The once-thriving wine business pursued by major retailers is struggling, with home party culture fading post-pandemic and overall wine consumption declining due to budget constraints. As a result, the financial performance of wine distributors has worsened.
Distributors raised wine imports expecting market growth, but demand has lagged, causing excess inventory. Some are responding by reducing store locations and pivoting towards a more premium product offering.
According to industry sources on Sept. 25, Lotte Mart’s specialty liquor store, Bottle Bunker, has reduced its locations from four to three. The Changwon Central branch, the second Bottle Bunker store, closed at the end of last month due to sluggish sales. The remaining locations are in Jamsil, Gwangju Sangmu, and Seoul Station. The closure was due to poor performance, despite the Changwon branch initially opening in a sizable 300-pyeong (about 992 square meter) space on the first floor of Lotte Mart. The other branches are also underperforming.
Bottle Bunker was introduced by Lotte Mart CEO Kang Sung-hyun to increase store traffic, expecting it would be effective since alcohol purchases are primarily made in person. While it initially showed results, the store’s popularity was short-lived as wine consumption faded. According to market researcher Euromonitor, domestic wine retail sales reached 54 million liters last year, a 14% drop from 63 million liters in 2022.
“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.”
Some companies focus on premium wine sales. Shinsegae L&B has reduced the number of its Wine & More stores by about six since last year. It plans to focus more on high-end wines rather than mid- to low-priced options, realizing that the core group of consistent wine drinkers prefers premium wines.
Shinsegae L&B plans to expand key locations, such as its signature Cheongdam store, and revamp them 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.
Newly established wine distribution companies are also struggling. Hanwha Galleria’s wine subsidiary, Vino Galleria, raised 3 billion won in a shareholder rights offering on Sept. 3, just one year after its founding. Last year, Vino Galleria posted sales of 440 million won with an operating loss of 190 million won.
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. Vino Galleria plans to directly import rare wines and ultra-premium whiskies priced over 100 million won to sell at its new premium wine shop, The Vino 494, which opened on Sept. 13 at Galleria’s Luxury Hall.
Hyundai Department Store’s wine import and distribution subsidiary, Vino H, reported sales of 3.9 billion won last year with an operating loss of 260 million won, an increase from the previous year’s loss of 60 million won. Vino H expects sales to decline by about 2% 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 differentiated experience.”
