Journal of Hospitality & Tourism Research http://jht.sagepub.com Exploring the Korean Wine Market Kyuho Lee, Jinlin Zhao and Jae-Youn Ko Journal of Hospitality & Tourism Research 2005; 29; 20 DOI: 10.1177/1096348004268195 The online version of this article can be found at: http://jht.sagepub.com/cgi/content/abstract/29/1/20 Published by: http://www.sagepublications.com On behalf of: International Council on Hotel, Restaurant, and Institutional Education Additional services and information for Journal of Hospitality & Tourism Research can be found at: Email Alerts: http://jht.sagepub.com/cgi/alerts Subscriptions: http://jht.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. EXPLORING THE KOREAN WINE MARKET Kyuho Lee Virginia Polytechnic Institute and State University Jinlin Zhao Florida International University Jae-Youn Ko Kyung-Hee University This exploratory study identified specific preferences and characteristics of Korean wine consumers. Relevant literature was reviewed in an attempt to find the most suitable market strategy in the Korean wine market. This study employed samples from members of a Korean wine association (KISA) to identify Korean wine consumers’characteristics and preferences. The study found Korean wine consumers had interesting preferences and that there were some significant differences between these preferences and demographic characteristics among the Korean respondents. The paper offers wine marketers suggestions about what they need to understand in order to attract Korean wine consumers and what may be appropriate and effective wine-marketing strategies and practices in Korea. KEYWORDS: wine; Korean wine consumers; wine-marketing strategy Historically, Western European countries have dominated wine production. In recent years, however, new wine-producing countries, such as Argentina, Chile, Australia, the United States, and South Africa, have entered the world’s wine market (Spahni, 2000). These countries have several competitive strengths, such as low labor costs; grape varieties, such as Chardonnay, Cabernet Sauvignon, Mer- lot, and so on; technological improvements, such as controlled fermentation instead of natural fermentation; and ideal climate conditions (Carreyrou, 2003; Johnson, 2001; Oldroyd, 2001; Solana-Rosillo, 1997). As a result, the $100 billion global wine industry is becoming more competitive, and traditional wine-producing countries are facing challenges from the New World wine countries (Carreyrou, 2003). For example, the global share of French wine exports decreased to 23% in 2002, compared to 32% a decade prior. Although wine consumption in Britain has increased sharply (Johnson, 2001), the Authors’Note: The authors wish to thank three anonymous reviewers for their valuable comments and suggestions for this study. Journal of Hospitality & Tourism Research, Vol. 29, No. 1, February 2005, 20-41 DOI: 10.1177/1096348004268195 © 2005 International Council on Hotel, Restaurant and Institutional Education Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 21 Figure 1 U.S. Wine Exports to South Korea (value $000) Amount 6,000 5,000 4,000 3,000 2,000 1,000 0 1,191 2,782 3,682 5,620 1998 1999 2000 2001 Year Note: Adapted from Walker (2002). famous Bordeaux wine lost 15% of its market share in the United Kingdom. However, the global wine export share from New World countries, such as the United States and Australia, has increased. For example, wine exports from Australia increased 20% in 2002 compared to 6% a decade prior (Angulo, Gil, Gracia, & Sanchez, 2000; Carreyrou, 2003; Orth & Krska, 2002). At the same time, world wine production exceeds world wine consumption (Dodd, 1997). It is estimated that global wine production surpasses consumption by about 20% (Oldroyd, 2001). The total world production was 27,400.74 million liters, with an increase of 17.1% from 1994 to 2000. This result is attributed to increased production of 63%, 52.8%, and 51.7% respectively, in North America, Asia, and Oceania (Vinexpo avec le Concours de Vertumne International & Associes, 2002b). Around the world, vineyards increased by 7.2% from 1994 to 2000, an expansion of 6,003.67 thousand hectares. As early as 1988, there was a total of 3,320 million liters of surplus wine in the world; this surplus soared to about 6,401 million liters between 1999 and 2000 because of a major decrease in wine consumption in Western Europe (Beckett, 2001; Spawton, 1990). This growing gap between production and consumption has challenged the global wine industry for more than two decades. It appears that the world wine industry should explore opportunities for expansion into new wine markets, such as Korea. Koreans have increased their wine consumption rapidly, with an annual growth rate of 20% from 1996, except during the 1997-1998 Asian economic crisis. It is estimated that Koreans will consume 20,000,000 liters of wine by 2006, which is a 36% increase from the 14,632,000 liters of wine consumed in 2000 (Vinexpo avec le Concours de Vertumne International & Associes, 2002a). Figure 1 presents U.S. wine exports to South Korea from 1998 to 2001. Korean wine imports from the United States have increased sharply, and the Korean market will be a key export market for U.S. wineries within 5 years (Stephens, 2003). Because of increased disposable income, health concerns, and growing wine demands from Korean working women, wine is gaining popularity in Korea Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. 