Smokers’ loss is tobacco stores’ gain

The share prices of South Korea’s convenience stores are on the rise on expectations of tobacco price hikes, according to a story in The Korea Economic Daily.

As was reported here yesterday, Korea’s Health and Welfare Minister, Moon Hyung-pyo, said on Tuesday that he hoped to see cigarette prices nearly doubled during the next six years so as to reduce the country’s smoking rate.

Moon said prices should be raised to at least WON3,300 ($3.24) per pack immediately, partly to reflect the general rise in consumer prices, and to WON4,500 by 2020.

The Daily reported that at 09:09 hours yesterday, the shares of GS Retail were traded at WON25,050, up 6.60 percent (WON1,550) from the previous day’s closing price. BGF Retail shares were traded at WON66,700, up 3.73 percent (WON2,400) from WON64,300.

At the same time, KT&G shares rose by 1.67 percent (WON1,600) to WON97,300.

The newspaper quoted Hyundai Securities as saying that the major beneficiaries of the cigarette price hike would be convenience stores, given the share of tobacco sales revenue in total convenience store revenue was very high.