Tag: South Korea

South Korea to Mandate New Health Warnings

Image: Tobacco Reporter archive
Cigarette manufacturers will have to start printing new graphic health warnings in late December, reports The Korea Herald, citing new regulations announced by the Ministry of Health and Welfare.
The ministry plans to distribute the updated manual for labeling health warnings on cigarette packaging today, as a follow-up to the government’s tobacco industry regulation revision passed in June.
New graphic health warnings specified in the document include a warning about second-hand smoking showing a rendered image of a newborn child sucking on a baby bottle stuffed with cigarette butts.
The new rules, which come into effect Dec. 23, impact vapor products, too. E-cigarettes manufacturers will be required to cover more than 50 percent of each pack with health warnings, officials said.
August 29, 2022
Illicit Trade Surges in South Africa

Photo: Tobacco Reporter archive
A new study by Ipsos shows that illegal cigarette trade has surged in the past year in South Africa.
Illicit trade exploded during a five-month ban on tobacco sales that was implemented to prevent the spread of Covid-19 during 2020. While the ban was lifted in August 2020, illicit trade continues to be significantly higher than it was before the measure.
The Ipsos study showed: four out of five stores in the Western Cape (80 percent) now sell cigarettes below the minimum collectible tax (MCT) rate of ZAR22.79 per pack, as do almost 70 percent of outlets in Gauteng, a significant increase compared to previous research; the number of garage forecourts across the country selling illicit cigarettes has quadrupled in the last year—despite the 2020 sales ban having been lifted; a single pack of 20 cigarettes is now on sale for as little as ZAR7 in many retail outlets nationwide.

The latest Ipsos study provides compelling evidence that criminals continue to dominate South Africa’s tobacco trade.
Johnny Moloto, general manager, BAT South Africa
“This is less than a third of the MCT and down even further from ZAR8, which was the lowest price found in the October 2021 study; and products bearing trademarks licensed to or owned by Zimbabwe-based Gold Leaf Tobacco Corporation and CarniLinx, a member of South Africa’s Fair-Trade Independent Tobacco Association, continue to win this illegal price war,” BAT South Africa (BATSA) wrote in a statement.
“The latest Ipsos study provides compelling evidence that criminals continue to dominate South Africa’s tobacco trade,” said BATSA General Manager Johnny Moloto. “These criminals are hiding in plain sight, robbing the fiscus of vital revenue when it is needed most. They are destroying legitimate businesses and jobs while national unemployment rates hit record highs.”
Tobacco Reporter covered South Africa’s struggle with illicit trade in-depth in its March 2022 issue (see “Damage Done“).
April 6, 2022
South Korea Smoking Rate Hits All-Time Low

Photo: Dzmitry
The smoking rate of South Koreans aged 19 and up fell below 20 percent for the first time in 2020, reports the Yonhap News Agency, citing a new Statistics Korea study.
The smoking rate of Korean adults declined to a record low of 19.2 percent in 2020, down 1 percentage point from 20.2 percent a year earlier.
The smoking rate fell 7.7 percentage points from 26.9 percent in 2010.
The results cover those who have consumed more than five packs of cigarettes over their lifetime and are currently smoking.
In 2020, the smoking rate among Korean men aged 19 and older reached a record low of 33 percent, down from 34.7 percent a year earlier.
The corresponding rate for Korean women aged 19 and older came to 5.5 percent, down from 5.9 percent in 2019.
Experts attributed the decline in smoking to growing public awareness of health and the government’s anti-smoking drive.
In January 2015, the government raised the price of cigarettes by 80 percent to KRW4,500 ($3.70) per pack from KRW2,500.
March 24, 2022
22nd Century to Launch VLN in South Korea

