Korea - South: KT&G Dominates Cigarette Market

Source from:  Korea Times (kr)  03/27/2013

Korea's leading cigarette manufacturer, KT&G, remains the top player in the local market over international giants. Last year, the company held 62 percent of the market share.

Even after the government opened the tobacco industry in 1988, the firm never lost its position to global competitors including Phillip Morris International, British American Tobacco and Japan Tobacco International.

KT&G attributes its competitiveness to its premium quality products and growth in overseas sales.

"We're so proud that we've done so well and never lost ground to the global competitors," KT&G said in a press release.

According to the company, maintaining such a stronghold is rare when a country's cigarette market is exposed to free and open competition.

For instance, when Spanish firm Altadis merged with Imperial Tobacco Group in 2007, its market share plunged by 20 percent. In Turkey, its state-run company Tekel was sold to British American Tobacco in 2008 and its shares dropped by 30 percent.

KT&G puts effort into maintaining the quality of its products, including its flagship brands: This, Time, Esse, Season and Raison.

Every step of the manufacturing process is monitored and the product is carefully examined twice before it is confirmed for sales. Quality-control managers are required to print their names on each pack of cigarettes to guarantee its quality.

"Such a policy ensures our customers we only sell the best," a KT&G official said.

The company also came up with new innovative products. One of them is Raison Cafe, a new hazelnut coffee-flavored cigarette in the Raison line.

KT&G also targeted international consumers to boost its sales, which soared to $634 million in 2012, up 1,713 percent from $37,000 in 2000. Of its brands sold overseas, Esse dominated the world's super-slim market with sales of over 50 billion cigarettes worldwide last year alone.

The former state-run company, which monopolized tobacco and ginseng, expanded its business to real estate, food and beverages, biomedical technology and pharmaceutical products since it was privatized in 2002

Its sales then climbed from 2.03 trillion won in 2002 to 3.98 trillion won in 2012, while its net profit more than doubled from 586 billion won to 1.03 trillion won over the same period.

KT&G was listed on the Dow Jones Sustainability Indexes (DJSI) for the third consecutive year in 2012, a family of indexes evaluating the sustainability of the largest 2,500 companies listed on the Dow Jones Global Total Stock Market Index. Enditem