South Korea - Tobacco Reporter

Song Young-jae to Lead BAT Korea

British American Tobacco has appointed Song Young-jae as its new country manager in Korea, reports The Korea Herald.

A marketing and finance expert, Song will be tasked with promoting BAT’s combustible products.

“Song is an expert in the global tobacco industry and the right person to spearhead the company’s future innovation,” a company official was quoted as saying.

A graduate from the London School of Economics and Political Science, Song started his career at the BAT headquarters in London in 2008. In 2010, Song moved to BAT’s Netherlands office, where he nurtured his specialty in marketing and finance.

Following a first stint at BAT’s Korean unit between 2014 and 2020, Song was appointed general director of the BAT-Vinataba joint venture in Vietnam.

“I feel heavy responsibility taking the country manager post at BAT Rothmans amid the rapidly changing market environment,” Song said. “I will introduce innovative and sustainable business strategies so that BAT Rothmans can lead the market in the future and solidify its status in the global tobacco industry.”

February 2, 2024

Korean Sales Fall for First Time in Years

South Korean cigarette sales fell in 2023 for the first time in four years, reports Yonhap News Agency, citing data from the finance ministry. Electronic cigarette demand, however, grew.

Last year, South Koreans purchased 3.61 billion cigarette packs, down 0.6 percent from 2022, the first on-year decrease since 2019’s 0.7 percent fall.

Sales of duty-free cigarettes increased 60.7 percent in 2023 in line with an increase in post-pandemic tourists.

Traditional cigarette sales fell 2.8 percent, but heat-not-burn electronic cigarettes increased 12.6 percent.

Last year, electronic cigarettes accounted for 16.9 percent of total sales, an increase from 12.4 percent in 2021.

January 31, 2024

KT&G Starts CEO Search

KT&G Corp. has started the process for appointing its next CEO.

To secure a wide array of qualified candidates, the external CEO candidate pool will be drawn from a combination of open recruitment and search firm recommendations. The internal CEO candidate pool will include individuals who have participated in KT&G’s senior management training program, as well as the incumbent CEO, Beak Bok-in. The governance committee will impartially assess both the external and internal pools to establish the longlist for CEO candidates.

Then, the governance committee will institute an advisory panel comprised of external experts to bring an objective perspective into the process of selecting the shortlist for CEO candidates, thereby enhancing the impartiality of the process. KT&G plans to proactively identify and nurture both external and internal CEO candidates moving forward, under the guidance of the governance committee.

The eligibility criteria for candidates participating in the open recruitment for the CEO position include individuals with experience in the tobacco or consumer goods industry (manufacturing or distribution business) as a representative director, or in the profit/loss management of a business unit equivalent to a company’s representative director.

KT&G lists the following skill requirements:

in-depth understanding of the tobacco or consumer goods industry and management expertise, capability in driving new business initiatives and global expertise;
business intuition and strategic thinking skills responsive to environmental changes;
ability to communicate with and manage stakeholders;
universal morality and ethical awareness required of a CEO

Candidate application for the open recruitment will be accepted through registered mail or e-mail by Jan. 10, 2024. Details regarding the application will be available on the KT&G website from Dec. 28, 2023.

According to KT&G, the CEO appointment process will be conducted over approximately three months in a fair and transparent manner. The governance committee will finalize the shortlist for CEO candidates in late January by incorporating the impartial and objective opinions of the advisory panel composed of external experts, and recommend to the CEO candidate recommendation committee.

After conducting a systematic and in-depth review of the shortlisted candidates, the CEO candidate recommendation committee will name the final CEO candidate and report to the board of directors in late February. The board of directors will then resolve the agenda for the annual general meeting of shareholders, and the CEO will be appointed following the approval at the annual general meeting of shareholders in late March.

“We have been committed to improving our CEO appointment process, especially focusing on strengthening the transparency, impartiality and objectivity of the process,” said Lim Min-kyu, chairman of the KT&G board of directors.

“Moving forward, we plan to conduct a comprehensive candidate selection process, taking into account the assessment and perspectives of the advisory panel comprised of external experts.”

Earlier this month, KT&G shareholder Flashlight Capital Partners urged the tobacco company to select its next CEO in a more transparent manner, after expressing disappointment with the current CEO’s performance and identifying several shortcomings in the previous selection procedure.

