 14.5
From $23.66 to $29.58 (KRW20000 to 24999) 32.4 32.2 32.1 32.0 31.8
From $29.58 to $59.15 (KRW25000 to 49999) 36.9 36.7 36.5 36.3 36.5
Above $59.16 (50000) 5.0 5.1 4.9 4.8 4.5
Total 100.0 100.0 100.0 100.0 100.0
Still white wine Under $17.74 (KRW14999) 30.0 33.0 38.0 38.5 39.0
From $17.75 to $23.66 (KRW15000 to 19999) 31.3 31.3 30.5 31.0 31.3
From $23.67 to $29.57 (KRW20000 to 24999) 26.2 23.3 19.8 19.5 19.3
From $29.58 to $41.40 (KRW25000 to 34999) 10.0 9.8 9.3 9.0 8.7
From $41.41 to $7.32 (KRW35000 to 39999) 1.6 1.5 1.4 1.2 1.1
Above $47.33 (KRW40000) 0.9 1.0 1.0 0.8 0.6
Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International, 2018

Exchange rate: Bank of Canada, 01/14/2018

Historical and forecast South Korea on- and off-trade value sales of wine, by category, US$ million and period growth (%) – fixed 2018 exchange rates
Category Off-trade/ On-trade 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
Wine Off-trade 1,137.5 1,110.4 1,137.2 1,268.4 −0.6 2.8
On-trade 1,320.6 1,278.4 1,309.4 1,481.6 −0.8 3.1
Non-grape wine Off-trade 546.8 436.4 435.5 439.9 −5.5 0.3
On-trade 854.9 746.0 754.5 790.4 −3.3 1.2
Sparkling wine Off-trade 26.4 48.0 52.5 69.2 16.1 7.1
On-trade 85.2 135.8 148.2 199.8 12.4 7.8
Champagne Off-trade 7.4 11.3 11.9 14.2 11.2 4.5
On-trade 34.0 50.2 52.9 65.4 10.2 5.4
Other sparkling wine Off-trade 18.9 36.7 40.7 54.9 18.0 7.8
On-trade 51.1 85.5 95.3 134.4 13.7 9.0
Still light grape wine Off-trade 564.3 626.0 649.1 759.3 2.6 4.0
On-trade 380.5 396.7 406.7 491.3 1.0 4.8
Still red Wine Off-trade 501.1 562.5 587.0 701.4 2.9 4.6
On-trade 289.1 293.3 304.9 399.6 0.4 7.0
Still rosé wine Off-trade 0.2 0.9 1.1 2.1 45.6 17.5
On-trade 7.0 21.6 24.1 34.0 32.5 9.0
Still white wine Off-trade 63.0 62.6 61.0 55.8 −0.2 −2.2
On-trade 84.4 81.8 77.6 57.7 −0.8 −7.1

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

Hypermarkets are increasingly democratizing the availability of wine in South Korea. E-Mart,Footnote 9 in major cities, expanded its portfolio of wines to offer a bargain price to lower the barriers for price-conscious consumers. Wineries are trying to expand their distribution to convenience stores to target the growing number of single households, with an emphasis on half bottles and affordable prices.

Distributions channel for wine inSouth Korea,% breakdown from 2013 to 2017
Distribution channel 2013 2014 2015 2016 2017
Store-based retailing 100.0 100.0 100.0 100.0 100.0
Grocery retailers 96.0 95.7 96.2 96.9 97.0
Food/drink/tobacco specialists 10.1 10.0 9.5 9.6 9.7
Hypermarkets 52.7 54.2 59.5 62.0 64.4
Small grocery retailers 16.6 15.1 13.0 12.9 12.8
Convenience stores 8.3 8.4 8.3 8.9 8.9
Independent small groceries 8.2 6.7 4.7 4.0 3.9
Supermarkets 16.7 16.3 14.2 12.5 10.1
Mixed Retailers (department stores) 4.0 4.3 3.8 3.1 3.0
Source: Euromonitor International, 2018

Imports

The South Korean wine market has long been dominated by countries like France and Chile, but the environment is quickly changing as South Korean consumers welcome wines from more diverse origins. Other competitors (New Zealand, Germany and South Africa in particular) are likely to expand their presence down the road.

