KT&G posted operating profit for the 3rd quarter amounting to 382.4 billion won, up 7.2 percent YoY with sales rising to 1.322,1 trillion won, up 11.8 percent YoY in the same period.

The increases were due to boosts in the sales of new cigarette brands such as “Legion Fiber,” raising the tobacco company’s share in domestic cigarette market to 64 percent above the 63 percent estimated.
Industry sources said KT&G has been doing well in the high-end cigarette market in the country.

The tobacco company has also been doing exceedingly well in overseas cigarette markets, with its Q3 sales rising a whopping 39 percent YoY to 205 billion won. The number of foreign countries that KT&G is operating in rose to 80 from 57 last year.

KT&G officials said they sold new cigarettes that suit the tastes of smokers in each country, explaining the enviable records that KT&G posted overseas this year.

KT&G’s 2nd quarter sales came to 406.5 billion won, up 25.9 percent YoY, led by boosts in the sales of the new electronic cigarette brand series such as “Fit” and “Mix,” above market estimates. Sales in the same period came to 1.255,9 trillion won, up 12.2 percent YoY, with net profit rising to 325.5 billion won, up 22.8 percent YoY.

First half sales amounted to 2.440,9 trillion won, up 11.6 percent YoY, while operating profit came to 754.6 billion won in the same period, up 19 percent YoY.

H1 net profit amounted to 599.4 billion won, up 16.5 percent YoY.

Until the late 1980s, the former South Korean tobacco monopoly KT&G was focused on the protected domestic market. The opening of the market to foreign competition, under pressure from the U.S. Trade Representative, led to a steady erosion of market share over the next 10 years.

Drawing on company documents and industry sources, this paper examines the adaptation of KT&G to the globalization of the South Korean tobacco industry since the 1990s.

It is argued that KT&G has shifted from a domestic monopoly to an outward-looking, globally oriented business in response to the influx of transnational tobacco companies. Like other high-income countries, South Korea has also seen a decline in smoking prevalence as stronger tobacco control measures have been adopted.

Faced with a shrinking domestic market, KT&G initially focused on exporting Korean-manufactured cigarettes. Since the mid-2000s, a broader global business strategy has been adopted including the building of overseas manufacturing facilities, establishing strategic partnerships and acquiring foreign companies.

Trends in KT&G sales suggest an aspiring transnational tobacco company poised to become a major player in the global tobacco market. This article is part of the special issue ‘The emergence of Asian tobacco companies: Implications for global health governance’.

The company’s renewed efforts to export came in 1990 when rioting over cigarette shortages, in the wake of the collapse of the Soviet Union, led KT&G to sign a five million pack contract to fill the gap.

In 1992 KT&G opened an overseas liaison office in Hong Kong which was converted to a full sales subsidiary, Korea Tobacco & Ginseng Hong Kong Ltd., in 1994. KT&G then re-entered the Japanese market in 1995 with an agreement with Mikuni to export one million packs.

This limited trade, however, was substantially scaled up by the building of three manufacturing facilities.

In addition, these factories produce selected foreign brands under license for domestic sale.

The company’s renewed efforts to export came in 1990 when rioting over cigarette shortages, in the wake of the collapse of the Soviet Union, led KT&G to sign a five million pack contract to fill the gap.

Two major South Korean duty free stores said Monday they have suspended sales of flavored e-cigarettes, following the government's warning against the use of such vaping products due to rising health concerns.

Lotte Duty Store and the Shilla Duty Free said they have halted sales of flavored vaping products made by U.S. maker Juul Labs and Korean brand KT&G.

The move came days after the government warned that vaping products could cause serious lung illness or death. After the government warning, local convenience stores, including GS25 and E-Mart, have cleared such vaping products from shelves.

A total of 36 e-cigarettes by 11 tobacco companies have been sold in South Korea, while unregulated vaporizing products made of nicotine stem and root are known to be available on the black market.

A view of the building in Seoul where KT&G has offices. (Photo: NewsWorld)