In a press note announcing the new CEO search, KT&G stressed that its governance committee is composed exclusively of outside directors. The Dec. 28 board of directors meeting, it added, was attended only by outside directors, “reinforcing the company’s commitment to ensuring independent decisionmaking of the board.”

December 28, 2023

KT&G Recognized for Carbon Neutrality

KT&G’s Yeongju factory has been recognized by South Korea’s Ministry of Trade, Industry and Energy for its commitment to achieving carbon neutrality.

Since 2020, the Yeongju plant has actively engaged in reducing greenhouse gases through continuous investment in equipment and improvements in manufacturing processes, successfully cutting down 437 tons of oil equivalent over three years. Moreover, the plant participates in the energy saving technology information exchange program, contributing to greenhouse gas reduction policies and leading carbon reduction activities through ongoing education and promotional efforts.

In 2021, the Yeongju plant acquired ISO 50001 (energy management system) certification. Last year, the plant was selected as an exemplary site under the Korea Energy Agency’s voluntary energy efficiency goal program.

“KT&G aims to go beyond mere numerical improvements, linking our value chain to tackle climate change and lead in reducing greenhouse gases,” KT&G wrote in a statement. “We will continue to generate tangible ESG results and engage in diverse activities connected to sustainability.”

November 21, 2023

BAT Designer Urges Responsible Creations

Product designs should not center only on providing attractive appearance but also encompass meaning, value and responsibility, according to Ken Kim, head of design at the BAT Group.

“The role of designers is changing, from simply designing products to assuming social and environmental responsibilities,” Kim said at the Design Korea conference, which took place Nov. 1-5, 2023, in Seoul. “This [new role] is not a choice for individual designers to make, but a common goal the industry and society must undertake together in order to move forward.”

Kim is the first Korean to head BAT’s product design division. His portfolio includes tobacco heating products such as Vuse Epod 2, Glo Pro Slim and Glo Hyper X2.

During the conference, which was reported in The Korea Herald, Kim reviewed measures on how designs could address social issues such as carbon neutrality amid heightened regulations, emphasizing that designs could function as an important key to the tobacco industry’s sustainable future.

He stressed the importance of designing products in ways that do not appeal to underage consumers. “We need a balanced design strategy that does not stimulate the curiosity of minors, through conducting analysis of design preferences by age groups,” he was quoted as saying.

November 6, 2023

KT&G Boosts NGP Capacity

KT&G has expanded its Sin Tanjin next-generation product (NGP) factory.

During a ceremony attended by CEO Baek Bok-in and over 40 employees, the company pledged to grow its NGP segment into a leading business.

KT&G has installed three additional electronic cigarette stick production lines this year, bringing the total number to eight. It also established an automated warehouse capable of storing up to 360,000 boxes.

KT&G plans to further expand its production innovation hubs, focusing on domestic manufacturing facilities such as Sin Tanjin and Gwangju, to ensure a smooth response to the rapidly growing demand for its NGP products.

The expansion of the Sin Tanjin NGP factory is part of KT&G’s investment plan, which was presented during the company’s “Future Vision Proclamation” event in January.

During that event, KT&G announced its strategy would focus on e-cigarettes, heated tobacco and the international expansion of its combustible cigarette business. The company intends to increase the revenue share of its noncombustible products to more than 60 percent by 2027 through investments and innovation.

The Sin Tanjin NGP factory will play a role as a growth engine that enhances the essential competitiveness of the NGP business, which is strengthening its market leadership.

Baek Bok-in , CEO, KT&G

In September, KT&G announced the construction of a new factory in Indonesia, which will be manufacturing for exports. In October, it broke ground for a new factory in Kazakhstan, establishing a foothold in Eurasia.

“The Sin Tanjin NGP factory will play a role as a growth engine that enhances the essential competitiveness of the NGP business, which is strengthening its market leadership,” said Baek in a statement.

“In the future, we will lead the growth of the NGP business based on innovative technology and advanced global partnerships and will leap to the ‘global top-tier’ through domestic innovative growth investments, including expanding production infrastructure.”

November 6, 2023

KT&G Celebrates Korea-Indonesia Ties

KT&G celebrated the 50th anniversary of South Korea-Indonesia diplomatic relations by organizing various global CSR activities, including support for university student startups, cultural festivals and improvements in the education environment.