Photo: 22nd Century Group
South Korea will be the first international market to commence sales of 22nd Century’s VLN reduced nicotine content cigarettes, the company announced in a press release.
“South Korea is an ideal international launch market in many ways, with a high smoking rate among developed countries and a government strongly committed to smoking harm reduction. We expect the first sale of VLN reduced nicotine content cigarettes to our South Korean partner to occur by the end of March,” said 22nd Centur4y’s CEO, James A. Mish.
“Approximately one in three adult men in South Korea are smokers, and an estimated 6 percent of adult women smoke. The government has worked over the past two decades to promote smoking cessation through a variety of means, including heightened tobacco prices, and remains committed to advancing alternative products to help curb smoking activity in the country. We are excited to make VLN reduced nicotine content products available in South Korea to help break the nicotine addiction cycle and support this important effort.”
The company will continue its launch process in additional markets in Asia and Europe with limited regulatory barriers while also leveraging VLN’s modified-risk tobacco product (MRTP) authorization in the United States toward seeking approval in additional markets with higher regulatory barriers.
In addition to its first international launch of VLN reduced nicotine content cigarettes in the more than $800 billion global tobacco market, 22nd Century Group is actively moving forward to launch VLN in the $80 billion U.S. market.
The U.S. FDA authorized 22nd Century’s VLN reduced nicotine content cigarette products on Dec. 23, 2021. The company is currently executing its 90-day post-authorization plan to launch in its first U.S. pilot market.
February 28, 2022
Korea: E-Cigs Gain as Combustibles Stagnate

Photo: Dzmitry
Sales of cigarettes in South Korea were flat from 2020 to 2021 but demand for electronic cigarettes rose amid the protracted pandemic, reports the Yonhap News Agency, citing data from the finance ministry.
South Korean smokers purchased 3.59 billion 20-cigarette packs in 2021, similar to the number logged the previous year, according to the Ministry of Economy and Finance.
Sales of traditional cigarettes fell 2 percent on-year to 3.15 billion packs last year while those of heat-not-burn tobacco products rose 17.1 percent to 440 million packs.
Compared with 2014, however, cigarette sales declined 17.7 percent last year—a development the government attributed to rising prices and anti-smoking campaigns.
In January 2015, South Korea increased cigarette prices by 80 percent to KRW4,500 ($3.72). The next year, the government required tobacco companies to print graphic images depicting the harmful effects of smoking on the upper part of cigarette packs.
As of 2020, the smoking rate among Korean men aged 19 or older dropped to a record low of 34 percent, down 1.7 percentage points from a year earlier, according to the health ministry.
January 31, 2022
KT&G Strengthens Grip on Korean ENDS Market

Photo: KT&G
KT&G’s share of the South Korean market for electronic nicotine delivery systems (ENDS) rose to a record 40.7 percent by the end of September, reports The Pulse News.
The company’s performance is driven by the success of new tobacco sticks, such as Fiit and Miix, which are compatible with its heat-not-burn cigarette brand Lil.
Cumulative sales of Lil devices surpassed 4 million units this year, compared with 3.22 million in 2020.
The company’s key growth driver has been Lil Hybrid 2.0, which combines KT&G`s proprietary technology using cartridge and stick.
KT&G is also strengthening the lineup of dedicated sticks for its devices. The lineup of Fiit and Miix sticks almost doubled from 11 types in 2019 to 20 today.
The Lil brand has been well received internationally, as well. In a global partnership with Philip Morris International, the KT&G product is now sold in 10 countries, including Russia, Ukraine and Japan.
December 2, 2021
Sales of Flavored Tobacco Products Spike in Korea

Photo: Borgwaldt Flavor
Sales of flavored tobacco products have increased significantly in South Korea, reports The Korea Bizwire, citing data from the Ministry of Economy and Finance.
While overall domestic sales of tobacco products declined to 3.59 billion packs last year from 4.4 billion packs in 2011, sales of flavored tobacco products more than quintupled from 260 million packs to 1.38 billion packs during the same period.
Accordingly, the share of flavored tobacco products among overall tobacco sales has risen to 40.3 percent in June 2021 from 38.5 percent last year and 5.8 percent in 2011.
Among flavored tobacco products, sales of capsule-type cigarettes shot up to 1.09 billion packs last year, more than 15 times higher than the 70 million packs sold in 2011, with their share among overall tobacco sales rising to 32.4 percent in June 2021 from 1.7 percent in 2011.
Sales of e-cigarettes also jumped from 80 million packs in 2017 to 380 million packs last year, with sales of flavored e-cigarettes surging from 50 million packs to 310 million packs.
October 7, 2021
KT&G Helps Alleviate Farm Labor Shortage

