By Nicki Bourlioufas
South Korea is being put forward as a top wine market for local winemakers to target, having survived COVID-19 comparatively well with wine consumption expected to rise robustly, according to Wine Australia.
COVID-19 hasn’t negatively impacted Australian exports to South Korea, with the value of exports growing by 15% in 2019–20, according to Wine Australia. The average value also grew 4% to $58 per case free on board (FOB). Almost 40% of the value of Australia’s exports to South Korea were priced at $90 or more per case.
Value of Australian wine exports to Sth Korea (A$million FOB)
Currently, there are 136 Australian companies exporting to South Korea – a mix of small, medium and larger exporters. “There are now double the number of companies exporting to South Korea than in 2013–14,” says Wine Australia, which see significant opportunity in the country.
Australian exports to South Korea have recorded consistent growth since the Korea–Australia Free Trade Agreement (KAFTA) came into force on 12 December 2014. It eliminated the 15% tariff on all wine. From 2013–14 to 2019–20, the value of Australian exports to the country grew by a compound annual rate of 18%.
COVID-19 survival key to opportunity
According to a report by Wine Intelligence, South Korea is the second most attractive wine market in the world after the US, with its resilience to COVID-19 a key reason, after jumping from being the tenth most attractive a year ago.
Wine Intelligence in August assessed the attractiveness of 50 key wine markets, including a how COVID-19 has impacted each market. Based on these factors, they gave each market a score out of 10. South Korea ranked second after the US and just ahead of Germany and China.
South Korea is Australia’s third largest export market for all commodities, largely due to the county’s dependence on imported energy, resources and agriculture. It is also Australia’s fourth largest two-way trading partner.
“This strong trade relationship further strengthens the attractiveness of South Korea as a market for Australian wine exporters to consider,” says Wine Australia.
The growth in wine consumption over the past decade has been strong – and is forecast by research house IWSR to stay strong, as displayed by the figure below. South Korea is the third biggest consumer of wine in Asia behind China and Japan, with significant growth expected off a low base. In 2019, the rate of consumption was 0.9 litres per head, compared to 25 litres in Australia and 12 litres in the US, says Wine Australia.
Still wine consumption volume in Sth Korea – historical and forecast (‘000 9L cases)
The impact of COVID-19
One of the main reasons for the rise in the rankings is that in South Korea, similar to Vietnam, Thailand and Singapore, has experienced relatively few deaths as a result of COVID-19, says Wine Intelligence. Past experience with epidemics, such as SARS in 2003, means South Korea has been relatively well-prepared to deal with the outbreak.
Of the 50 markets analysed by Wine Intelligence, South Korea places at number 6 in predicted GDP growth in 2020. The International Monetary Fund (IMF) has estimated that the country’s gross domestic product (GDP) will fall by 1.2% in 2020. In comparison, the IMF has forecast the United Kingdom’s GDP to fall by 6.5% and the US’s by 5.9%.