From wine to jeans, Seoulites pay the most

Seoul is one of the most expensive cities in the world to buy wine, infant formula, smartphones, cosmetics and jeans due to its exclusive distribution structure, according to Consumers Korea.

The organization, also known as the Citizens’ Alliance for Consumer Protection, compared the prices of 55 daily necessities sold at department stores, large discount store chains and supermarkets in 18 countries.

Seoul was among the top five most expensive cities for 17 of the products.

In Korea, exclusive distributors like department stores tend to import and distribute foreign wines, cosmetics, jeans and infant formula, and they have the most expensive distribution margins and sales commissions, the agency said.

Such a limited distribution structure hinders price competition, while allowing department stores with expensive marketing costs and high commission rate to set high consumer prices, it added.

The data showed that infant formula and wines from the U.S. were sold at the most expensive prices in Korea compared to the 17 other cities.

Ritz Lytton Springs Zinfandel wine from the U.S. was sold at the highest price of 113,000 won ($104.20) in Korea, followed by China (97,490 won), Italy (78,170 won), Taiwan (75,420 won) and Thailand (58,160 won). In the U.S., the same product retails for 28,000 won, meaning it is four times more expensive in Seoul.

The price of Nature’s One Baby’s Only Organic, a U.S.-based baby formula, was 2.2 times more expensive in Korea, where it retails for 32,000 won, than in the U.S. (14,700 won).

Seoul was the fourth-most-expensive city to buy Similac Advanced Infant Formula from Ireland.

“To lower the prices of these imported consumer goods, parallel imports and expanding the distribution channels should be permitted to encourage price competition,” said Kim Jae-ok, chairwoman of Consumers Korea.

Korea was the second-most-expensive city in which to buy Samsung’s Galaxy S3 smartphone (32-gigabyte model) after Japan, and the fourth-most-expensive city for Galaxy Note (16-gigabyte model).

“Although the Galaxy S3 is a Korean product, it costs 110,000 won more in Seoul than in Europe or elsewhere in Asia on average,” said Kim. “Considering that there are no transportation costs or tariffs, this is unreasonable and must be corrected.”

Samsung Electronics said its products in Korea have better specifications and come with a spare battery, charger and earphones - justifying the inflated prices.

Meanwhile, Seoul was the second-most expensive city for European cosmetics like Olay Total Effect Cream (35,000 won) and L’Oreal UV Perfect Sunscreen (25,000 won), and the fourth-priciest place to buy Sisley Suncream.

For lipstick products, Seoul was mid-range, ranking 16th most-expensive for products by Chanel, 12th for Lancome and seventh for Estee Lauder.

The consumer agency said Seoul also ranked in the top five for: Levis 501 Jeans, Illy’s Espresso Coffee, GNC Prima-C vitamins, Pantene Pro-V Shampoo, Heineken, Montes Alpha Cabernet Sauvignon (a Chilean wine) and Persil laundry detergent.

Consumers Korea urged the government to publicize the import prices of the goods to keep customers better informed of just how much they are being over-charged.

It plans to keep monitoring prices of expensive imported items and calling for changes to local distribution structures, it said.

By Kim Jung-yoon [kjy@joongang.co.kr]