On Sept. 28, KT&G selected the finalists in a competition for business ideas at UNTAR University’s Imagination Entrepreneurship School in Jakarta, Indonesia. A day earlier, the South Korean cigarette maker hosted a similar event at the State University of Jakarta.

Meanwhile, the KT&G Welfare Foundation finished renovating an elementary school in the Bogor region, transforming an old building into a new educational facility with an earthquake-resistant construction.

In 2014, KT&G established the KT&G Korean Language Institute in Indonesia, providing approximately 2,800 people with opportunities to learn Korean. In addition, the company operates Imagination University, which supports the development of the capacity and cultural experiences of Indonesian youth. In 2021, it established the KT&G Vocational Training Center at Malang’s UKCW University, teaching marginalized youth sewing, computer technology and other skills.

“We are taking the lead in promoting communication between the two countries through cultural exchanges in celebration of the 50th anniversary of Korea-Indonesia diplomatic relations,” said a KT&G representative. “We will continue to make efforts to spread Korean culture and enhance exchanges through various platforms.”

Indonesia is an important market for KT&G, which aims to earn half of its sales from overseas business by 2027. The company operates a tobacco factory in Indonesia and recently announced the construction of a second manufacturing facility.

October 31, 2023

South Korea: Smoking Down After Covid

The smoking rate in South Korea decline in the wake of the Covid-19 pandemic, reports The Korea Bizwire, citing figures from the Community Health Survey.

On Oct. 26, the Korea Disease Control and Prevention Agency (KDCA) released the results of an analysis of changes in the Community Health Survey conducted before and after the pandemic.

The smoking rate among adults decreased by 1.8 percentage points, dropping from 21.2 percent before the pandemic to 19.4 percent after. The smoking rate for men also saw a decrease of 3.8 percentage points, going from 39.6 percent to 35.8 percent during the same period.

The KDCA utilized the average figures for the 2017 to 2019 period as the pre-COVID index and the data from 2020 to 2022 as the post-Covid index.

October 30, 2023

Korea to Require Ingredient Disclosure

South Korea’s National Assembly approved the Law on the Control of Harmful Effects of Tobacco during its full session on Oct. 6, according to The Korea Bizwire. The law mandates the disclosure of the types and amounts of harmful ingredients used in cigarettes.

The law will take effect two years after it is officially announced. It is expected to be put into practice by October 2025.

Following implementation of the law, cigarette makers, importers and distributors will have to regularly test harmful ingredients in their products every two years and disclose the results and information on ingredients in the cigarettes with the Ministry of Food and Drug Safety.

Data about the dangerous ingredients will be made available to the public online. The Tobacco Harmfulness Control Committee will decide which specific harmful components will be disclosed.

E-cigarettes, including liquid and cigarette varieties, are also included in the law.

Previously, South Korea disclosed tar and nicotine levels in cigarettes but did not examine or reveal content of carcinogenic substances, including naphthylamine, nickel, benzene, vinyl chloride, arsenic and cadmium.

October 9, 2023

BAT Plants Flowers to Address Litter

BAT Rothmans, the Korean unit of BAT, has started a flower planting campaign called “Kkot BAT” to help prevent litter and cigarette butts in alleys.

“Kkot” translates to “flower” and “BAT” translates to “plot;” the campaign is placing flowerpots or flowerbeds in neighborhoods suffering from litter and illegal waste disposal.

BAT Rothmans has secured partnerships with nongovernmental organizations with close relationships to local communities.

“Our Kkot BAT campaign is a meaningful campaign in which companies join hands with the local community for environmental solutions,” said Kim Eun-ji, the country manager of BAT Rothmans. “We will continue to give positive influence on neighborhoods with environmental, social and corporate governance efforts.”

BAT Rothmans signed a memorandum of understanding with the Korean National Council for Conservation of Nature Seoul branch in June and planted its first flower garden in Jung-gu, Seoul, near BAT Rothmans’ headquarters.

Following its first campaign, BAT Rothmans will plant about 20 flower gardens all over Seoul, with plans to expand its influence to Gwanak-gu, Dobong-gu and Nowon-gu by the end of the year.

September 20, 2023

Tag: South Korea