22 JOURNAL OF HOSPITALITY & TOURISM RESEARCH (Bang, 2000; Ryu, 1994; Seo, 2002; Stephens, 2003). Wine has become an attractive substitute for higher alcohol-content beverages. For global wine marketers, the export of wine to Korea can be appealing, as the Korean government has begun to remove tariffs on imported wine. For example, according to the recent Free Trade Agreement (FTA) between Korea and Chile, the Korean government will remove the 15% tariff on Chilean wine in 5 years (Choi & Huh, 2002). The Korean wine market has huge growth potential for the global wine industry (Bang & Cho, 2001; Kim, 2002; Stephens, 2003). According to Spawton (1991a), the wine industry has focused more on sales than on marketing; however, wine industry managers should emphasize marketing because of the global changes in consumers’ behavior and the competitive environment (Sharp, 1991; Spawton, 1990). However, most wine-marketing research is limited to the European market because of the market’s importance for both wine production and consumption. For instance, the European wine countries produced almost 74% of the world’s wine, and the market accounted for approximately 72% of the world’s wine consumption in 1998 (Spahni, 2000). Considerable marketing research has focused on Europe and North America. For instance, studies include British wine consumers (Mitchell & Greatorex, 1989); the Spanish wine market and consumers (Angulo et al., 2000; Gil & Sanchez, 1997); port wine–marketing strategies (Lages & Shaw, 1998); Greek wine consumers (Kalogianni, Klavdianou, Alexaki, & Tsakiridou, 1999); the Hungarian wine market (Williams & Pearson, 1992); European consumers’ wine consumption patterns (Smith & Solgaard, 2000); Irish consumers’ wine preferences (Keown & Casey, 1995); cross-cultural European wine consumers’motivations (Hall, Shaw, & Doole, 1997); information sources of American wine drinkers (Dodd, Pinkleton, & Gustafson, 1996); and consumers’ characteristics of wine clubs in Canada (Schell, Amero, Cameron, & Scott, 1985). Because the global wine industry has become more and more competitive (Stephens, 2003; Walker, 2002), wine marketers should begin to explore emerging wine markets, such as South Korea. Very little wine-marketing research has been conducted in Korea, where there is a large potential for increased wine purchasing. It is critical for the wine marketers to better understand Korean wine consumers’purchasing behaviors, needs, and preferences in order to develop marketing strategies for export to Korea (Beverland, 2002; Dodd, 1997; Sharp, 1991). The objective of this article is to answer the following questions: • What are Korean wine consumers’ characteristics and specific preferences when selecting a wine? • Are there any significant relationships between key demographic variables (age, gender, income, and the years of wine drinking experience) and their wine selecting preferences? • What could be effective marketing strategies in the Korean wine market? • How should wine marketers implement marketing strategies in Korea? Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 23 LITERATURE REVIEW Wine Attributes and Consumer Preferences Several researchers have studied wine consumer preferences in various countries. Gil and Sanchez (1997) examined wine attributes that affected Spanish wine-purchasing preferences. The origin of the wine played the most important role when Spanish consumers purchased a local wine. Spanish wine consumers also considered price and grape vintage as important attributes. Kalogiann et al. (1999) identified the wine preferences of Greek consumers. The study found that most Greek consumers considered the following wine attributes (listed in order of importance) when purchasing wine: full taste, clarity, appellation of origin, aroma, and attractiveness of the label. It was also found that most Greek wine consumers preferred to buy wine in supermarkets rather thanin wine cellars because of the lower price. Keown and Casey (1995) examined the wine purchasing behaviors of Northern Irish consumers. The researchers found that the country of origin, brand name, grape variety, and region of origin were the most important factors influencing Northern Irish wine purchasing. Gluckman (1986) analyzed British wine consumers’ behaviors and attitudes. He found that there were two groups of considerations influencing British consumers’ wine-purchasing decisions: implicit considerations, such as color, packaging appearance, country of origin, and size of container; and explicit considerations, such as price, quality, reliability, taste, and suitability for all tastes. Thomas (2000) discussed the factors influencing New Zealand consumers’ wine drinking. According to his study, the New Zealand wine consumers relied mostly on the opinions of family and friends, followed by any awards a wine has won, price and promotions, and the fame of the label. The New Zealand wine consumers tended to listen to friends or family opinion to avoid any risk in their wine purchase. Effective Wine Marketing Spawton (1990) discussed effective wine-marketing methods and global wine-marketing strategies. He argued that because of mass wine production and intensive competition in the global wine market, wine marketers should identify wine customers’ characteristics and purchasing behaviors and anticipate their needs. The success of the wine industry depends on how wine marketers establish and implement global marketing strategies, not on how much wine they produce (Spawton, 1990). Goldsmith and d’Hauteville (1998) investigated the characteristics of heavy wine drinkers. The researchers found that the enthusiasm and interest of wine consumers are key factors motivating heavy wine consumption. The researchers suggested that marketers who wish to capture heavy wine consumers should concentrate their marketing tactics on the enthusiasm, interest, and involvement of those wine consumers. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. 