South Korean imports of wine by category (HS: 2204) – US$, 2014 to 2018
Category 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Wine total (HS: 2204) 182,177,994 189,768,209 191,438,518 210,046,587 244,007,347 7.6
Wine in containers of <= 2 L (HS: 220421) 152,286,834 155,711,546 153,691,900 163,600,805 192,720,489 6.1
Sparkling wine (HS: 220410) 24,772,510 28,842,085 32,015,310 39,969,949 44,321,128 15.7
Wine in containers of > 10 L (HS: 220429) 5,061,141 5,195,700 5,703,772 5,419,532 5,367,734 1.5
Wine in containers of > 2 L but <= 10 l (HS: 220422) 1,055,846 1,597,698 N/A

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

N/A: not available

South Korean imports of Wine in containers of <= 2 L by major exporters (HS: 220421) – US$, 2014 to 2018
Country 2014 2015 2016 2017 2018 CAGR* % 2014-2018
World 152,286,834 155,711,546 153,691,900 163,600,805 192,720,489 6.1
France 42,330,290 40,756,744 40,623,073 41,812,305 49,909,682 4.2
Chile 36,953,751 40,923,138 40,275,587 39,200,605 45,146,748 5.1
United States 19,853,251 21,607,533 20,585,343 23,487,643 29,283,212 10.2
Italy 23,829,670 20,838,564 20,562,905 22,858,094 26,420,560 2.6
Spain 10,108,449 10,948,123 10,809,819 11,854,676 14,651,330 9.7
Australia 7,316,147 8,123,592 9,279,324 11,209,526 11,703,412 12.5
Argentina 3,608,442 4,050,231 4,344,989 4,653,838 4,940,048 8.2
New Zealand 1,877,328 1,878,389 2,113,029 2,592,310 3,559,719 17.3
Germany 2,900,179 2,525,836 1,908,109 2,289,401 1,969,536 −9.2
South Africa 1,515,974 1,884,114 1,018,622 915,035 1,475,135 −0.7
Canada (12th) 663,525 693,430 661,217 609,196 721,273 2.1

Source: Global Trade Tracker, 2018

*CAGR: Compound annual growth rate

Both South Korean consumers and traders in general have limited knowledge of and experience with Canadian wine. Many of them have the perception that European producers, in particular France and Italy, offer better quality wine. Many South Korean importers expect to do business directly with foreign wineries. However, many Canadian wineries rely on export middlemen for emerging wine markets, including South Korea.

South Korean imports of Canadian wine - US$, 2014 to 2018
Category 2014 2015 2016 2017 2018 CAGR* % 2014-2018
Wine total (HS: 2204) 720,827 778,918 727,142 616,017 727,867 0.2
Wine in containers of <= 2 L (HS: 220421) 663,525 693,430 661,217 609,196 721,273 2.1
Sparkling wine (HS: 220410) 33,514 82,516 62,673 5,166 5,153 −37.4
Wine in containers of > 10 : (HS: 220429) 7,278 2,972 3,252 1,617 1,441 −33.3

Source: Global trade tracker, 2018

*CAGR: Compound annual growth rate

South Korea overview

South Korea is the world's 11th largest economy (Canada is the 10th largest) and Asia's 4th largest after China, Japan and India. The South Korean economy is characterized by a highly educated, hard-working workforce; high-tech infrastructure; low public debt and unemployment; and a relatively stable market. South Korea has experienced steady economic growth and a strong labour market over the past few years, which will support income growth over the forecast period (2018-2022).

