Wine industry faces troubles, opportunities

The economic downturn and the won's rapid loss to the dollar are slowing the growth of the Korean wine industry, which had expanded considerably in recent years.

According to the Korea International Trade Association, money spent on importing wines from January to May last year increased 30 percent from the same period in 2007.

Considering wine imports grew as much as 77.6 percent in the January-May period of 2006, the 2008 figure is not so impressive.

Industry officials said strong U.S. dollar severely hurt the nation's wine industry, causing importing costs to double in less than a year.

In the wake of the troubles, Agane Korea - a major wine retailer - collapsed last month.

Kim Mi-sun, an assistant manager of Doosan Corporation Liquor said the high won-dollar exchange forced the company to first raise prices of imported wines last June and again on Jan. 5 this year.

Once-booming wine bars in areas such as Cheongdam-dong and Apgujeong-dong, southern Seoul, are also being hit hard by the wine woes.

"Quite a few wine bars around here have shut down or temporarily closed since last fall," said Kim Jong-jae, an employee of VIN GA, a popular wine bar located in Sinsa-dong.

"We are comparatively okay, but we too have fewer customers coming in," Kim told The Korea Herald by telephone.

Amid the slowing economy, however, there are newcomers seeking to increase their influence on the market through economies of scale.

At the end of last month, Shinsegae, a local retail giant operating Shinsegae Department Store and E-mart outlets, launched "Shinsegae Wine Company."

Shinsegae plans to distribute wines they import to retailers and department stores it operates, which is expected to take a bite out of small and mid-sized wine importers. Almost all of E-Mart's 100-plus outlets are selling wine.

On the other hand, the new wine company is expected to trigger and accelerate competition, eventually lowering the price of wine for consumers.

By streamlining importing and distribution, the company plans to provide imported wines at about 20 to 40 percent cheaper than competitors.

"There also is a bright side to the current situation," said Kim at Doosan.

Foreign premium wine distributors are eager to compensate their losses by lowering prices of their high-quality wines. You can buy a bottle of high-end wine at half the original price these days," Kim added.