Free trade to stir up competition among global wine brands in Korea

            Competition among global wine brands in Korea is
            expected to be stirred up by free trade. Korea and the EU agreed
            this week that they would try to get a free trade deal signed next
            week at the G20 meeting in London. The EU, especially France, is the
            biggest wine exporter to Korea.
            Korea agreed it would immediately eliminate a 15-percent tax on
            European wine if the FTA with its second biggest trading partner is
            ratified. That would add to the FTA with Chile, which went into
            effect in 2004 and will allow Chilean wine to land in Korea
            duty-free beginning next month.
            A tax on wine from the United States would be immediately removed if
            Korea's FTA with that country is ever ratified. Experts say the
            abolition of tax on foreign wine will ignite a price war as it will
            lower the costs of wine by 10 to 20 percent on average.
            According to the Korea International Trade Association, French
            brands account for the highest revenue in Korea with a market share
            of almost 40 percent last year. Chile is the second biggest exporter
            in terms of sales with a market share of 18 percent, followed by
            Italy and the U.S.
            But in terms of volume, Korea imported the most from Chile, totaling
            6.6 billion tons in 2008 backed by the bilateral accord, surpassing
            France's 5.5 billion tons. This means Korean consumers were more
            attracted to Chilean wine because of its low price. U.S. and
            Australian brands have been targeting Korean consumers with low
            prices as well.
            Korea's foreign wine market reached more than US$166 million last
            year, up 11 percent from 2007.