Tag: Korea

KT&G Reports Results and Presents Growth Plan

Image: KT&G
KT&G reported consolidated revenue for the third quarter of KRW1.64 trillion and operating profit KRW415.7 billion, up 2.2 percent year-on-year.
The growth trend centered on the main business continued in the third quarter. Revenue of the three companies core growth businesses—overseas cigarettes, next generation products (NGP) and health-functional foods exceeded KRW1 trillion, achieving the highest-ever quarterly revenue, while the revenue of the tobacco business also reached a record high.
Revenue in the tobacco business reached KRW1.048 trillion, up 7.7 percent from the same period last year, while operating profit grew 23.6 percent to KRW333 billion, outpacing the revenue increase.
In the tobacco business, growth was particularly strong in overseas cigarettes. In the third quarter, revenue of the overseas cigarette business reached KRW419.7 billion, up 30.5 percent year-over-year, setting a new record in revenue for two consecutive quarters, while sales volume and operating profit also increased by 10.1 percent and 167.2 percent, respectively, achieving growth trifecta in sales volume, revenue and operating profit.
While reporting its financial results, KT&G also announced a plan to achieve 15 percent return on equity (ROE) by 2027, to increase cash returns and to repurchase and cancel shares.
Since the appointment of CEO Kyung Man Bang in March, KT&G has been working to increase its competitiveness and upgrade the group’s financial structure. In particular, the company has been prioritizing the group’s ROE enhancement project, which is based on profitability improvement, asset efficiency and financial optimization.
Under the new corporate value-up plan, shareholder return will also be expanded in 2024. KT&G’s board of directors resolved to repurchase 1.35 million shares with KRW150 billion of the financial resources secured through the securitization of non-core and low-yield assets and to cancel them in full within the year.
“We are in full swing in creating results by strengthening our business structure centered on our core business and upgrading our financial structure to become a ‘global top-tier’ company,” KT&G wrote in a press note. “We will continue to focus our resources and capabilities on our three core businesses to strengthen our intrinsic competitiveness and return the fruits of our achievements to our shareholders to achieve true value-up where corporate value and shareholder value grow together.”
November 7, 2024
Korea: Vape Firms Evading Taxes

Image: Andrii Yalanskyi
E-cigarette companies have been evading taxes by declaring false nicotine content when importing liquid nicotine base into South Korea, according to one of the country’s lawmakers, reports The Pulse.
The accumulated tax evasion is estimated at several trillion won.
Between January 2020 and July 2023, 20,197 kg of liquid nicotine base was imported, according to documents from the Korea Electronic Liquid Association obtained by Lim Lee-ja of the ruling People Power Party. Approximately 3,300 bottles of e-liquid can be produced with 1 kg of liquid nicotine. Each bottle is levied at KRW53,970 ($40.60).
Many e-cigarette companies have been mis-declaring tobacco leaf nicotine as tobacco stem and root nicotine to evade taxes since 2016, according to the association. Under Korea’s tobacco laws, nicotine extracted from tobacco stems and roots is not classified as tobacco.
Data shows that e-cigarette companies changed their declarations from tobacco leaf nicotine to synthetic nicotine when Korea’s Individual Consumption Tax Act was amended in 2021 to impose taxes on all tobacco-derived nicotine. Synthetic nicotine is classified as a simple commodity and not subject to taxes.
The association stated that annual distribution volume of Korean e-cigarette liquid is 30 million 30 mL bottles, with an estimated annual tax evasion of KRW1.6 trillion.
In 2019, the Board of Audit and Inspection audited the Korea Customs Service, the Ministry of Environment and the Ministry of Health and Welfare, showing that all the inspected imported nicotine was tobacco leaf nicotine. Falsified declarations have continued since then, according to the association.
Lim has called on the government to crack down on companies falsely declaring their products.
Liquid nicotine base is considered a hazardous substance under the Chemical Substance Control Act, regulated by the Ministry of Environment. Imports must be reported to the minister of environment, and companies must obtain an import declaration certificate for hazardous substances.
Those caught failing to report or falsely reporting the import of hazardous substances are subject to up to one year of imprisonment and up to KRW30 million in fines. None of the companies shown to have falsely declared nicotine products in past audits have been punished to date.
September 7, 2023
Microalgae to Reduce Emissions at PM Korea

