NEWS
MAJOR S. KOREAN WINE RETAILERS PIVOT BACK TO PREMIUM MARKET AMID SLUGGISH SALES
By Siulan Law Mathews DipWSET
30-9-2024
Credit: Siulan Law Mathews
South Korean wine retailers are struggling after a short-lived boom post COVID, many are pivoting back to selling premium wines to the niche market instead of expanding to the mass market.
Take market leader Shinsegae L&B, it is planning to revamp its signature Cheongdam store to focus on premium wine sales.
This marks a complete reversal from Shinsegae Group Chairman Chung Yong-jin’s initial goal of making wine more accessible by offering it at reasonable prices.
Lotte Mart’s specialty liquor store, Bottle Bunker, has to close one of its four locations last month due to sluggish sales. The remaining locations are in Jamsil, Gwangju Sangmu and Seoul Station and are all underperforming.
Bottle Bunker was introduced by Lotte Mart CEO Kang Sung-hyun to increase store traffic, while it initially showed results, the store’s popularity was short-lived as wine consumption faded.
According to market researcher Euromonitor, Korean wine retail sales dropped 14 percent from 63m litres to reach 54m litres last year.
“Trends in alcohol, like wine, highballs, whiskey, and cognac, change too quickly,” an industry insider said. “It’s difficult to run large-scale stores when trends shift so fast.”
Newly established wine distribution companies are also struggling. Hanwha Galleria’s wine subsidiary, Vino Galleria, had to raise WON3 billion (USD2.3 million) in a rights issue on 3 September, just one year after its founding. Last year, Vino Galleria posted sales of WON440m with an operating loss of WON190m.
Vino Galleria explained that the additional funding is for business expansion, and the company plans to focus on premium wines as part of its luxury content strategy. The company plans to directly import rare wines and ultra-premium whiskies priced over WON100m to sell at its new premium wine shop, The Vino 494, which opened on 13 September at Galleria’s Luxury Hall.
Hyundai Department Store’s wine import and distribution subsidiary, Vino H, reported sales of WON3.9b last year with an operating loss of WON260m, an increase from the previous year’s loss of WON60m.
Vino H expects sales to decline by about 2 percent compared to last year, but considers this a reasonable outcome given the overall contraction in the wine market.
A Vino H staffer said, “Instead of pursuing aggressive sales growth, we plan to develop wine products that offer customers a different experience.”
(the writer can be contacted at: info@thewinechronicle.com)
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