About two hours after the arrivals from Korea reached Napa Valley, a new pickup truck pulled up to the winery in a cloud of dust. The man who stepped out knocked on the office door.
“Brian, you called for me?”
“Yeah, come in and sit down.”
It was Jacob, the owner of Golden Grain Soju House. He had come straight from the brewery, so his clothes were shabby, but the air and expression he exuded were now unmistakably those of a businessman. Golden Grain Soju House had risen to become a rising star in the American spirits market thanks to the explosive sales of fruit soju and a premium brandy called Ruby Quartz. Perhaps because of that, his already large frame now seemed to carry an added maturity.
“What’s up? Is this person Korean?”
Jacob asked, jerking his chin toward Manager Gim Ihyeon, who was sitting on a corner of the reception sofa inside the office.
“That’s right. He wants to import wine, cherries, and your Ruby Quartz from Korea.”
“Ruby Quartz?”
Jacob’s eyes immediately lit up.
“I am Manager Gim of Segi Group. I have long heard of Ruby Quartz’s reputation.”
Manager Gim, being from a major corporation, was fluent in English. When he greeted him politely, Jacob replied:
“Pleasure to meet you. We were actually wondering with Brian who our first partner to export Ruby Quartz outside the U.S. would be, so Korea is interesting. Truthfully, we control supply so strictly even within the U.S. that price protection is quite tricky.”
“Yes. I’m not sure if you gentlemen are aware, but Korea’s liquor tax law is quite severe on imported alcohol. It is even worse for distilled spirits like Ruby Quartz.”
Manager Gim then picked up a pen and began writing numbers on the blank sheet of paper on the table.
“Currently, the brandy liquor tax in Korea is seventy-two percent. On top of that, an education tax of thirty percent of the liquor tax is added. Right there, ninety-three point six percent of the cost goes to taxes alone. And it doesn’t end there. When you add a twenty percent customs duty and ten percent value-added tax, the calculation comes out to roughly one hundred fifty percent or more in additional taxes on top of the local ex-factory price.”
Jacob furrowed his brow at the harsher-than-expected taxes.
“One and a half times the cost is tax? Then what on earth would the consumer price be?”
“A bottle that sells for two hundred dollars locally will, by the time it reaches the shelves of a Korean department store, already exceed five hundred thousand won in taxes alone, not even accounting for the importer’s margin and logistics costs. The reality is that the final consumer price falls somewhere between eight hundred thousand and one million won.”
Having first laid out this reality while simultaneously putting on a great show of distress, Manager Gim Ihyeon soon fixed his eyes with determination and spoke.
“That is why I propose this: for the initial launch volume only, please drastically lower the FOB (Free On Board) price. In return, we at Segi Group will position Ruby Quartz at the very top of the Korean market. We will protect your profits even if it means reducing our own margin, so what you gain, President Jacob, is the massive showcase of the Korean market.”
Jacob exchanged a glance with me. Both Warren and I had no reason to refuse, since the more Golden Grain Soju House’s sales rose, the better it was for us, so we nodded. There was even less reason to pass up an offer where they would protect our profits even at the cost of their own margin.
“Then what is the initial volume and price you want?”
“In the U.S., you work by the case, right? How many bottles of Ruby Quartz are in one case…?”
“Six.”
I was the one who answered, and Manager Gim clapped his palms together and replied.
“Then shall we start with exactly three hundred cases?”
He had come in big from the start. You couldn’t call it big in America, but Korea was a market so small it couldn’t even be compared to the U.S., so three hundred cases to test market reaction seemed like quite a bold move.
“The price…?”
“I heard you sell it for six hundred dollars. If you could reduce it by just twenty percent, we would be grateful.”
He was saying he would take three hundred cases at five hundred dollars. It was a major contract worth nine hundred thousand dollars at once.
“Very well. Trusting in Segi Group’s distribution power, we will set the ex-factory price for the initial three hundred cases as you propose, Manager Gim. In exchange, brand management within Korea must strictly follow our guidelines.”
Jacob and Manager Gim’s hands met in the air. It was the moment the first gateway opened for Ruby Quartz—the red gemstone—to head to Korea.
