Baek Bok-in, President of KT&G, "Full-scale Entry into Global Market Backed by PMI's Massive Infrastructure"

KT&G-PMI Global Collaboration Event Held on the 29th
Initial 3-Year Contract... Introducing 'Lil' Worldwide through PMI
"Will Enhance Brand Awareness through Infrastructure + Technology"

On the 29th, Baek Bok-in, President (left), and Andre Kalanjopoulos, CEO of PMI (right), are posing for a commemorative photo after signing a global export-related agreement at the Four Seasons Hotel in Gwanghwamun, Seoul.

[Asia Economy Reporter Choi Saeng-hye] "The collaboration with Philip Morris International (PMI) will be recorded as a very historic event in the history of the global tobacco industry. Leveraging PMI's vast infrastructure, we will widely promote KT&G products to consumers worldwide."

On the 29th, Baek Bok-in, CEO of KT&G, officially announced the strategic partnership with PMI at the ‘KT&G-PMI Global Collaboration’ event held at the Four Seasons Hotel in Gwanghwamun, Seoul.

KT&G is accelerating its global market expansion by partnering with PMI, the world's number one tobacco company. The event was attended by CEO Baek Bok-in, PMI CEO Andre Calantzopoulos, and other company officials who participated in the signing ceremony, commemorative photo session, and press conference.

Under this agreement, KT&G will supply its ‘lil’ products to PMI, which will be able to sell them worldwide except in South Korea. Both companies agreed to establish a global cooperation system to launch products in more countries while monitoring market performance, and to strive for rapid product sales within this year. The initial contract period is three years, with plans to establish a long-term partnership if results are favorable. KT&G will supply the products and receive royalty income from PMI.

The products to be sold globally through PMI include four types of KT&G’s heated tobacco products currently released domestically: ‘lil Hybrid,’ ‘lil Plus,’ ‘lil Mini,’ and the liquid-type electronic cigarette ‘lil Vapor,’ as well as future innovative products. The companies are considering co-branding options for overseas sales, such as using both the existing ‘lil’ and ‘IQOS’ brand names.

KT&G cited PMI’s massive distribution network and infrastructure as the main reasons for partnering with its competitor rather than exporting directly. Im Wang-seop, head of KT&G’s business division, explained, "Even after detailed comparisons regarding profitability if we had chosen direct export, it was clear that utilizing PMI’s distribution network and infrastructure would be much more efficient. The strong brand power of IQOS in overseas markets also played a role in this collaboration." KT&G expects significant synergy effects by co-branding lil and IQOS through this partnership.

PMI expressed trust in KT&G’s outstanding technology and innovative portfolio as the basis for collaboration. PMI CEO Andre Calantzopoulos said, "This partnership will set a new standard in the tobacco industry. Through this agreement, we plan to offer smokers worldwide a wider range of choices in flavors and price points based on KT&G’s successfully commercialized products in the domestic market, and we expect to accelerate our vision of a smoke-free future."

There will be no changes to the components or specifications of lil products exported overseas. KT&G’s own heated tobacco sticks, such as ‘Fit,’ will also be supplied together with the devices. Im emphasized, "We will not compromise the identity of ‘lil’ for overseas market entry, and since the dedicated tobacco sticks are developed to fit the devices, each brand’s differentiating points will be continuously maintained."

The contract does not include provisions on patents or technology exchange. However, since both parties decided to continue separate consultations for each collaboration case, cooperation such as applying PMI’s know-how to KT&G’s product development and improvement is possible. Im stated, "Both companies agree to avoid exhausting disputes related to patents."

Im Wang-seop expects a sharp increase in exports of heated tobacco products this year due to this agreement. He said, "Last year, exports were practically limited to some duty-free sales in Japan and Vietnam. Starting this year, we will actively enter many countries through strategic collaboration with PMI, and the export ratio will increase significantly compared to last year."

KT&G aims to become one of the ‘Global Big 4’ companies by 2025. The company is focusing on overseas market expansion to complete a balanced business portfolio not only domestically but also globally, and plans to increase the number of countries it has entered from about 80 currently to over 100 by the end of this year through aggressive new market development.

This content was produced with the assistance of AI translation services.