Tag: Korea

  • Korean Bill Stalls in Defining “Tobacco”  

    Korean Bill Stalls in Defining “Tobacco”  

    Today (February 10), a bill in South Korea that includes liquid-type electronic cigarettes in the legal definition of “tobacco” did not pass the Economic and Financial Subcommittee of the National Assembly. Some members raised concerns about the credibility of the government’s findings, noting that synthetic nicotine is harmful, similar to existing tobacco products, and opposed the bill. There were also arguments that decisions should be deferred considering the survival rights of the liquid tobacco industry.

    The main point of the amendment is to expand the definition of “legal tobacco” to include liquid-type electronic cigarettes that use synthetic nicotine as a primary ingredient. Under current law, tobacco is defined as “the leaves of the tobacco plant.” Electronic cigarettes containing synthetic nicotine are not classified as legal tobacco.

    The issue, critics say, is that liquid-type electronic cigarettes have a similar addictive quality to existing tobacco products and are effectively used as tobacco, however, because of the legal definition question, they escape various regulations and taxation.

    Last December, the Economic and Financial Subcommittee held a public hearing related to the amendment of the Tobacco Business Act where both ruling and opposition party members reached a consensus that liquid-type electronic cigarettes should be regulated legally as if they were tobacco. However, in a closed-door meeting later that day, differing concerns were raised regarding the government’s findings.

    “There is a consensus among ruling and opposition party members to define and regulate liquid-type electronic cigarettes as tobacco,” one of the members of the Economic and Financial Subcommittee said. “However, additional discussions are needed on how to flexibly apply the Tobacco Business Act considering the survival rights of sales vendors.”

  • PM Korea Says Science Demands E-Cigarette Recognition

    PM Korea Says Science Demands E-Cigarette Recognition

    The head of Philip Morris Korea cited scientific evidence today (February 5) in defense of the global tobacco company’s ongoing efforts to shift from traditional cigarettes to electronic vaping products for healthier living. Managing Director Hannah Yun emphasized the importance of scientifically proven data in persuading the government about the benefits of electronic cigarettes. Her remarks were directed at the Korean government, which has highlighted their harmfulness, urging citizens to quit both tobacco and electronic smoking.

    Yun acknowledged that, as a cigarette company, it has often faced criticism regarding public health. She added that the company’s efforts to encourage smokers to quit by promoting a potentially less harmful alternative have rarely received outright support from outside the industry, including from the Korean government.

    The government has consistently criticized smoking without distinguishing between e-cigarettes and traditional cigarettes or acknowledging the potential benefits of the former. Instead, it has treated e-cigarettes as “just another type of smoking you must quit” through various advertisements and TV campaigns.

    The Ministry of Health and Welfare in November released the results of an external report, which studied synthetic nicotine used in vaping, a type of e-cigarette smoking. The report concluded that synthetic nicotine contains multiple types of hazardous chemicals, which is contrary to what vaping product makers have said.

    “We have been stacking up scientific data and making reports promoting those data to prove the benefits of e-cigarettes. This is our only way to get at the government,” Yun said at a press conference in Seoul, where Philip Morris International (PMI) and its Korean subsidiary unveiled a new model for its flagship e-cigarette device brand IQOS to Korea.

    “We want the government to know that our e-cigarette business is not about pursuing our own business interests. It is rather our campaign promoting a healthier way to smoke based on scientific data. We wish the government would look at our business and understand it scientifically.”

    Philip Morris Korea’s External Affairs Director Kim Joo-han asked the government to “check a broader range of data before introducing policies or pursuing campaigns” to better understand e-cigarette smoking.

    “Member states of the Organisation for Economic Co-operation and Development [OECD] have introduced e-cigarette-friendly policies to promote the practice and help the public quit smoking more effectively,” Kim said. “The Korean government should look into those examples.”

    During the event, Philip Morris Korea unveiled IQOS Iluma i, the latest version of its IQOS product, which was first launched globally in 2014 and in Korea in 2017.

    As of last October, the company occupied a 40 percent share of Korea’s e-cigarette market, while KT&G led with 49 percent and BAT Rothmans accounted for 11 percent. Meanwhile, JTI Korea, a Korean subsidiary of Japan Tobacco International, also released its new e-cigarette device model, Ploom X Advanced, in October 2024.

    “One out of every five adults in Korea are now smoking e-cigarettes,” Yun said. “We believe we are truly doing the right thing by helping the rest four out of every five adults quit tobacco smoking.”

    Vassilis Gkatzelis, PMI’s president of East Asia, Australia, and Duty-Free Region, said during the press conference that PMI aims to log two-thirds of its entire sales from e-cigarette products by 2030.

    “What is truly expected of a tobacco company? The answer is straightforward,” Gkatzelis said. “It is introducing the smoke-free future.”

    Gkatzelis said that among PMI’s 180 market countries, Korea “holds a very special place” because it is among the top five countries in its global e-cigarette market. “IQOS is accelerating the transition away from tobacco cigarettes,” he said. “It is ushering in the world where combustion smoking is increasingly becoming obsolete and will [just be seen in] a museum.”

  • BAT Expands VUSE Presence in Korea

    BAT Expands VUSE Presence in Korea

    BAT Rothmans, the Korean subsidiary of British American Tobacco, announced plans today to accelerate its growth in the country’s vaping market by broadening its product offerings and distribution network.

    The flagship VUSE Go Slim 2ml, initially available in limited districts within Seoul, will now be distributed across all of Seoul, Incheon, and Busan. The device features a transparent mouthpiece for checking liquid levels and a removable battery. To cater to varying preferences, six new flavors have been introduced: Cool Fresh, Pearl Spark, Forest Mix, Dark Smooth, Purple Smooth, and Blossom Smooth.

    The VUSE Go Box 6ml, launched last year, has become popular among adult users transitioning to vapor products. With three times the liquid volume of the VUSE Go Slim and additional features like a boost control button for enhanced flavor, the device is priced competitively at 25,000 won ($17.15).

    The company entered the Korean market 18 months ago, introducing the VUSE Go lineup as the first of its kind in Asia. The brand has gained recognition for its use of high-quality natural nicotine and odor-free technology. “VUSE is dedicated to meeting the diverse needs of consumers by supporting the transition to non-combustible alternatives,” a BAT Rothmans official said. The company aims to strengthen VUSE’s position as a leading vapor brand in Korea by continuing to expand product options and accessibility.

  • KT&G Reports Results and Presents Growth Plan

    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.”

  • Korea: Vape Firms Evading Taxes

    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.

  • Microalgae to Reduce Emissions at PM Korea

    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.

  • Tobacco Age Unaffected by Counting Change

    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.

  • Korea to Crack Down on E-liquid Tax Evaders

    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. 

  • KT&G to Release New HnB Products in Korea 

    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.