South Korea’s wine market is experiencing a significant contraction in the first half of 2024, with major importers such as Nara Cellar and Lotte Chilsung Beverage reporting substantial profit losses. In a notable case, Nara Cellar, the nation’s fourth-largest wine importer, posted an operating loss of 2.12 billion won (approximately US$1.68 million) during this period, marking a staggering 240.4% decline compared to last year, when the company achieved a profit of 1.52 billion won.
For the mid-year financial report of 2024, Nara Cellar’s sales revenue totaled 41.6 billion won (around US$30.81 million), reflecting a slight decrease of 5.36% from the previous year. The total revenue for 2023 was 85.33 billion won (US$62.62 million), indicating a significant 20.4% drop year-over-year.
This downturn in profits is largely attributed to an ongoing decline in wine imports within the country. According to the Korea Customs Service, wine import volumes fell by 3% in the first six months of 2024, totaling 24,460 tons. This follows a more pronounced 12.95% decrease in the value of wine imports at the end of 2023, compared to peak levels in 2021.
As South Korea’s only publicly listed wine importer, Nara Cellar’s financial woes are mirrored in its plummeting stock price. On October 11, 2024, the company’s shares closed at 3,925 won (US$2.91), just 19.6% of its initial public offering price of 20,000 won (US$14.82). Nara Cellar’s market capitalization has dwindled to 50.55 billion won (US$37.46 million), down significantly from its initial value of 197.3 billion won (US$147.89 million).
Nara Cellar is not alone in facing declining wine sales; Lotte Chilsung Beverage, a prominent producer and distributor under the Lotte Group, also reported a 5.6% decrease in domestic wine sales, totaling 40.7 billion won (US$30.03 million) in the first half of 2024, despite a rise in revenue from its overseas operations.
In spite of these challenges, Nara Cellar remains optimistic about its future, setting ambitious goals to achieve 250 billion won (US$189 million) in sales and 25 billion won in operating profit by 2025. The company distributes 160 wine brands across approximately 1,500 stock-keeping units (SKUs), featuring well-known labels such as Montes, Caymus, Duckhorn, and La Crema. Nara Cellar maintains a diverse portfolio with 40% of its distribution from the U.S., 20% from France, 16% from Chile, 8% from Italy, and the remaining 16% from other countries, as it continues to explore new wineries globally.
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