Research highlights impact of Korean FTA

New AGWA-funded research has highlighted the opportunities and challenges for Australian wine in South Korea following the recent signing of the Korea–Australia Free Trade Agreement (KAFTA) between the two countries.

Academics from the University of South Australia believe the wine industry has a ‘small but definite window of opportunity’ to make its presence felt, but caution that benefits will not flow simply because the previous 15 per cent import tariff has been removed under KAFTA.

Associate Professor You-il Lee, from the University’s Business School, said Australia should follow the lead of Chile, which developed effective marketing activities to capitalise on its free-trade agreement. Chile is now the second biggest wine provider to South Korea, with a 22 per cent share of a market that has grown by 350 per cent since 2000.

A/Prof Lee and Dr Richard Lee from the University’s Ehrenberg-Bass Institute for Marketing Science undertook interviews, surveys and focus groups as part of the research project, which showed that Australian wine lacks a presence and profile in Korea.

On the up-side, they note that during the free trade negotiations there was a steep increase in interest in Australian wine among Korean importers and distributors.

The latest information from the Wine Australia export approvals database shows that over the first quarter since the KAFTA came into force, the total volume of wine exported was down — however, there is strong growth in the upper price segments. Comparing the first three months of 2015 to the first three of 2014, the above A$10 per litre segment increased by 40 per cent and the A$7.50 to A$9.99 increased by 98 per cent.

A/Prof Lee also will present the research findings and participate in discussions about both the South Korean and Japanese wine markets during a webinar to be run jointly by AGWA and Wine Communicators of Australia this Tuesday (14 April).

The webinar is free and registrations will be open until COB on Monday (13 April). For more information or to register, click here.

The project’s final report can be downloaded here.

AGWA funds a number of projects that address specific market access issues, as well as research for strategic positioning of the Australian sector to maximise opportunities.

This complements its broader mandate to monitor trade issues and barriers, help negotiate arrangements to improve market access and streamline exporting requirements, and build relationships with regulators and wine industry bodies around the world.

Korea FTA