Photo: KT&G
KT&G deployed employee volunteers to help leaf tobacco farmers who are struggling due to a shortage of workers in Asan City, South Chungcheong Province.
South Korea’s leaf tobacco is harvested in midsummer, from July to August. It is difficult to mechanize, and most of the harvest is performed manually, requiring a lot of labor. Korean farms have been experiencing difficulties in securing a sufficient workforce due to the ongoing Covid-19 pandemic and the decline of the rural population.
In response, KT&G has been deploying employee volunteers to leaf tobacco farms every year since 2007. This year, employees of the Raw Materials HQ and Gimcheon Plant visited a leaf tobacco farm in Dunpo-myeon, Asan City, and helped harvest about 5,700 kg of leaf tobacco from 16,000 square meters of cultivated land.
KT&G provides help not only in leaf tobacco harvesting in the summer but also in transplantation in the spring.
The company has also continued to provide economic support for the promotion of the welfare of leaf tobacco farmers. In May, the company donated KRW400 million to support health checks for farmers and to provide scholarships for the children of farmers. From 2013 to the present, the accumulated amount of support amounted to KRW2.85 billion, benefiting 7,957 farmers to date.
“I hope that this employee harvesting service has been of some help to farmers who are struggling due to the Covid-19 pandemic and heat waves,” a KT&G official said in a statement. “We will continue to provide practical support to improve the quality of life of farmers, and we will strive to continue to grow together with them.”
August 26, 2021
Back to the Future

Korean smokers have embraced heat-not-burn products not only because of their potentially reduced risk to health, but also because they create less odor than conventional cigarettes. (Photo: KT&G)
KT&G continues to invest in its heat-not-burn segment while retaining its domestic lead in traditional cigarettes.
By George Gay
According to how most of us perceive time, the past, present and future stand separate but in a linear, “progressive” relationship in which past events affect what happens in the present, which in turn impacts the future. It is counterintuitive, but not impossible, however, for a tide of cause and effect to move in the other direction. For instance, we sometimes, though not often enough given the climate emergency, tailor our actions during the present to prepare us for what we think will be happening in the future. It is even possible for the present to influence the past, though, as far as I am aware, this normally involves only interpretations of past events that might be given new perspectives by current thinking.
However, if you’re willing to use a little imagination, it is possible to identify in respect of the tobacco and nicotine sector a recent instance of the present’s affecting the past. As most readers of this magazine will know, people in South Korea took quickly to heat-not-burn (HnB) products, almost certainly because, in part, the consumer base was generally tech-savvy and eager to move from traditional, combustible cigarettes to what were perceived to be less risky products. But another reason why these new products were quickly embraced was that people apparently liked the fact that consuming HnB sticks created less smell than did smoking combustible cigarettes. That this was deemed important was made clear in a July 2019 report in The Korea Herald in which Japan Tobacco International Korea was said to have announced the upcoming release of its “odor-reduced” tobacco vapor product Ploom Tech.

