PMI and KT&G Boost Collaboration
Philip Morris International and KT&G are extending their cooperation in selling smoke-free devices with a long-term deal. The arrangement builds on a deal signed in March 2020 that has seen PMI commercialize the South Korean cigarette manufacturer’s Lil heat-not-burn product in more than 30 markets.
The new agreement, signed on Jan. 30, runs until Jan. 29, 2038, with performance-review cycles and associated commitments, based on volume, to be confirmed for each three-year period. PMI and KT&G expect these commitments to increase over the full duration of the agreement, starting with a total commitment for the first three-year period equivalent to 16 billion consumables.
The agreement gives PMI continued exclusive access to KT&G’s smoke-free brands and product-innovation pipeline, including offerings for low- and middle-income markets, that will enhance PMI’s existing portfolio of smoke-free products.
It gives KT&G continued access to PMI’s global commercial infrastructure and experience commercializing smoke-free products to support the further expansion of KT&G’s smoke-free business outside South Korea.
“We have been pleased with the success of our cooperation with KT&G so far and believe a long-term collaboration will accelerate the achievement of a smoke-free future. We want everyone who does not quit smoking to switch to a better alternative, for the benefit of their own health, public health, and society at large,” said PMI CEO Jacek Olczak in a statement, adding the KT&G’s Lil products play a complimentary role to PMI’s popular IQOS heat-not-burn device.
“With KT&G’s technology and speed of innovation and PMI’s science and commercial infrastructure, we believe our partnership will accelerate our shared vision of a smoke free future.”
“We are now able to further raise the competitiveness of KT&G’s smoke-free products in the overseas market and establish a basis for stable growth of our global business through the advancement of the strategic partnership with PMI,” said KT&G CEO Baek Bok-In in a statement. “KT&G will make efforts to acquire world-class capabilities to become a global top-tier company in NGP earlier than planned and to lead the next generation tobacco market.”
KT&G introduced Lil in 2017 and has been launching updated versions of the product at frequent intervals.
Following their March 2020 agreement, PMI and KT&G first introduced Lil in three markets including Japan. Later, they expanded sales to into 31 to countries in Europe and Central America, among other regions.
