In Korea, Online Wine Sales Are Still Illegal

I am from Seoul, South Korea and like to share an interesting story about online wine sales in Korea. Although selling wine online becomes a global trend, sadly it is still illegal in Korea. 

In 2012, Fair Trade Commission (FTS) has been arguing for months to allow online wine sales, which is an initiative to counter consumer dissatisfaction over high wine prices even with the implementation of FTA with Chile and EU. FTC insists that the Internet path will spur competition in the market and in turn lower the wine prices. Not only that, FTC says South Korea’s online economy is the 2nd largest in the world by share of GDP and accounts for 7.3% ($75B) of the nation’s GDP in 2010, according the BCG. 

However, National Tax Service (NTS) argues that allowing wine to be sold online would be open a Pandora’s box, and may cause beer and whiskey producers to line up to sell their products online as well. An NTS official said “We cannot make an exception just for wines.” NTS also worries that the Internet will become a conduit for unlicensed liquor traders to sell wine without paying due taxes and create a black market. 

Ironically, traditional Korean wine such as “Makgeolli” is already available over the Internet since 2010. Imported wine doesn’t benefit from this advantage and has to be sold through a complex distribution channel. Even though consumer groups believe that online channel would increase an underage drinking problem, realistically young people (under 19) are easy to access/buy the traditional Korean wines like “Soju" due to lower price. The average price of Soju is $1.2 but that of wine is $22. 

[Makgeolli]

[Soju]

Meanwhile, President’s House is relatively favorable to FTC in that online sales will decrease high wine price in Korea. But NTS responsible for online wine sales strongly disagrees with NTS and President’s House. An anonymous NTS official said “The underlying reason for the prohibition is that NTS worries about decrease in collecting taxes after online wine sales are allowed. 

“We have no plan to allow Internet sales. There is no timeline and has been no decision.” said a consumer tax office at NTS.