24 JOURNAL OF HOSPITALITY & TOURISM RESEARCH Dodd (1997) and Goldsmith (1998) examined the characteristics of wine innovators. As opinion leaders, wine innovators are likely to buy new wines, purchase wine more frequently than noninnovators, and spread favorable or unfavorable word-of–mouth to other consumers about wines that they experienced (Dodd, 1997; Goldsmith, 1998). Most wine innovators acquire wine information from wine magazines, journal articles, and wine tastings, in comparison to wine noninnovators, who obtain wine information through word-of-mouth from friends or relatives (Dodd, 1997). It is important for wine marketers to develop marketing programs, such as a frequent-buyer reward program, to attract and retain the wine innovators because they are frequent wine buyers as well as opinion leaders who influence other consumers’ wine purchases (Goldsmith, 1998). Spawton (1991b) claimed that wine consumers felt risk psychologically, functionally, and economically when they purchased wine. Psychological risk was related to the consumer’s self-esteem. For example, consumers might worry about selecting the wrong wine. The functional risk occurred when consumers could not decide which wine they should buy for their specific meals or occasions. Insufficient wine knowledge could cause the functional risk. The economic risk was associated with the value of wine. Consumers often were not confident of the true value of wine that they purchased. In particular, when the consumers bought an unfamiliar bottle of wine, their sense of an economic risk tended to increase. Mitchell and Greatorex (1989) indicated that reducing risk was a key factorin purchasing wine and illustrated methods for reducing those risks. They suggested taking the opportunity to taste wine and following the recommendation of friends and relatives as effective ways to reduce the risks of purchase. In comparison, using a store image and buying the most or least expensive wine were considered the least popular ways for consumers to avoid the risk of purchasing wines. Novice wine consumers were more likely to buy well-known brands based on family members’ or friends’ opinions, thereby reducing the risk of wine purchasing (Spawton, 1991b). Thompson and Vourvachis (1995) argued that consumers tended to depend on friends’ or family members’ opinions in their wine selections because wine had many attributes, such as flavor or tastes, making identification of those attributes difficult. Therefore, wine marketers can be more effective if they offer consumers enough opportunities to taste and test wine flavors before purchase (Thompson & Vourvachis, 1995). Orth and Krska (2002) claimed that international or regional exhibition awards for wine products influenced consumer wine purchases significantly. They pointed out that wine consumers preferred to buy wine with exhibition awards rather than without because the consumers perceived that exhibition awards were a quality assurance indicator. The Korean Wine Market Alcohol consumption is deeply related to a society’s culture (Smith & Solgaard, 2000). Traditionally, Korea is a heavy-alcohol-consumption country Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 25 (Stephens, 2003). Koreans have preferred to consume high-alcohol-content beverages, such as the traditional Korean sake, Soju (Kim, 2002; Stephens, 2003). However, the increasing household income in an improved Korean economy, the growing numbers of female drinkers, and the Westernizing of the Korean life style have led to a change in Korean drinking patterns, away from strong-alcohol beverages to low-alcohol and high-quality alcoholic beverages (Bang, 2000; Ryu, 1994; Stephens, 2003). Dodd and Morse (1994) discussed how wine consumers reflected health concerns when they bought wine. The researchers examined sales before and after the airing of CBS’s 60 Minutes program The French Paradox. The French paradox refers to the fact that the French have a low risk of heart disease, in spite of their high fat diet, because of their moderate consumption (one or two drinks daily) of red wine. After the program showed that moderate red wine consumption could lower heart disease by about 40% or 50%, red wine sales increased by 44.5% in the United States. When the Koreans heard the report that moderate red wine drinking may reduce heart disease, more and more of them became interested in drinking red wine (Bang & Cho, 2001). The heightened health concerns have motivated increased wine consumption in Korea. Ko, Lee, Park, Lee, and Kim (2002) conducted a study to investigate the importance of wine sales in hotel restaurants in Korea. They found that wine sales account for an average of 72% of total alcohol sales in the Western restaurants of major hotels in Korea, whereas the average wine sales in Korean and Chinese restaurants in the hotels are 40% and 15% of the total alcohol sales revenue of the restaurants, respectively. They suggested that fewer Koreans consume wine with Asian food than with Western food. Ryu (1994) suggested that the wine industry may develop a smaller sized bottle of wine in Korea to appeal to new wine drinkers because the size reduces the risk of wine purchasing in terms of taste and price for the increasing number of new wine drinkers in Korea. Many Koreans believed that Western food pairs well with wine (Stephens, 2003). For example, French wine goes well with French cuisine. Actually, many Korean traditional dishes, such as bulgogi and kimchi, could be harmonious with full-bodied Cabernet Sauvignon and Merlot (Stephens, 2003). Beverland (2002) stressed that global wine companies should tailor their marketing strategies to Asian markets. Most of the Asian markets are totally different from Western markets in terms of distribution channels, legal systems, cultural values, languages, and consumer preferences. According to Beverland (2002), Western-style sales and marketing, which emphasize product quality, may not be effective in the Asian markets because Asians place a greater importance on forming good relationships with their business partners; Asians value trust and human association in addition to product quality (Bretherton & Carswell, 2001).For example, giving assistance to the local distributors by arranging wine tastings and educating sales people could be an effective way to build a good relationship with the local distributors in Asian countries (Beverland, 2002; Bretherton & Carswell, 2001). Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. 26 JOURNAL OF HOSPITALITY & TOURISM RESEARCH METHOD Instrument A quantitative method (self-administered questionnaire) was used to collect data regarding Korean wine drinkers’ characteristics and preferences. The questionnaire was composed of three major parts, with 35 variables measuring Korean wine consumers’ preferences and characteristics. The questionnaire was based on relevant literature reviews (Gil & Sanchez, 1997; Kalogianni et al., 1999; Keown & Casey, 1995). The first part of the questionnaire dealt with respondents’ preferences and characteristics when drinking or selecting wine. The second part included wine attributes, the purpose of wine drinking, and factors influencing wine drinking among Koreans. The last section consisted of the respondents’ demographic characteristics, such as age, gender, education, occupation, and income. A 7-point Likert-type scale was used to measure Korean wine drinkers’ preferences, characteristics, purpose in drinking wine, and factors affecting wine consumption. The questionnaire was originally developed in English because most of the pertinent literature reviews referred to in developing the questionnaire were written in English. A Korean Ph.D. student who is fluent in both English and Korean and has an extensive knowledge of wine translated the original English questionnaire into Korean. A bilingual Korean professor back-translated into English to test the readability of the translated instrument. Before data collection procedures began, the questionnaire was pilot-tested on 10 Koreans to ensure the reliability and clarity of the questionnaire. Participants The survey was conducted among the members of a wine association (KISA) in Seoul during the months of September and October 2002. KISA’s members are interested in wine and the sharing of wine information. KISA is one of the largest wine associations in Korea and offers regular wine seminars and wine-tasting events. Membership is very diversified, ranging from hotel managers to housewives. The survey was conducted during KISA’s regular meetings in September and October, 2002. The survey questionnaires were distributed to 280 members who attended the meetings. Some 218 filled out the questionnaires, generating a response rate of 78%. This is a convenience sample of active Korean wine consumers. The data were analyzed by using SPSS 10.0 software. Data Analysis Frequencies and percentages of age, gender, income, education level, and occupation of respondents are given in Table 1. In addition, t tests and one-way ANOVA tests were employed to analyze Korean wine drinkers’preferences, characteristics, and other factors influencing wine drinking by age, gender, and years of wine-drinking experience. The researchers also utilized multiple regression tests to examine whether any relationships existed between frequency of wine drinking, income, gender, and age. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 27 Table 1 Descriptive Characteristics of Participants (N = 218) Characteristic n Percentage Age (years) 20-29 81 37.2 30-39 66 30.3 40-49 48 22.0 50 or older than 50 23 10.5 Total 218 100.0 Gender Male 108 50.0 Female 108 50.0 Total 216 100.0 Income Below $14,999 74 34.7 $15,000-$24,999 58 27.2 $25,000-$39,999 58 27.2 $40,000 or older 23 10.8 Total 213 100.0 Educational level High school 17 7.8 Collegea 66 30.3 University/graduate 135 61.9 Total 218 100.0 Occupation Self-employed 15 7.7 Government worker 5 2.6 White-collar worker 44 22.5 Service sector 127 64.8 Not in workforce 5 2.6 Total 196 100.0 Years of wine drinking More than 15 years 33 15.2 10-14 29 13.3 5-9 50 22.9 1-4 74 33.9 Less than 1 year 32 14.7 Total 218 100.0 a. College is usually a 2-year program in Korea. RESULTS Participants Table 1 shows the demographic profile of the respondents. The number of male respondents (50.0%) was the same as that of female respondents (50.0%). The majority of respondents was between 20 and 49 years old (89.5%). Most of the respondents had university or graduate degrees (61.9%). A totalof 30% of the respondents had a 2-year college education; 34.7% of the respondents had annual household incomes below US$14,999; and 27.2% and 10.8% had Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. 28 JOURNAL OF HOSPITALITY & TOURISM RESEARCH Table 2 Descriptive Statistics for Wine Specific Attributes, Factors Influencing Wine Purchasing, and Purpose of Wine Drinking Mean Importance Score Standard Deviation Wine attributes Flavor 5.92 1.80 Taste 5.75 1.51 Price 5.02 1.55 Appelation of origin 4.99 1.69 Wine brand 4.97 1.52 Wine reputation 4.68 1.66 Regional label 4.27 1.62 Grape vintage 4.01 1.80 Factors influencing wine purchase Friends’ or relatives’ recommendation 4.54 1.83 Wine publications 4.35 1.68 Wine promotion 3.79 1.75 Wine advertising 3.78 1.64 Wine tasting 3.71 1.79 Wine seminar 3.28 1.80 Purpose of wine drinking Harmony with food 4.97 1.58 Status and ambience 4.61 1.67 Health 4.18 1.78 Note: 7-point Likert-type scales ranging from 1 to 7, where 1 = not at all important and 7 = very important. yearly household incomes of US$25,000-$39,999 and US$40,000 or more, respectively. A total of 65% of the respondents worked in the service industry, 22.5% were white-collar workers, 7.7% of respondents were self-employed, and 2.6% were government workers. Consumers’ Preferences Affecting Purchasing and Drinking of Wine As presented in Table 2, Korean respondents ranked flavor as the most important attribute when purchasing wine (5.92 on a 7-point Likert-type scale), followed by taste (5.75) and price (5.02). The lowest wine attributes were grape vintage (4.01) and regional label (4.27). While being tested for factors influencing their wine purchasing, the respondents indicated that recommendations from friends or relatives had the greatest influence on their wine purchasing (4.54). Wine seminars had the