President Baek Bok-in Moves One Step Closer to Global 'Big 4' Dream... KT&G Achieves Largest Performance Since Inception

Achieved Record Quarterly Performance in 5 Years Since Inauguration Through Technological Innovation Management
Sales Increase in Both Cigarettes and E-cigarettes
Exports to Key Markets Including the Middle East Expand, Boosting Overseas Sales
"Plan to Enter 200 Countries by 2025"

[Asia Economy Reporter Choi Saeng-hye] Baek Bok-in, CEO of KT&G, is one step closer to realizing his dream of growing KT&G into a 'Global Big 4' company by 2025. KT&G achieved a remarkable feat by posting the highest quarterly sales and operating profit in its history in the third quarter, showing balanced growth across all business sectors including tobacco, overseas markets, and real estate. This achievement came five years after Baek took office. Since his appointment, Baek has pursued an aggressive strategy emphasizing technological leadership and expanding market share.

On the 6th, KT&G announced that its consolidated sales and operating profit for the third quarter increased by 10.7% and 13.6%, respectively, reaching KRW 1.4634 trillion and KRW 434.6 billion, marking the highest quarterly sales and operating profit in the company's history. The company showed balanced growth across all business sectors, including steady domestic tobacco sales, expanded exports to key overseas markets, increased sales volume of overseas subsidiaries, and strong real estate performance. On a standalone basis, KT&G's sales and operating profit were KRW 908.8 billion and KRW 353.6 billion, growing 25.6% and 24.1% compared to the same period last year.

KT&G's market share of heated tobacco sticks in the domestic market for the third quarter was 64.9%, higher than 64.1% in the fourth quarter of last year, marking the highest level recorded in the past decade. The secret lies in relentless technological innovation. Since taking office, Baek has reorganized the research and development (R&D) organization and increased investment in costs. KT&G's tobacco-related R&D expenses, which were around KRW 12.2 billion in 2016, increased to KRW 23 billion in 2019. In particular, the company innovated by applying the 'odor reduction' function, which is important to consumers choosing heated tobacco sticks, to regular cigarettes.

‘Esse Change Himalaya,’ launched at the end of April last year, sold an average of 120,000 packs per day and surpassed 10 million packs in sales within four months of launch, gaining tremendous popularity. At the end of last year, KT&G continued the success of odor-reducing products by releasing ‘La Saison French Cleo,’ which applied the ‘Triple Care System’ to reduce three types of cigarette odors generated after smoking.

Electronic cigarette performance is also on the rise. KT&G registered a fundamental patent related to electronic cigarettes in 2005 and began full-scale development in 2016. KT&G's R&D capabilities have been notably enhanced since Baek's appointment in 2015. Last year, the ‘Lil’ device surpassed IQOS, which had dominated the heated tobacco stick market with over 50% market share in the device segment. Recently, despite the stagnation of the electronic cigarette market due to increased demand for heated tobacco sticks, KT&G achieved a 35.1% share of dedicated sticks, driven by the popularity of ‘Lil Hybrid 2.0’ and the success of new products ‘Fit’ and ‘Mix.’

Especially, KT&G's transformation into an 'export company' was largely driven by the global business commitment of the management team led by CEO Baek. In November 2017, Baek held a 'Global Vision Declaration Ceremony' and announced a mid-to-long-term plan to grow KT&G into a global top 4 tobacco company by 2025. The company set a goal to increase overseas sales more than fourfold by 2025 and is actively targeting new markets such as Latin America and Africa in addition to its main markets in the Middle East and Russia.

In January, KT&G signed an export contract for the electronic cigarette ‘Lil’ with global tobacco company Philip Morris International (PMI). Following the launch of the heated tobacco stick ‘Lil Solid’ in Russia in August and Ukraine in September, KT&G expanded into Japan, marking the start of its full-scale global electronic cigarette market penetration.

Overseas tobacco-related performance is naturally increasing as well. In the third quarter, KT&G's overseas tobacco sales volume increased by 30.9% year-on-year to 12.7 billion sticks, and sales revenue rose 28.2% to KRW 262.9 billion. Exports to key markets such as the Middle East expanded, driving sales, while overseas subsidiaries in the U.S. and Russia saw increased sales volume due to expanded distribution networks.

KT&G plans to continue expanding its market base in the fourth quarter by strengthening distribution in key countries and expanding its brand portfolio, while actively developing new markets in Latin America and Africa to achieve exports to over 100 countries within the year. The company has set a goal to increase its presence to about 200 countries by 2025. Currently, KT&G operates in over 90 countries worldwide.

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