Image: Regina
Philip Morris International will establish a demonstration facility for carbon capture and utilization technology at its factory in Yangsan, North Gyeongsang Province, South Korea, according to the Korea Environment Corp. (KECO), reports Korea Bizwire.
The facility will leverage the carbon dioxide absorption of microalgae, which is expected to reduce the factory’s annual carbon emissions by 2.15 tons.
The facility will operate solely on solar power and utilize wastewater as well as repurpose the microalgae as fertilizer or feed after use, providing the repurposed products free of charge to local communities.
The site and funding were provided by the South Korean arm of PMI, coordinated by KECO, and research and development support were provided by the Korea Environment and Merchandise Testing Institute.
July 13, 2023
Tobacco Age Unaffected by Counting Change

Image: Blue Planet Studio | Adobe Stock
South Korea’s legal age for buying liquor or cigarettes will remain the same despite the country’s adoption of international age-counting standards, according to the family ministry, reports The Korea Times.
Korea has traditionally considered newborns to be one year old, adding a year on the first day of each new year regardless of birth dates. The internationally recognized system is based on birth dates.
The change, which takes effect this week, makes those using the Korean age system one or two years younger, depending on their date of birth.
Under the Youth Protection Act, however, the legal age to purchase liquor and tobacco will remain at 19, meaning those born in 2004 or before can buy cigarettes or liquor.
June 28, 2023
Korea to Crack Down on E-liquid Tax Evaders

Photo: makistock
South Korea plans to crack down on traders who try to evade taxes on e-liquids by falsely claiming that their products contain synthetic nicotine rather than tobacco-derived nicotine, reports The Korea Bizwire.
On Nov. 10, the Korea Customs Service announced it has developed a highly accurate method to identify whether the nicotine contained in e-liquid is extracted from tobacco leaves or created in a laboratory.
This method uses derivatization technology to increase the detection sensitivity by a factor of 30.
Classified as cigarettes under tax laws, e-liquids containing natural nicotine are subject to an inland duty of KRW1,799 ($1.32) per mL.
By contrast, e-cigarettes containing synthetic nicotine are classified as manufactured goods and are therefore exempt from cigarette consumption taxes.
November 14, 2022
KT&G to Release New HnB Products in Korea

Photo: Tobacco Reporter archive
KT&G Corp. will launch new heat-not-burn products in South Korea to strengthen its electronic nicotine devices lineup, reports the Yonhap News Agency.
The South Korean cigarette manufacturer will release Lil Able and its premium version, Lil Able Premium, on Nov. 16.
KT&G’s third-quarter net profit jumped 29 percent from a year earlier on increased exports and a strong U.S. dollar. Currently, the company earns 90 percent of its sales from the cigarette business division and 10 percent from the heat-not-burn division.
The company has been stepping up efforts to increase sales in the noncigarette business division.
From January to September, net income climbed 21 percent to KRW1.06 trillion from KRW878.58 billion in the same period of last year.
On Nov. 4, the company announced a KRW350 billion share buyback to boost shareholder returns.
November 9, 2022
Unidentical Twins

Photo: Keechuan | Dreamstime.com
South Korea and Japan, the world’s leading heat-not-burn markets, have different views on the technology’s potential for tobacco harm reduction.
By Stefanie Rossel
Six years after Philip Morris International’s (PMI) IQOS device hit the shelves, Japan and South Korea are the world’s two leading markets for heated-tobacco products (HTP). Euromonitor International valued Japan’s HTP market at $8.59 billion in 2019, up from $7.76 billion in 2018. South Korea’s HTP market totaled $1.61 billion in 2019, up from $1.53 in 2018 and more than $1 billion above third-ranking Italy. In contrast to South Korea’s overall tobacco sector, which is expected to grow only modestly through 2023, the country’s HTP market may increase by 21 percent annually to reach $4.4 billion, according to Euromonitor.
That South Korea followed in the footsteps of Japan surprised few. Both countries are perfect breeding grounds for high-tech reduced-risk tobacco products. Before the arrival of HTPs, their tobacco markets were dominated by combustible cigarettes. Both nations are health-conscious and tech savvy, sporting a love of gadgets. And both are economic powerhouses. With a population of 51 million, South Korea is the world’s 11th largest economy; Japan (population: 126.5 million) ranks third behind the U.S. and China. Both cultures value discretion and politeness, meaning that smokers are keen to avoid disturbing others, for example with secondhand smoke.
There are, of course, differences between the two markets. Japan has often been cited as a special case in its rapid adoption of HTPs as there is little competition from other reduced-risk products (RRPs). Nicotine-containing vapor products are banned in Japan.
Nonetheless, South Korea’s smokers eagerly embraced HTPs when they entered the market in 2017. Three types of electronic nicotine-delivery systems (ENDS) are sold in the country: e-cigarettes, HTPs and a hybrid product combining elements of both. Although e-liquid vapes were introduced earlier, HTPs quickly became much more popular. According to The Korea Herald, HTPs represented 13.5 percent of the country’s tobacco market in 2019 while e-cigarettes had a share of 4 percent. By comparison, the share of HTPs in Japan, where the products have been on the market since 2014, was estimated at 23 percent in 2019.
In both countries, the HTP market is dominated by first-mover IQOS although other players have joined the race over the past few years. In Japan, IQOS held 17.7 percent of the country’s tobacco market in the first quarter of 2020. Other products include Glo (British American Tobacco) and Ploom (Japan Tobacco).
In South Korea, HTPs include IQOS, Glo and KT&G’s Lil. With an estimated 50 to 60 percent, IQOS has the largest slice of the market.