least effect on consumers’ wine purchasing (3.28 mean score). Regarding the purpose of wine drinking by the participants, harmony with food had the highest mean score (4.97), followed by status and ambience (4.61), and health (4.18). As shown in Table 3, the majority of the respondents preferred to drink red wine (5.12) followed by white wine (4.59). The mean score of rose wine was the lowest (3.10). Table 3 also shows the mean score of the respondents’ preference Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 29 Table 3 Descriptive Statistics for Different Wine Varieties and Origin of Wine Mean Preference Score Standard Deviation Wine Variety Red 5.12 1.60 White 4.59 1.52 Sparkling 3.19 1.71 Rose 3.10 1.56 Origin of wine France 5.24 1.61 U.S. 4.34 1.87 Italy 4.16 1.82 Australia 3.62 1.72 Chile 3.56 1.73 Germany 3.54 1.46 Spain 3.09 1.56 Korea 3.08 1.54 South Africa 2.67 1.51 Note: 7-point Likert scales ranging from 1 to 7, where 1 = least like and 7 = the most like. Table 4 Price and Wine Bottle Size That Wine Consumers Prefer to Purchase Percentage Price Under $7.99 1.8 $8.00-$24.99 24.8 $25.00-$41.99 34.4 $42.00-$58.99 29.4 $59.00-$75.99 8.7 Over $76.00 0.9 Size of wine (ml) 750 75.7 375 21.4 200 2.9 for wine origin. The country of origin most preferred was France (5.24), followed by the United States (4.34), and then Italy (4.16). South African wine had the lowest mean score (2.67). Wine Size and Wine Price As presented in Table 4, 34.4% of the participants preferred to buy wine priced between $25.00 and $41.99, and 29.4% of the participants preferred to buy wine priced between $42.00 and $58.99. Only 0.9% of the respondents preferred tobuy wine priced over $76.00. The majority of the respondents preferred to buy 750 ml bottles (75.7%). On the other hand, approximately 25% of the respondents favored the purchase of 375 ml or smaller bottles of wine. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. 30 JOURNAL OF HOSPITALITY & TOURISM RESEARCH Table 5 Significant Differences in Wine Selection by Gender Mean Score Variable Male Female t Value p Value Preferences Red wine Italian wine South African wine Importance Grape vintage Regional label Health 5.49 4.42 2.91 4.27 4.49 4.48 4.79 3.90 2.42 3.75 4.06 3.89 3.110 2.150 2.429 2.135 1.986 2.484 .002 .033 .016 .034 .048 .014 Note: Significance level at .05. Relationship Between Demographic Variables and Wine Preferences The researchers examined the relationship between key demographic variables (gender, age, years of wine drinking, income, and frequency of wine drinking) and the importance of each preference; however, this study reports only on the significant variables. Significant Differences in Wine Selection by Gender To determine whether gender is related to importance and preference levels for attributes, the researchers utilized t tests to compare males and females on each preference and importance rating. As presented in Table 5, the participants’ responses to red wine, Italian wine, and South African wine were significantly different. Male participants liked red wine (df = 217, t statistic = 3.110, p = .002), Italian wine (df = 217, t statistic = 2.150, p = .033), and South African wine (df = 217, t statistic = 2.429; p = .016) significantly more than female participants did. In addition, male respondents placed more importance on the grape vintage (df = 217, t statistic = 2.135, p = .034) and regional label (df = 217, t statistic = 1.986, p = .048) than did female respondents. Consideration of health in drinking wine also differed significantly by gender. Health issues were more important to males than to females (df = 217, t statistic = 2.484, p = .014). However, other variables, such as white wine (df = 216, t statistic = 1.394, p = .165), taste (df = 216, t statistic = .090, p = .928), and wine reputation (df = 216, t statistic = .861, p = .390), did not differ significantly by gender when the respondents selected wine. As shown in Table 5, all the mean scores of male respondents are higher than those of female respondents. The reason may be that the Korean female respondents were more cautious and conservative in responding to the questionnaire than the Korean males because female Koreans do not drink alcoholic beverages as much as men do. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 31 Traditionally, Korean women do not often drink alcoholic beverages because most Korean women tend not to work after marriage, thus having less opportunity to drink for social or business purposes. This factor might lead the female Korean respondents to answer the questionnaire more conservatively than the male respondents did. Significant Differences in Wine Selection by Age To determine whether age is related to importance and preference levels for attributes, the researchers used one-way ANOVA with Tukey’s HSD to identify specific group differences. In addition, each significant variable was followed up with a linear trend test to see whether the group differences followed a consistent pattern. ANOVA results in Table 6 show that the red wine preferences of the four age groups are not all the same (F = 4.39, p = .005). The researchers used Tukey HSD to conduct further post hoc tests to explain the differences by age group as seen in Table 7. The results indicated that consumers aged 30 or older liked red wine significantly more than did younger respondents. Sparkling wine preferences differ according to age group (F = 4.63, p = .004). The respondents aged 20 to 29 liked sparkling wine significantly more than respondents aged 40 to 50 or older. The importance of the regional label differs by age group (F = 2.88, p = .037). Respondents aged 30 to 49 placed greater importance on the wine’s regional label when selecting it compared to respondents aged 20 to 29. The importance of health concerns in Korean wine drinking varies with age (F = 4.22, p = .006). Health played an important role in wine drinking to older consumers compared