Business dynamics of on-premise wine trade: cases from South Korea

Abstract

Purpose

This paper aims to explore the dynamics and performance of on-premise wine trade business.

Design/methodology/approach

The study involved in-depth interviews with six on-premise businesses in Seoul, South Korea. The data obtained were methodically analysed to understand the impact of different variables through a qualitative business dynamic model.

Findings

Customer satisfaction and number of customers are key performance factors for on-premise wine trade business. Customer satisfaction is driven by servicescape, wine lists and front-line employees. However, the length of wine list impacts directly on inventory costs and staff knowledge, while the number of service staff in the business has a non-linear effect on profits, as service staff does not grow linearly with the number of customers.

Research limitations/implications

One important limitation is that the business dynamics model, which is based on South Korean cases, used only owners/sommeliers’ perspectives but not consumers’ perspectives. There are two implications. First, in terms of on-premise wine trade, the alignment of servicespace, front-line employees, wine lists and pricing strategy is key to shape customers’ expectations and confirm the market positioning of the business. Second, for wineries, understanding the dynamics of on-premise wine trade can help them to find strategies to position their wines.

Originality/value

The paper offers two contributions. Firstly, the paper provides the first exploratory study on the business dynamics of on-premise wine trade businesses, which complements existing wine-buying behaviour studies. Secondly, the study explores the on-trade channel in South Korea, providing insights into an important Asian market.

Citation

Hwang, J. and Kunc, M. (2015), "Business dynamics of on-premise wine trade: cases from South Korea", International Journal of Wine Business Research, Vol. 27 No. 3, pp. 239-254. https://doi.org/10.1108/IJWBR-08-2014-0034