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Japanese success
South Korea appears to offer even greater potential for lowering the overall smoking rate than Japan. Smoking is predominantly a male habit in South Korea, and although prevalence has slowly fallen over the past decades, it is still high compared with the Organization for Economic Cooperation and Development average of 23 percent. According to statista.com, 40.6 percent of male adults in South Korea smoked in 2018 whereas the figure for female smokers was 6 percent according to the most recent available data, from 2017. In total, the average smoking prevalence stood at 21.7 percent in 2018, down from 26.1 percent 10 years earlier, according to a study by the Korea Centers for Disease Control and Prevention.
Until it became a testing ground for HTPs, Japan had similar figures. The share of men smoking decreased from 50 percent in 2001 to around 25 percent in 2018, with about 10 percent of Japanese women smoking, according to japan-guide.com. While sluggish at first, the decline accelerated spectacularly after the nationwide introduction of HTPs in late 2015. A study published in May 2020 on behalf of the Coalition of Asia-Pacific Tobacco Harm Reduction Advocates (CAPHRA) based on data from the Tobacco Institute of Japan and PMI confirmed that the remarkable reduction in combustible cigarette sales was triggered by the entry of HTPs.
David Sweanor, a professor at the Faculty of Law of the University of Ottawa and one of the study’s authors, calls Japan a success story in tobacco harm reduction. The Japanese experience, he says, proves how consumers’ interest and the regulatory environment shape markets. While Japanese regulations precluded alternatives to combustible cigarettes, such as nicotine vapor products, HTPs generated huge interest among smokers in Japan.
“As more [smokers] adopted the alternative, they helped speed switching by others,” says Sweanor. “I think this gives us an indication of just how much more rapidly countries could reduce cigarette use if there were many different low-risk alternatives available and policies and public education campaigns facilitated a widespread move away from [combustible] cigarettes. We have seen the most rapid decline in cigarette sales ever witnessed in a major market. A third of the cigarette market was gone in a remarkably short period of time, and this was accomplished with a noncoercive measure. People who smoke cigarettes were simply provided with a viable alternative.”
Sweanor insists there now is evidence that a range of low-risk products could help rapidly achieve the smoking rate targets of the World Health Organization’s (WHO) sustainable development goals. “To seek to ban or limit access to such products protects the cigarette industry rather than public health,” he says.
RRPs are the most disruptive influence on smoking in decades, according to CAPHRA Executive Director Nancy Loucas. In northern Asia, HTPs are the most popular form of safer nicotine products, she says. “So it is very disheartening that countries in Asia Pacific, like Korea and the Philippines, are looking to either ban and/or reduce access and choice of all forms of tobacco harm-reduced products for their smoking citizens.”

South Korea’s home-grown heat-not-burn device, Lil by KT&G (Photo: KT&G)
Different stance
South Korea’s government, however, turned out to be less receptive to the harm reduction potential of HTPs than Japanese authorities. In June 2018, the country’s ministry of food and drug safety announced the results of its own study of HTPs, claiming that five cancer-causing substances had been found in the products, with the level of tar in some of them exceeding that of conventional cigarettes. The public health agency also ruled out that HTPs could serve as smoking cessation tools if they produced similar levels of nicotine as traditional cigarettes. The announcement sparked a legal battle with PMI and an ongoing conflict between tobacco manufacturers and South Korea’s government over the latter’s attempts to impose stricter regulations on HTPs.