to younger consumers. Wine reputation (F = 0.60, p = .618), wine brand (F = 0.52, p = .670), and the impact of status and surroundings (F = 1.39, p = .247) did not differ significantly by the age of the respondents. The results of the study indicated that there is a linear relationship between consumers’ health concerns and age, as shown in Figure 2. As age increases, health concerns become a greater influence on wine drinking. In addition, younger consumers tended to like sparkling wine more than older consumers did. Significant Differences in Wine Selection by Experience To determine whether the number of years of wine drinking is related to importance and preference levels for attributes, one-way ANOVA with Tukey’s HSD was used to identify specific group differences. The number of years a respondent has been drinking wine is significantly related to mean responses for preference and importance levels in some variables. Table 8 illustrates that the levels of preference and importance are significantly different at α = .05 with respect to the respondents’ years of wine drinking. Red wine preference, as related to years of wine drinking experience, were not all the same (F = 4.74, p = .001). A greater level of preference was placed on red wine by respondents who had been drinking for 10 to 14 years, compared to respondents who had been drinking wine for 1 to 4 years or less (see Table 9). The importance of price and grape vintage were different by the respondents’ years of wine-drinking experience. Price and grape vintage were more important Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Table 6Significant Differences in Wine Selection by Age 20 to 29 30 to 39 40 to 49 50 or Older Linear TrendVariable Years Old Years Old Years Old Than 50 Years Overall FValuea pValue (pvalue)b PreferenceRed wine 4.64 5.44 5.50 5.09 5.12 4.39 .005 .225 Sparking wine 3.38 3.56 2.81 2.26 3.19 4.63 .004 .001 ImportanceRegional label 4.02 4.33 4.79 3.87 4.27 2.88 .037 .995 Health 3.65 4.39 4.54 4.70 4.18 4.22 .006 .011 Note: Significance level at .05. a. One-way ANOVA test to see if age groups differ on each variable. b. Test to see whether age is linearly related to variable. Lee et al. / KOREAN WINE MARKET 33 Table 7 Significant Differences in Wine Selection by Age: Multiple Comparison Post Hoc Test 20 to 29 30 to 39 40 to 49 Variable Years Old Years Old Years Old 50 or Older Preference Red wine 20-29 < 30-39a 20-29 < 40-49a Sparking wine 50 or older 50 or older < 20-29a < 30-39a Importance Regional label 20-29 < 40-49a Health 20-29 < 30-39a 20-29 < 40-49a a. Tukey HSD approach to compare all pairs of age groups (significance level at .05). factors to respondents whose wine-drinking years were 10 or more compared to respondents whose wine-drinking years were fewer than 10. Regarding health and harmony with meals, respondents with 10 to 14 years of wine-drinking experience considered health and harmony with meals to be more important than those with 1 to 4 years of wine experience. Status or surroundings were significantly related to respondents’ years of wine drinking, with those having 5 to 9 years of experience rating status or surroundings as more important than those having 1 to 4 years of wine-drinking experience. Variables such as taste (F = 1.75, p = .140), flavor (F = 1.32, p = .265), and brand (F = 1.12, p = .349) did not differ significantly by respondents’ years of wine-drinking experience. Relationship Between Frequency of Wine Drinking and Income, Sex, and Age The researchers attempted to identify whether any relationships existed between respondents’ frequency of wine drinking and demographic characteristics, such as income, gender, and age. To detect such relationships, the authors performed multiple regression using frequency of wine drinking as the dependent variable, and income, gender, and age as the independent variables. The results of the multipleregression testindicatedthat the respondents’income, gender, and age had a significant role in predicting the frequency of wine drinking. Respondents’ income, sex, and age explained 14% of the variance in the frequency of wine drinking, which finding was statistically significant (F = 1.47, p = .000). There was a significant positive correlation between respondents’ income and frequency of drinking (p = .002). Also, there was a significant positive correlation between age and frequency of drinking (p = .007). However, gender was not significantly related to frequency of drinking. DISCUSSION AND CONCLUSION The Korean wine market has huge potential for growth and development. Identifying consumer preferences and characteristics is critical to expanding and Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Table 8Significant Differences in Wine Selection by Experience More Than 10 to 14 5 to 9 1 to 4 Less Than Variable 15 Years Years Years Years 1 Year Overall FValuea pValue PreferenceRed wine 5.21 6.14 5.18 4.68 5.03 5.12 4.74 .001 Sparking wine 2.48 3.03 3.40 3.12 3.91 3.19 3.20 .014 ImportancePrice 5.24 5.90 4.78 4.93 4.59 5.02 3.65 .007 Grape vintage 4.24 4.86 3.64 3.76 4.16 4.01 2.83 .026 Health 4.70 4.86 4.14 3.77 4.06 4.18 2.93 .022 Harmony with meal 5.18 5.59 5.20 4.49 4.94 4.97 3.46 .009 Status and surroundings 4.79 4.34 5.12 4.12 5.00 4.61 3.70 .006 a. One-way ANOVA test was used to see whether the years of wine drinking experience was significantly related to variables (significance level at .05). Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Table 9Significant Differences in Wine Selection by Experience: Multiple Comparison Post Hoc Test More Than 10 to 14 5 to 9 1 to 4 Variable 15 Years Years Years Years Less Than 1 Year PreferenceRed wine 1-4 < 10-14 yearsa, less than 1 < 10-14 yearsa Sparkling wine more than 15 years < less than 1 yeara ImportancePrice 5-9 < 10-14 yearsa, 1-4 < 10-14 yearsa, less than 1 < 10-14 yearsa Grape vintage 5-9 < 10-14 yearsa, 1-4 < 10-14 yearsa, less than 1 < 10-14 yearsa Health 1-4 < 10-14 yearsa Harmony with meal 1-4 < 10-14 yearsa Status and surroundings 1-4 < 5-9 yearsa a. Tukey HSD test was used to compare all pairs of the years of wine drinking experience group (significance level at .05). 