“It’s done. Now get going, hahaha.” “Wait, you’re kicking me out just like that?”
When Jacob made a wronged expression, Chloe smirked and stepped forward.
“You’re busy. And didn’t you get a girlfriend recently?”
Jacob flinched in surprise and looked back and forth between me and Chloe.
“How did you know?”
“The whole department’s talking about it. They say you’ve been coming to campus way too much right before graduation. Elisa, a sophomore? From the same department… Let’s get together this weekend. We’re throwing a party since Jacob got a girlfriend.”
“Should we?”
Seeing him secretly pleased, I added:
“Yeah. I’ll tell Armando to come too. Who knows, he might have changed girlfriends again by now.”
After sending Jacob off like that, I immediately continued negotiations with Manager Gim Ihyeon.
“So, you want to take Astra Veil?”
“That is correct.”
“But I wasn’t planning on allocating only Astra Veil…”
Dad had already established a corporation called Redwood Holdings, so it wouldn’t be too difficult to additionally allocate shipping volume to Korea.
“We weren’t planning on bringing in only Astra Veil either. Naturally, we would like to import all the cherry wines that became a hot topic in Japan: Serasiana Ashelon, Sylphid, and Quiet Hill.”
“Hmm…”
I nodded, but the truth was that exporting wine to Korea itself wasn’t enormously attractive. Even if Korea didn’t import it, most of the volume shipped within the U.S. was consumed anyway.
If there was a reason we still had to export, it was because if mid-priced wines like Ashelon, Sylphid, and Quiet Hill saw sluggish sales, just as Serasia’s sales had gradually declined, inventory would pile up. Additionally, by reducing supply, we could diminish the image that consumers could easily buy them and defend the price.
If not for these reasons, even if they had come all the way from Korea, I probably wouldn’t have allocated them any volume.
“Let’s have it imported through the corporation called Redwood Holdings. Wine should have lower taxes than distilled spirits, but what about the price…?”
He immediately began tapping on his calculator.
“Yes, the liquor tax on wine is thirty percent. The education tax is ten percent of the liquor tax. Combining the fifteen percent customs duty and ten percent VAT, roughly about seventy percent of the cost goes to taxes. It’s better than distilled spirits, but still no small amount. Therefore, for Sylphid and Quiet Hill, we would like to consider mass-market accessibility first. To maximize the effect of Reporter Gim Sujin drinking it on broadcast, the department store retail price needs to be set in the early one-hundred-thousand-won range. To do that, you would need to match the import cost to this level.”
Looking at the price sheet he had back-calculated, I scoffed.
“Thirty-five dollars? Ha, then there’s no reason to export at all.”
Back-calculating from the taxes and logistics costs he mentioned, it would come to about fifty-five thousand won by the time it arrived in Korea. Adding the department store’s margin, the importer’s operating costs, and profit, the resulting price was one hundred ten thousand won.
Momentarily flustered by my cold attitude, Manager Gim Ihyeon wiped sweat from his head and said.
“Then how much…?”
“Right now, Ashelon, Sylphid, and Quiet Hill all have an ex-factory price of seventy dollars. This is the price before it goes to the distribution company. If you want to take them, you’ll have to match not this price, but the Redwood Holdings price with an added forty percent distribution margin. If you don’t like it, that’s that.”
“Then the price at the department store will exceed three hundred thousand won, won’t it?”
“If it doesn’t sell because the price is high, that’s because the wine’s value doesn’t live up to its price. That’s what I think.”
“Ah… yes…”
Seeing his flustered appearance, Chloe, who had been watching quietly until now, leaned in and whispered to me.
“Why is he flustered? We were just talking about Ashelon, Sylphid, and Quiet Hill, weren’t we?”
The only things Chloe had been able to understand from our conversation were the names of the wines.
“He must think we’ve got wine stacked up in the warehouse? Trying to lowball us?”
“Huh? Well… how would those people know your winery’s situation? Most wineries have wine stacked up in their warehouses, so they might have thought that.”
As she said, most wineries had enormous quantities of wine stacked in their warehouses by the barrel. Some of it was for aging, but even apart from that, it was common to have a considerable amount of wine that hadn’t even been bottled yet.