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The product category also saw a significant tax hike. Unsure about how to treat HTPs, regulators initially taxed them at half the per-pack rate of combustible cigarettes and required them to carry a dedicated health warning featuring a syringe. After category growth and a WHO recommendation, the government increased the tax rate to 90 percent of that of cigarettes and changed the warning labels to match those of traditional cigarettes.
KT&G in January 2020 announced an agreement with PMI for the distribution of three HTPs and a vapor product outside of South Korea. Although the target markets have yet to be revealed, Japan is likely to be among them as it accounts for more than 90 percent of the global $5 billion HTP market, according to Euromonitor. And the category is expected to grow further in the country. The Japanese Ministry of Health, Labour and Welfare’s 2018 National Health and Nutrition Survey, which was published in January 2020, found that 30.6 percent of Japanese male current adult smoker and 23.6 percent of Japanese female current adult smokers were already using HTPs.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

July 1, 2020
Up and Coming

KT&G CEO Baek Bok-in (left) and PMI CEO Andre Calantzopoulos celebrate their companies’ agreement to commercialize KT&G’s next-generation products internationally. (Photos courtesy of KT&G)
KT&G prepares to join the world’s premier league of tobacco companies.
By Stefanie Rossel
From No. 5 to No. 4 in only five years: KT&G has set an ambitious goal. Currently the world’s fifth-largest cigarette manufacturer, South Korea’s leading tobacco firm aims to become part of the Big Four by 2025—a quantum leap, as the company described it in a recent exchange with Tobacco Reporter. To achieve that target, KT&G has devised a comprehensive strategy: It plans to solidify its position in its domestic tobacco market, expand its international tobacco business, diversify its operations and maximize both financial and nonfinancial values.
Originally a government-owned monopoly, KT&G faced fierce competition when South Korea’s tobacco market liberalized in 1988 and foreign cigarette manufacturers entered the country. Yet despite the challenge presented by new players, KT&G managed to maintain its leading position. In 2019, the company accounted for 64.1 percent of its domestic market, generating annual sales of more than $4 billion.
By turning its focus outward, embracing change and building a competitive edge, the company has grown significantly. A Korea CXO Institute survey published in February 2020 rated KT&G as the most profitable company among South Korea’s 30 biggest conglomerates. At 24.3 percent, the company had the highest average net income margin between 2008 and 2018.
But KT&G’s achievements weren’t limited to the balance sheet. Last year, the company received the top corporate governance award in the Korea Corporate Governance Service evaluation of environmental, social and governance (ESG) performance. Recognizing its high level of sustainable management, KT&G received top A+ grades in overall ESG for two consecutive years (2018 and 2019).
The cigarette manufacturer currently exports to more than 80 countries, a number that is supposed to increase to 200 within five years. The company, which outside South Korea is best known for its Esse super slims brand, started selling cigarettes overseas in 1988. In 2008, it established its first international plant in Turkey followed by a factory in Russia in 2010. In 2011, KT&G acquired Indonesia’s sixth-largest tobacco manufacturer.
“KT&G will expand its overseas tobacco business by region and by actively pioneering new markets it has not entered yet,” a spokesperson told Tobacco Reporter. “In order to successfully enter new markets, KT&G will strengthen the distribution network and marketing infrastructure of the major continental regions. KT&G will also focus on developing brands that meet the needs of local consumers. In fact, exports to new markets in Africa, South and Central America, and Asia-Pacific regions have sharply increased over the past few years, resulting in the diversification of the markets and shifting from dependence on the Middle East to frontier markets. KT&G will continuously strive to diversify its markets to various regions.”
Currently, KT&G has subsidiaries in Turkey, Russia, Indonesia and the U.S. In China, KT&G operates a local branch office. Subsidiaries in the U.S. and Indonesia are experiencing exceptional sales growth, according to the company. KT&G says it will expand distribution channels in the U.S. and Indonesia and initiate more proactive marketing activities in the two countries to ensure continuous sales growth.
In February of this year, the company signed a KRW2.2 trillion ($1.82 billion) contract with Alokozay of Dubai, one of the largest FMCG brands in the Middle East, for a period of seven years and four months. Industry officials said the deal would help KT&G avoid the huge costs required to set up an independent sales network in the region. The deal also brings predictability to the South Korean company’s business because it requires Alokozay to purchase certain volumes of KT&G products for the duration of the agreement.