36 JOURNAL OF HOSPITALITY & TOURISM RESEARCH Figure 2 Significant Difference of Wine Preference and Purpose of Wine Drinking by Age Group 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 57-point Likert ScaleSparkling Wine Health 20-29 30-39 40-49 50 or over 50 Age developing that market. The purpose of this study was to identify Korean wine consumers’ preferences and characteristics and provide suggestions for promoting wine in the Korean market. According to the results of the study, the majority of female respondents (65%) had started drinking wine within the previous 4 years. Recently, wine has become popular among Korean female drinkers because it is easy to drink and has lighter alcohol content in comparison with strong, traditional Korean liquors, such as Sochu, which is brewed from rice (Seo, 2002). It is expected that the female wine market will increase significantly in the total Korean wine market (Bang & Cho, 2001). Therefore, developing female wine drinkers is an important issue for expanding that market. The results of the study indicated that young respondents (aged 19-29) liked sparkling wine significantly more than did older age groups. Wine marketers may introduce a broad range of sparkling wine in the Korean market for the young wine drinkers. This study revealed that the flavor and taste of wine were the most important factors (ranked first and second) in the respondents’ wine selections. Wine marketers should facilitate flavor and taste of wine in their marketing effort so that the consumers better understand these attributes. Harmony with meals was ranked first as the purpose for drinking wine. Asia will be the fastest growing region in wine consumption in the next 5 years (Vinexpo avec le Concours de Vertumne International & Associes, 2002b). Ko et al. (2002) argued that it is critical for wine companies to identify and develop wine products that can be easily matched with Asian food in order to boost wine consumption and achieve a long-term success in the highly promising Asian market. At the same time, it might be necessary for a wine company to educate Korean wine drinkers that certain wine can be harmonious with traditional Korean food. For example, full-bodied red wines, such as Carbernet Sauvignon and Merlot, go well with traditional Korean barbecue, bulgogi (Stephens, 2003). However, many Korean consumers perceived that Western wine always goes with Western food Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 37 (Stephens, 2003). Therefore, it is suggested that the wine marketers need to promote the fact that Korean wine consumers do not have to restrict themselves to Western food whenever they drink wine; they should try Korean food as well. The results of the study showed that recommendations from relatives or friends played an important role in Korean consumers’ wine-purchasing decisions. Keown and Casey (1995) pointed out that many consumers hesitated to buy wine because of the risk and uncertainty. According to the results of the study, Korean consumers tended to reduce the risk in wine purchasing by listening to friends’ or relatives’ recommendations. Recently, several wine clubs were established in Korea so that wine consumers could share wine information (Lee, 2002; Stephens, 2003). Wine marketers should build a good relationship with the wine club members because the members, as opinion leaders, may play an important role in spreading wine information to their friends or relatives. In addition, professional staff can be helpful in providing information and advice about wine. Marketers can invite sales personnel from key wine stores, and food and beverage managers from major hotels and restaurants in Korea, to their wineries and provide tours and tastings. In this way, the personnel can become familiar with wine products and eventually provide better wine information or suggestions to customers. Also, the knowledge gained helps wine consumers reduce any uncertainty or risk regarding their wine purchases (Keown & Casey, 1995). Roberto (2002) reported that Robert Mondavi has provided a series of training seminars and educational events to fine restaurants and hotels. The purpose of these events has been to help restaurant and hotel operators better understand Robert Mondavi wines as well as successful wine service. Other wine distributors and marketers should learn from Robert Mondavi and provide seminars and trainings for hotel and restaurant employees. The results of the study showed that the level of preference and importance in certain research variables differed significantly by age. For example, middle-aged and older participants (40 years or older) preferred red wine, compared to younger ones, aged 20 to 29. The middle-aged and older respondents’ preference for red wine was closely related to their health concerns. According to the results of the study, there was also a strong linear relationship between consumers’ health concerns and age. As consumers’ age increases, health concerns become an important factor in their wine drinking. The fact that moderate red-wine drinking could reduce heart disease affected older consumers’red-wine preferences. Wine marketers should take advantage of the older Korean consumers’health concerns in promoting red wine in their marketing. To attracttheolder winedrinkers, marketers’advertisementsand publications can focus on explaining the health benefits of drinking red wine. The results of the study illustrated that the levels of preferences and importance in many variables differed significantly, according to how many years the respondents had been drinking wine. Price and grape vintage were more important attributes to consumers who had been drinking more than 10 years than consumers who had been drinking wine less than 10 years. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. 38 JOURNAL OF HOSPITALITY & TOURISM RESEARCH In addition, health concerns and harmony with meals were more important issues to consumers who had drunk wine 10 to 14 years than to consumers who had started to drink wine only within the past 4 years. However, the considerations of surroundings and status were more important aspects in influencing consumers whose wine-drinking periods were less than 4 years than to consumers who had been drinking wine for 5 to 9 years. These results imply that the consumers whose wine-drinking period is less than 4 years may not have enough wine knowledgeto appreciate the wine attributes, such as grape vintage and health benefits of wine drinking. Also, these new wine drinkers drink passively in keeping with external factors, such as status and surroundings. Therefore, it is recommended that wine marketers provide information related to wine attributes and health benefits to this young wine market segment in Korea. For example, a wine retailer in Korea developed traditional Korean paintings that also include wine information in Korean and attached them to the labels of their imported wine bottles so that Korean customers could become familiar with their wine (Seung, 2002). In addition, it might be helpful for wine marketers to design and offer wine cultural events so that wine- drinking beginners can better understand wine (Roberto, 2002). The results of the study indicated that two demographic characteristics, income and age, are closely related to the frequency of wine drinking. High- income consumers drink wine more frequently; older consumers drink wine more frequently compared to relatively low-income consumers and younger consumers. Wine marketers may group Korean wine-drinker segments according to their income and age. It will help the wine operators to develop their marketing strategy by the characteristics of each wine-consumer segment to accommodate the different needs and preferences of each. The traditional wine market has been saturated, and the global wine industry has become very competitive. Thus, wine marketers need to find new markets. The Korean wine market has great potential. The worldwide wine industry hasa real opportunity in the Korean wine market if it understands the characteristics and preferences of the Korean wine consumers, and if it customizes products, service offerings, and marketing. Worldwide wine-marketing managers need to realize that they can achieve long-term success in foreign markets if they understand the consumer preferences and characteristics of each market. Limitations of the Study and Future Study The researchers chose the members of KISA as the target population. The researchers believe that the Korean wine market is still limited even though, recently, the population of wine drinkers has increased rapidly. For example, in 2002, wine consumption per capita in South Korea was only 0.3 litre, which is extremely small compared to the average of French consumers, who drink about 75 bottles of wine annually (Lankov, 2003; Seoul Wine Expo, 2003). Therefore, it is difficult to identify Korean wine drinkers’preferences and characteristics based on a systematic approach or a nonconvenience sampling method. The results of the study may not represent the general Korean wine consumers because the population of the study consisted of Korean wine association members. However, the Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution. Lee et al. / KOREAN WINE MARKET 39 researchers believe that the findings are valid, albeit with the limitations of the survey method because the current population of wine consumers in Korea has been driven by the more wealthy and educated consumer group. This finding is consistent with the characteristics of samples in the study in terms of age, gender, occupation, education, and income (Lankov, 2003). In addition, the study focused on identifying Korean wine drinkers’ characteristics and preferences. It did not discuss other key issues, such as the choice of a wine firm’s entry mode, a factor crucial for a foreign wine firm’s success in the Korean markets. A firm’s profit in the foreign markets is highly correlated to the appropriate selection of its entry mode (Solana-Rosillo, 1997). Most Asian wine markets are fundamentally different from Western markets in terms of their marketing practices, distribution channels, and pricing strategies (Beverland, 2002). 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Vinexpo avec le Concours de Vertumne International & Associes. (2002a). Le marche des vins et spirituex en Coree du Sud: Faits marquants [The wine and spirits market of South Korea]. Bordeaux, France: Author. Vinexpo avec le Concours de Vertumne International & Associes. (2002b). World wine and spirit market overview and prospects for 2006. Bordeaux, France: Author. Walker, L. (2002, July). Export boom. Wines & Vines, 83(7), 16-22. Williams, J. L., & Pearson, B. (1992). Tackling the challenge of Western markets: The case of Tokai, Hungary. International Journal of Wine Marketing, 4(2), 38-44. Submitted March 24, 2003 First Revision Submitted September 16, 2003 Final Revision Submitted April 17, 2004 Accepted May 16, 2004 Refereed Anonymously Kyuho Lee (e-mail: leekyuho@vt.edu), is a Ph.D. student of Hospitality and Tourism Management in Pamplin College of Business at Virginia Polytechnic Institute and State University. Jinlin Zhao, Ph.D. (e-mail: zhaoj@fiu.edu), is an associate professor at the School of Hospitality Management at Florida International University. Jae-Youn Ko, Ph.D. (e-mail: jyko@khu.ac.kr), is an assistant professor in the College of Tourism & Hotel Management at Kyung-Hee University, Seoul, Korea. Downloaded from http://jht.sagepub.com at CALIFORNIA DIGITAL LIBRARY on November 6, 2007 © 2005 ICHRIE. All rights reserved. Not for commercial use or unauthorized distribution.