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The reaction to the demonstration of this consumer preference was interesting and far reaching. For instance, KT&G established a “Smell Care Center” in 2019 to develop technology that could reduce the smell of tobacco smoke on the breath, hands and clothes of smokers. And the upshot of such developments was that manufacturers started to launch on South Korea’s market combustible cigarettes that, like those available in Japan for many years, created less smell than did traditional cigarettes. KT&G alone has seven what it calls “smell-down” cigarettes on the market.
So here was a case of the present, in the form of new-generation products, affecting products many people would have said had been consigned to the past. Whether this is progress or regression I shall leave for readers to decide, along with the questions it raises about how consumers view risks and weigh them against perceived benefits. But what is not in question is that the popularity of these newly reinvigorated combustible cigarettes put a dent in the advance of HnB products.
HnB devices were first introduced to South Korea’s market with the launch of Philip Morris International’s IQOS in June 2017, from which time the HnB sector quickly expanded during the next two years as British American Tobacco and KT&G launched their own HnB devices, Glo and Lil, respectively, and many smokers switched fully to HnB products or became dual users of combustible cigarettes and HnB products.
But this rapid expansion of the HnB sector was slowed by the success of the reduced-smell combustible cigarettes and by the introduction of government taxation and other policies that led to the prices of HnB sticks and combustible cigarettes, and the regulations governing them, being almost aligned. And, ironically, it was only with the arrival last year of the Covid-19 pandemic that the HnB sector started to recover from this setback, a recovery that was possibly caused in part by people spending more time indoors. In any case, at the beginning of this year, the HnB sector had increased during the previous few months by about three or four percentage points to take it to where it was accounting for about 15 percent of the overall tobacco and nicotine market.
You can look at this 15 percent figure from a glass half-full or half-empty perspective, but manufacturers seem to be plumping for the former. While acknowledging that 15 percent is a reasonably small share of the overall market, KT&G, for instance, perceives it as pointing to a huge opportunity, and an opportunity that will be realized in part because of a growing focus on tobacco control worldwide. Consequently, manufacturers are putting major efforts into supporting the HnB sector as is evidenced by KT&G, which, since 2017, has launched seven different Lil device variants and 19 different Fiit and Miix consumables, which are the tobacco sticks used with its HnB devices.

“This year, KT&G will strive to secure a leadership position in the market and seize opportunities in the rapidly changing world economic order.”
Bok-In Baek, CEO, KT&G
New Nostalgia
KT&G is aware that while the HnB sector is a hugely important and increasing part of South Korea’s tobacco and nicotine product market, it is vital that the company maintains its leadership position in the combustible cigarette sector given that sector’s dominant market position. South Korea’s combustible cigarette market last year stood at 65 billion pieces, of which KT&G accounted for 41.6 billion pieces or 64 percent. By comparison, the company accounts for 38.4 percent of the HnB stick sector, up from 31.7 percent in 2019 and 34.3 percent in 2020.
Maintaining a dominant position on South Korea’s combustible cigarette market will not be easy because, since the market will not grow, competition will be fierce. Additionally, the challenges will come not only from other manufacturers. The market, as elsewhere, is beset by increases in regulations and taxation. Six different imposts are levied on combustible cigarettes, and they account for 73.7 percent of the retail price. Although, having said that, the retail price of a pack of 20 combustible cigarettes is generally—with few exceptions—KRW4,500 ($3.99), which KT&G describes as being “affordable for anyone.” In addition, the tax levied on HnB sticks, at 66.8 percent, amounts to much the same as that on combustibles, and, while for the time being imposts on e-cigarettes are not as high as those on combustible cigarettes or HnB sticks, the government apparently intends to increase them.

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Meanwhile, there has been another trend on South Korea’s tobacco market, this one demonstrating the more usual direction of travel whereby the past influences the present. “Newtro,” apparently a term combining the words “new” and “retro,” is a trend in which younger generation people are attracted to earlier styles, mostly from the 1980s, and older generation people are nostalgic for such styles. This trend led last year and this year to companies operating across South Korea’s food and beverage market to relaunch, with much success, products from the past. And, in March, KT&G took advantage of this Newtro trend to relaunch, under the banner “88 Returns,” its 88-cigarette brand, which was introduced as a celebration of South Korea hosting the 1988 Olympic Games.
As I remember things, 88 was something of a product pointing to the future—a relatively low-tar, low-nicotine (LTLN) cigarette, or at least a brand with a LTLN variant. Through the 1970s and 1980s, cigarettes with relatively high levels of tar and nicotine were popular in South Korea, and it wasn’t until the next two decades that LTLN cigarettes gained popularity. The fall in tar levels during the 1990s and 2000s can probably be attributed to the impressive economic and societal improvements that took place during this period and that brought with them an increase in consumer awareness of tobacco-related health concerns. At that time, of course, it was not unusual for such concerns to be “addressed” by consumers moving from cigarettes with high tar and nicotine deliveries to LTLN cigarettes, and, in the late 1980s, cigarettes with tar deliveries under 10 mg per cigarette started to appear. Since then, tar and nicotine levels have been reduced further, and KT&G took a lead in this market trend by launching LTLN cigarettes, such as ESSE in the 1990s and The One in the 2000s. There are variants of ESSE and The One that deliver tar levels as low as 0.1 mg per cigarette.
The LTLN market is expanding, not only in South Korea but also in many other countries, and, as a result, the total sales volume of ESSE, taking in both domestic and overseas markets, currently stands at more than 700 billion pieces. According to Euromonitor International, worldwide, ESSE, a super-slim LTLN cigarette, has been the best-selling super-slim cigarette brand for five consecutive years.

