KT&G Establishes Itself as World''s Fifth-largest Tobacco Manufacturer

Source from:  Korea It Times 01/19/2016

In 2015, KT&G sold 46.5 billion cigarettes in overseas markets, dwarfing its domestic cigarette sales. Last year, KT&G, South Korea's top tobacco maker, saw its overseas cigarette sales outperform its domestic sales for the first time in the company's history.

KT&G said on Jan. 18 that 2015 overseas sales of KT&G cigarettes reached 46.5 billion sticks, far exceeding domestic sales of 40.6 billion cigarettes. Back in 1999 when KT&G was a state-owned company, KT&G sold a meager 2.6 billion cigarettes in oversea markets. Since the company was privatized in 2002, it has grown remarkably.

In 2012, KT&G marked 10 years since its privatization, logging 40.7 billion cigarettes in sales, more than a 15-fold increase from 28.5 billion cigarettes in 2005 sales.

Last year's sales record of 46.5 billion cigarettes is the highest ever since KT&G began exporting its cigarettes to overseas markets. As of the end of last year, cumulative sales hit 540 billion cigarettes.

By region, 48.8 percent of KT&G's overseas sales came from the Middle East, 25.4 percent from the Asia Pacific region, 14.2 percent from Latin American and Europe and 11.5 percent from the Commonwealth of Independent States (CIS) and Central Asia.

By product, sales of KT&G's popular brands Esse, Pine and Time made up 55.5 percent, 29.2 percent and 5.3 percent of its overseas sales, respectively.

In the early days of KT&G's endeavors to make inroads into overseas markets, KT&G took aim at Middle Eastern countries, such as Iran and Turkey, where multinational tobacco giants had difficulty gaining ground. Betting on the excellent quality of its cigarette products,　KT&G resolutely ventured into the Middle East.

Strategically making a pitch for its super-slim cigarette brand "Esse," KT&G has aggressively broken into the Middle East, Russia, Eastern Europe, Southeast Asia, North America and South America.

Also, KT&G has increasingly opted for local production in overseas markets to swiftly supply its products to each market, which played a role in jacking up its overseas sales. Since 2008, KT&G had set up production plants in Turkey, Iran and Russia, thereby revving up its global expansion.

KT&G has also made a bold M&A move: it took over Indonesia's 6th largest tobacco maker in 2011.

Meanwhile, exports of KT&G cigarettes are projected to climb eight percent y-o-y this year to 2.22 billion cigarette packs. Dongbu Securities, a Korean financial services provider, predicts that overseas sales will jump 13.4 percent y-o-y to 788.6 billion won owing to a weak won and an uptick in the average sales price (ASP) of goods.

KT&G said: "Having faced falling domestic demand, we have set our sights on overseas markets. Our efforts to expand globally have paid off. We have evolved into one of the world's top 5 tobacco makers. From now on, we will compete head-to-head against global tobacco manufacturers in the developed world."　Enditem