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New technologies
In its home market, KT&G plans to reinforce its leadership position by expanding its portfolio of low-tar and low-nicotine products along with low-odor products, which are known as “smell-down” products in South Korea. “The biggest trend that shaped the domestic tobacco market during the past few years can be defined as smell-down tobacco,” says KT&G’s spokesperson. “In 2017, heated-tobacco products [HTPs] were first introduced in the domestic market, and the consumers showed interest in the smell-down feature of the heat-not-burn products. KT&G discovered this consumer trend and concentrated its efforts in incorporating smell-down technology in traditional tobacco products.”
Last year, the company established a dedicated Smell-Care Research Center, which enabled KT&G to successfully developed various smell-down solutions, such as a cigarette-breath reduction technology, a finger zone that reduces cigarette smell on fingers and the “triple care” system, which minimizes cigarette breath and cigarette smell on fingers and cigarette smell on clothes. Since last year, KT&G has launched five smell-down products in South Korea. “All five products have received highly positive feedback from consumers and have helped KT&G reach the highest domestic market share in the past 10 years,” the spokesperson said.
However, the domestic operating environment has become increasingly unfavorable to KT&G. At the time of liberalization, South Korea was the world’s 12th-largest tobacco market, with cigarette consumption of 80 billion to 85 billion sticks annually. Amid increasing tobacco control measures, the country’s cigarette market has declined continuously over the past decade. In 2019, smokers consumed 3.45 billion 20-cigarette packs, down from 3.47 billion in 2018, according to a Korea Herald report. The figure represents a 20.9 percent decline from 2014, which is largely attributed to an 80 percent tax-driven cigarette price hike in January 2015. In 2016, the government started requiring tobacco companies to print graphic health warnings on the upper part of their cigarette packs.
Despite ever stricter regulations, South Korea still has a relatively high smoking prevalence of 21.7 percent, according to a 2018 Statista survey. It’s predominantly men who smoke (40.6 percent). After HTPs hit the market in late 2017, however, the smoking rate declined markedly. Within a year, South Korea became the second-largest market for HTPs behind Japan. In 2019, HTPs accounted for 10.5 percent of the country’s cigarette market, according to the Ministry of Economy and Finance. Sales of traditional cigarettes fell 2.4 percent to 3.06 billion packs in 2019 while sales of HTPs rose 9.3 percent to 360 million packs, according to The Korea Herald.

One of KT&G’s bestselling brands is Esse. The picture rights shows Esse variants sold in South Korea and the picture left shows Esse variants sold abroad.
Investing in the future
KT&G believes it held on to its No. 1 position in South Korea because it built a well-balanced portfolio of both traditional tobacco products and next-generation products (NGPs). The company has stepped up research and development in both categories. Its R&D investments reached KRW23 billion in 2019, having continuously grown every year from KRW12.6 billion in 2015. KT&G also recently established a task force focused solely on developing NGP technology and doubled its number of researchers. As a result, KT&G’s patent filings have increased tenfold over the past three years to 431 cases in 2019.
In 2017, the company entered the HTP market with its Lil brand of which it has launched several variants and updates since. The name Lil stands for “a little is a lot,” according to KT&G. The concept is meant to capture product qualities such as minimalism, simplicity, user-friendliness and sophistication.
The Lil family includes products such as Lil Plus, Lil Mini and Lil Hybrid. The latter product is the culmination of KT&G’s independent technology and has been widely recognized for innovation, according to KT&G. Lil Hybrid simultaneously uses tobacco sticks and liquid cartridges, allowing consumers to experience reduced cigarette smell and increased vapor production at the same time. The product was introduced at many international exhibitions last year in which it received great acclaim from international buyers around the world.

Unprecedented move
The brand is likely to become even more popular soon. In January, KT&G and Philip Morris International (PMI) signed a three-year agreement to commercialize Lil overseas. According to KT&G, the deal presents an opportunity for KT&G to introduce its NGP portfolio worldwide through PMI’s massive global sales network, which spans 180 markets.
In addition to the company’s current NGP product line, the contract also encompasses the products’ future versions. It also includes consumables, such as Fiit and Miix tobacco sticks, which are designed to be compatible only with Lil devices. KT&G and PMI are discussing the potential for a parallel brand association between Lil and PMI’s HTP, IQOS. The international expansion through PMI’s network is expected to start later this year in several yet-to-be identified markets.
The deal comes at a time when NGPs in South Korea are increasingly under pressure. In 2018, a controversial study by the country’s Ministry of Food and Drug Safety concluded that HTPs emitted even more tar than conventional cigarettes. The authors added that the products were not suitable as smoking cessation tools. Following the outbreak of vaping-related illnesses last year in the U.S., the South Korean government in October 2019 issued a “strong warning” against e-cigarettes.