Catering to nostalgic smokers, KT&G recently launched “88 Returns,” a revamp of its 88 cigarette brand, which was introduced as a celebration of South Korea hosting the 1988 Olympic Games.
Determined to Recover
The Covid-19 pandemic, which had its roots in the recent past, is with us in the present and will be with us in the future, has had a negative impact on South Korea’s tobacco and nicotine industry, especially considering the lockdowns that have occurred domestically and around the world, because of such factors as the downturn in the duty-free sector. In March, addressing KT&G’s 34th annual shareholders’ meeting, CEO Bok-In Baek said that in the face of the heightened uncertainties created by the pandemic, KT&G was using “resilience” as the keyword for 2021’s business management goal—a resilience that reflected the company’s determination not only to recover from the negative impacts of Covid-19 but also to leap forward. “This year, KT&G will strive to secure a leadership position in the market and seize opportunities in the rapidly changing world economic order,” he said.
KT&G’s mid-term to long-term plan is to focus further on and increase the portion of “direct business management” by establishing more local subsidiaries and manufacturing plants in overseas markets. KT&G established its fifth local subsidiary in Taiwan this March, the other four being those in Turkey (established 2008), Russia (2009), the U.S. (2010) and Indonesia (2011). The plan also includes increasing investments in the already existing local subsidiaries, especially in KT&G Indonesia. Indonesia is the world’s second-largest cigarette market, and KT&G, which is the sixth-largest manufacturer in Indonesia by market share, is striving to increase its presence with plans for launching 10 new cigarettes in 2021 while also increasing its kretek product line, which currently included 30 products.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.

July 1, 2021
KT&G Recognized for Innovation

Chi-Bum Oh, senior managing director at KT&G Corp (left) accepts the Prime Minister’s Commendation on May 31. (Photo: KT&G)
KT&G was awarded the Prime Minister’s Commendation on May 31 in recognition of its contribution to the development of national industry at the 56th Invention Day commemoration ceremony.
Hosted by the Korean Intellectual Property Office and organized by the Korea Invention Promotion Association, the event rewards individuals and organizations that have contributed to the promotion of inventions in South Korea.
This year, KT&G was recognized for its contribution to protecting national industrial technology and for the development of the intellectual property system through its unique technology development and job invention promotion policy.
KT&G CEO Baek Bok In, who took office in 2015, has emphasized the importance of technology in the tobacco industry and focused on securing intellectual property. In 2016, KT&G established a special division for intellectual property. It has also expanded its employee proprietary information and inventions agreement for researchers to encourage patent applications.
In 2018, KT&G built its own computer system to effectively manage the company’s intellectual property rights. As a result of these and other actions, KT&G’s patent applications rose from 43 in 2016 to 1,203 in 2020.
“Last year, our researcher received the Prime Minister’s Commendation at the 55th Invention Day ceremony, but not stopping there, KT&G’s technological capabilities were recognized once again this year,” said Chi-Bum Oh, senior managing director at KT&G, in a statement. “In the future, we will focus on technological innovation and the management of intellectual property rights to enhance corporate value.”

June 2, 2021