Top six South Korean metropolitan areas by population
Metropolitan area Population
Seoul 10+ million
Busan 3.5 million
Incheon 2.9 million
Daegu 2.5 million
Daejeon 1.5 million
Gwangju 1.5 million
Source: Korean Statistical Information Service 2016 census data
Historical and forecast selected socio-economic indicators of South Korea
Age group in 2018 Population ('000) in 2018 Average gross income in US dollars
2018 2022 CAGR* % 2018-2022
Population [0-19] 9,578.40 N/A N/A N/A
Population [20-24] 3,402.70 21858.2 25,675.80 4.1
Population [25-29] 3,474.30 25,307.60 29,480.90 3.9
Population [30-34] 3,338.00 27,427.80 31,821.20 3.8
Population [35-39] 3,974.90 28,338.70 32,613.00 3.6
Population [40-44] 3,857.50 29,149.10 33,495.60 3.5
Population [45-49] 4,362.70 29,251.00 33,597.60 3.5
Population [50-54] 4,130.60 28,718.50 33,052.80 3.6
Population [55+] 15,021.70 26,460.2 30,821.5 3.9

Source: Euromonitor International, 2018

*CAGR: Compound annual growth rate

N/A: not available

Doing business in South Korea

When contact with a South Korean importer is established, it is advisable to visit the importer in person. There is no substitute for face-to-face meetings because Korean traders highly value face-to-face contacts when developing business relationships with new foreign suppliers. Cold calls usually don't work with South Korean businesspeople. One of the best ways for new-to-market Canadian suppliers to develop contacts with a large number of Korean buyers/importers is through participation at a trade show. Seoul Food & Hotel (www.seoulfoodnhotel.co.kr) is the leading food trade show held annually in South Korea. Participating in these shows enhances initial contacts with importers, agents, wholesalers, distributors, retailers and others in the food and beverage industry.

Alcoholic beverage imports

By law, only licensed liquor importers are allowed to import alcoholic beverages, including beers, spirits and winesFootnote 10. South Korean leading importers are often members of the South Korea Wine & Spirits Importers Association (KWSIA). Importers are allowed to sell directly to wholesalers, retailers (restaurants, bars, hotels and liquor stores) and directly to consumers (since 2012). However, bars and restaurants are not allowed to buy alcoholic beverages from off-trade liquor retailers (liquor shops and supermarkets).

Taxes

Both domestic and imported beers are taxed at 72%, but their tax base is different. Taxes on local beer are based on the sum of manufacturing, margins and sales costs. However, imported beer is taxed on its import price, or the product price plus transition fees declared by the importer, and customs tax. In other words, marketing and sales costs are not taxed on imported beer.

Local breweries complain to the government about unfair competition, with the tax gap as high as 20% according to estimates by the Korean Alcohol and Spirits Industry Association. The South Korean government is reviewing the current tax structure to tax all beers based on their quantity as part of next year's tax reform package.

Tariffs

Since January 1, 2019, most of Canada's exports have benefited from duty-free access into South Korea under the Canada-Korea Free Trade Agreement (CKFTA). South Korea will eliminate all tariffs on alcoholic beverages by 2024. Consult the Canada Tariff Finder to explore tariff information for the South Korean market under the CKFTA, and other foreign markets with which Canada has a free trade agreement.

Tariff preferences for key Canadian alcoholic beverage exports to South Korea:

Tariff preferences (%) on selected Canadian alcoholic beverage exports to South Korea
Date Beer (HS: 2203) Rye whisky (HS:220830.30) Gin (HS: 220850) Wine (HS: 220421)
Most Favoured Nation[1] 30.0 30.0 30.0 30.0
2017 17.1 0.0 14.0 0.0
2018 12.9 0.0 12.0 0.0
2019 8.6 0.0 10.0 0.0
2020 4.3 0.0 8.0 0.0
2021 0.0 0.0 6.0 0.0
2022 0.0 0.0 4.0 0.0
2023 0.0 0.0 2.0 0.0
2024 0.0 0.0 0.0 0.0

Source: Canada Tariff Finder

1: The Most Favoured Nation (MFN) tariff rates of South Korea are generally applicable to imports from all countries. MFN is a status or level of treatment accorded by one state to another in international trade

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on Seoul Food and Hotel (SFH) 2019, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Resources

Sector Trend Analysis – Alcoholic beverages in South Korea
Global Analysis Report

Prepared by: François Thériault, Market Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2019).

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