KT&G’s Lil heating tobacco device has been widely recognized for its innovative technology. The name “Lil” captures product qualities such as minimalism, simplicity, user-friendliness and sophistication.
A market with potential
In its pursuit of new growth engines for a sustainable future, KT&G has successfully diversified its business into various nontobacco sectors, including health and beauty, bio and pharmaceuticals and real estate. The company has been especially committed to strengthening its ginseng and health functional food business through its wholly owned subsidiary, Korea Ginseng Corp. (KGC). It’s a compelling strategy; Future Market Insights valued the global ginseng market at $622.9 million in 2019. With demand for plant-based products rising at a steady pace, the research firm expects the ginseng market to reach $903.8 million by the end of 2027.
KGC has been continuing the tradition of Korean ginseng for more than 120 years, according to KT&G. During that time, KGC has not only maintained its leadership position in the domestic market but also evolved into a global company supplying ginseng and health functional food products to more than 60 countries. To establish a solid foundation for a long-term and sustainable future, KT&G says it will continue to expand its ginseng and health functional food business and its other business sectors.
In the ongoing Covid-19 pandemic, KT&G has fared well so far. By implementing preventive measures against infection, the company has managed to avoid disruption to its operations and supply chain. Of course, some of the company’s export markets have imposed national lockdowns, potentially altering the business outlook depending on the levels of supply chain disruption and lockdowns in those countries.
In the important Middle East market, however, KT&G has seen no significant disruption to logistics and retail sales. In the markets where the company has subsidiaries, the impact has been limited because it runs its own manufacturing facilities. While it is impossible to predict when the pandemic will cease, KT&G says it will minimize the impact by continuing to closely monitor the developments around Covid-19 and adjusting its strategy as necessary.
Tobacco Reporter’s spelling of brand names
Tobacco Reporter’s editorial style guide calls for product names to be capitalized even when trademark owners use different cases as part of their branding. The chart below shows the differences between our spelling and that used by KT&G for the brands mentioned in this article.
Tobacco Reporter’s spelling
KT&G’s official brand names
Lil
lil
Lil Mini
lil mini
Lil Hybrid
lil HYBRID
Miix
MIIX
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

July 1, 2020
KT&G sales resilient
Photo by strogoscope
The imposition of graphic health warnings on cigarette packs sold in South Korea will have a limited effect on KT&G, according to a story in The Korea Times quoting analysts.
The analysts said that the company’s sales would rebound in the second half of this year.
The share price of Korea’s biggest tobacco company has been falling during the past month in line with growing concerns that graphic health warnings will adversely affect sales.
From December 23, tobacco packs manufactured for sale in Korea have been required to carry one of 10 pictures with written warnings about the adverse effects of smoking.
And already convenience stores and some other retailers are selling the cigarettes with the warnings.
It is expected to take a month or so for all the cigarettes produced before December 23 to be sold.
“We project that KT&G’s sales will decline about 13.3 percent in the first half of the year,” Cape Investment & Securities analyst Kim Tae-hyun said. “But the sales will recover to the previous year’s level by the third quarter.
“Electronic cigarettes, which have been weighing down on KT&G, won’t be able to replace conventional cigarettes. E-cigarettes have limited growth potential.”
Kim expects that KT&G will go beyond China, Russia, the US and the Middle East to stretch its sales into Latin America and Africa. “The company will continue to bolster its sales overseas this year and beyond,” he said.
Meanwhile, KT&G was quoted as saying that it was difficult to estimate the effects of graphic warnings on its sales.
“We still need more time to assess how warning photos could affect our sales,” a KT&G official said.
“We will continue to comply with regulations and, as always, we will make every effort to expand our overseas business.”
January 13, 2017
Korea to ban product discriptors
Cigarette makers in South Korea will be banned from using such words as light, low tar and pure on cigarette packaging from next year, reports The Korea Times.
The Ministry of Strategy and Finance announced revised decrees on Sunday to forbid tobacco makers from using such misleading words on packages or in advertisements.
The rules will go into effect on Jan. 22. Violators will face up to a year in jail or a fine of up to WON10 million.
The rules also call for cigarette manufacturers to make low-ignition propensity cigarettes beginning July 22, 2015.
Manufacturers who fail to produce fire-safe cigarettes after that date could have their licenses revoked.
June 30, 2014