Since taking up inventory like that usually meant selling off about half cheaply when a bulk sale opportunity arose, his mention of thirty-five dollars probably wasn’t something said out of complete ignorance.
Seeing me and Chloe whispering with smiles, Manager Gim Ihyeon soon opened his mouth.
“Understood. Then would a discount of about ten percent be possible?”
“Five percent. Anything below that is difficult. We’re only going that far because it’s being distributed through Redwood Holdings. And even if you sign a contract today, there is no volume for you to take right now.”
At this, he was the most flustered yet.
“Excuse me? You mean there is none?”
“That’s right, there isn’t. We won’t have volume to allocate to Korea until after October of this year.”
“Ah, I see.”
He now seemed to understand why I had said I had no reason to sell cheaply.
“Then what about Astra Veil…?”
“That one is gone too. What little we had has all been allocated to Japan.”
“Ah…”
“This too, we can’t allocate any volume until after October of this year.”
“……”
“Will you still contract with us? You’ll have to receive a substantial amount of cherries next year as well. Ah, and Astra Veil is a bit different from the other wines. For this wine, please maintain a minimum consumer price of one point five million won in Korea.”
Manager Gim’s eyes widened in surprise.
“One point five million won? That’s about an ordinary salaried worker’s monthly wage. The inventory might not move.”
“This isn’t a wine made to move volume. Astra Veil is Redwood’s pride and the pinnacle of its technical skill. This was also agreed upon with President Hirose of Enoteca in Japan. If Segi Group cannot maintain this price, we will not supply Astra Veil.”
After seeming to ponder briefly, he nodded vigorously.
“Yes! I’ll make one phone call and sign the contract right away. I’ll stay nearby for about a day to amend the contract.”
“Please do.”
Manager Gim Ihyeon, who left the office immediately, said he had received approval from his superiors and would send the amended contract by fax tomorrow.
“Let’s do this well.”
“Thank you.”
Manager Gim Ihyeon bowed his head to me, who was roughly his nephew’s age, and this time I too bowed my head together in the Korean manner.
---
A five-star hotel located in Napa Valley.
Manager Gim Ihyeon arrived at the place where Reporter Gim Sujin had stayed not long ago, and happened to run into Division Head Jeong Hanmin of Mirae Distribution, who was drinking coffee in the lobby.
“Oh? Manager Gim!”
Manager Gim Ihyeon could tell by instinct. That their meeting was no accident. The flustered Division Head Jeong Hanmin had undoubtedly anticipated that he would be staying at this hotel and had been waiting in the lobby.
“Are you staying here too, Division Head?”
“Did the negotiations go well?”
At his appearance, as if reading his countenance with slightly nervous eyes, Manager Gim Ihyeon held only a faint, inscrutable smile.
“Who knows. I’m simply waiting for an answer.”
At those words, Division Head Jeong Hanmin’s face momentarily stiffened before returning to normal. The fact that he was waiting for an answer meant he hadn’t been rejected, and if things continued this way, the possibility had arisen that the volume would be split in half.
Not to mention the possibility that it would all go to the other party…
“Ah… I see. It seems Segi Group pushed quite hard? Even though there’s nothing to take right away?”
This was exactly the reason he was so confident of victory. Trends were a fleeting flow, and after a few months, trends were bound to die down. The reality would be that if they spent a lot of money to bring in wine at that point, it would be hard to expect the same effect as now. He had undoubtedly believed that Segi Group wouldn’t push strongly because of this.
“Wine is a luxury item that shines brighter with time, is it not? If we can get it even by the end of this year, we must do our best.”
But both Manager Gim Ihyeon and Division Head Jeong Hanmin were confident of one thing. That the wealthy who sought wine preferred it when the trend had passed. It was Astra Veil in its post-trend state that would draw the wealthy’s interest even more.
“I’ve been here the whole time, and the scenery is so beautiful. I think I’ll enjoy a nice rest for the first time in a while before I go.”
“Me as well. Then I’ll head up first, Division Head.”
Passing Division Head Jeong Hanmin, who was on guard against him until the very end, Manager Gim Ihyeon walked in to check in, a deep smile playing at his lips that had never been seen before.