KT&G Smiles Amid Cigarette Market Slump, Steps Swiftly Toward 'Global Big 4' Status

'Odor Reduction' Heated Tobacco Successfully Settles in Market
Individual Operating Profit Increased by 14.2% Last Year
Global Market Expansion Accelerates through Collaboration with PMI... 'Lil' Goes Global

[Asia Economy Reporter Choi Saeng-hye] Despite the decline in the domestic smoking population, KT&G is making steady progress toward its vision of becoming one of the global big 4 tobacco companies by achieving strong results not only in the domestic market but also in overseas businesses. In particular, this year, significant growth in overseas business is expected through collaboration with Philip Morris International (PMI), the world's number one tobacco company.

On the 14th, KT&G announced through its earnings report that last year’s sales and operating profit reached 4.9657 trillion KRW and 1.3815 trillion KRW, respectively, marking an increase of 11.1% and 10.1% compared to the previous year. Excluding the performance of its subsidiary KGC Ginseng Corporation, sales increased by 12.1% to 2.9426 trillion KRW, and operating profit rose by 14.2% to 1.1472 trillion KRW. This means the tobacco business generated more profit despite the shrinking smoking population.

Last year, the total demand for domestic cigarette sales was 63.9 billion sticks, down about 2% from 65.2 billion sticks the previous year, but KT&G achieved sales of 40.6 billion sticks, a slight increase of about 0.5% from 40.4 billion sticks the previous year. Reflecting consumer demand for "reduced odor," KT&G launched new products consecutively last year, including "Esse Change Himalaya" in April, "Raison Huiba" in August, and "Raison French Cleo" in November, which helped increase market share. Esse Change Himalaya gained great popularity, surpassing 10 million packs sold within four months of its launch. Since the introduction of e-cigarettes, Esse Change Himalaya is the only conventional cigarette to have sold over 10 million packs within four months of release.

Thanks to strong sales of new products, the market share in the fourth quarter of last year reached 64.1%, the highest in the past decade. For e-cigarettes, stable momentum was maintained through the launch of new products such as "Lil Vapor." Last year, the market share of dedicated sticks and devices was 32% and 55%, respectively.

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

Overseas cigarette sales recorded 42.8 billion sticks, a 3.6% decrease from the previous year, but sales increased by 8.9% to 843.5 billion KRW. Aggressive market penetration through expanded distribution networks, enhanced product competitiveness, and differentiated new product launches led to record-high performance at major overseas subsidiaries in Indonesia, the United States, and other countries. A KT&G official explained, "Annual sales increased due to improved profitability in new markets and some base effects from exchange rate appreciation." In the real estate business, which continues its leasing and rental operations, sales reached 419.4 billion KRW with an operating profit of 202.9 billion KRW.

Expectations are high for this year’s performance as well. The goal is an 11% increase in sales and a 0.9% rise in operating profit. There is particular optimism for overseas business. Last month, KT&G announced collaboration with Philip Morris International (PMI), the global number one tobacco company, to accelerate the globalization of the e-cigarette "Lil." KT&G plans to expand the number of countries it operates in from about 80 currently to around 100 by the end of this year through aggressive new market development.

A KT&G official stated, "Our goal this year is to achieve consolidated sales of 956.6 billion KRW through overseas tobacco business," adding, "We aim to discover new growth engines such as conventional cigarette business and next-generation tobacco products to realize our dream of becoming a 'global big 4' company by 2025."

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