South Korea wine mart ready to toast U.S. trade deal

06/30/2007

Jun 30, 2007


SEOUL (Reuters) - South Korea's free trade pact with the United States signed at the weekend should nicely pair South Korea's steadily growing wine market with the export ambitions of U.S. wine makers.

But it may take several years of ageing before it leads to a drop in exorbitant wine prices in South Korea.

"Korea is due for a big boom in California wine," said Dan Schulte, a senior executive with major importer Pieroth Korea.

When the free trade deal comes into effect with the United States, it will lead to a lot more wine on the market, but the price drop from the tax cuts may not be quickly passed on to consumers, Schulte and other wine industry sources said.

The few South Koreans who are regular wine drinkers are used to paying a premium for the beverage and it will take a much larger number of consumers, who are better informed about global prices, before a bottle becomes cheaper, they said.

A paper from the U.S. Embassy in Seoul shows retail wine prices in South Korea are about two to four times those in the United States due to high mark-ups, taxes, distribution costs and government regulations.

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