Legalised ecommerce, plus growing home-premise consumption, ignites interest in the wine category
In an era of disruption that characterised the ongoing Covid-19 pandemic, the most significant development of the past year in the South Korean wine market has been the government’s relaxation of the laws surrounding the purchase of alcohol online. Having only been introduced in mid-2020 to South Korea, online wine buying is something that one in five South Korean wine drinkers have done in the past six months, according to Wine Intelligence data.
The law currently only permits online alcohol orders to be collected from a local shop or restaurant rather than delivered to home as is the norm in many other markets. However, combined with the boom in home-based alcohol consumption caused by the Covid restrictions, and a general drift away from traditional categories such as soju, it has come at a fortuitous moment for the wine category.
Still wine in South Korea has been on an upward trajectory for several years, led by younger adult consumers. Still wine volume consumption in South Korea has risen by almost a quarter in 2020, capping a period of growth since 2016, according to IWSR data.
Even with this growth, wine remains a small player by global standards in the South Korean alcohol market. Part of the issue with wine and South Koreans is that it is not a part of everyday life. Only 13% of adults (4 million) say they drink wine on a weekly basis, according to Wine Intelligence, though this is up from just over 3 million in 2017. The category has traditionally struggled to appeal to younger drinkers in a market where beer and soju are the main social and relaxing drinks.
While the soju category remains huge, its close connection with on-premise occasions has prompted a single-digit percentage decline in volume consumption in 2020, with wine the main beneficiary, according to Tommy Keeling, Research Director at IWSR Drinks Market Analysis. “Wine grew exceptionally strongly, driven by increased at-home consumption and reaching a historic high. All countries of origin grew, but Chilean wines were the main driver,” notes Keeling.
Keeling also points to the long-term trends of consumers wanting to experiment with wine, which is seen as a sophisticated drink, as well as a relatively healthy option compared with other forms of alcohol, as reasons for volume growth.
“The South Korean wine market has also become one where brands dominate the space as opposed to countries or regions of origin,” remarks Lulie Halstead, CEO at Wine Intelligence. In 2021 Wine Intelligence consumer tracking data suggests awareness and purchase has increased when compared with our previous wave of data for brands of all sizes, be they mainstream or niche within the market.
“When making their purchasing decision, South Korean consumers are less influenced by the country and region of origin than when compared with 2017, which highlights the movement of the South Korean market to becoming a brand-oriented space,” notes Halstead.
The combination of a disrupted on-premise, and more opportunities to buy wine using an app, appear to be provoking a re-evaluation of the role of wine within South Korean society, especially among the educated urban younger drinkers. Wine Intelligence data estimates that the wine drinking population has expanded by just under a million drinkers since 2017, and around half of these new entrants are aged 19 (the legal drinking age) to 24. The future therefore looks quite encouraging for wine producers selling in South Korea.
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