Tag: South Korea

KT&G Distributes Funds to its Tobacco Growers

Kim Sam-soo, chairman of the Leaf Tobacco Production Cooperative (left), and Shin Song-ho, head of KT&G’s raw materials division (right), at the delivery ceremony in Daejeon on May 25
(Photo: KT&G)
KT&G delivered KRW400 million ($358,338) in welfare-promotion funds to continue its co-prosperity program with domestic leaf tobacco farmers. The contribution will be used to cover medical examination costs for 960 elderly leaf tobacco farmers and to provide scholarships to 85 children from farming families.
According to KT&G, farmers are struggling to secure labor due to the continued decline in the rural population and the Covid-19 crisis. Leaf tobacco cultivation is labor intensive due to difficulties in mechanizing, and tobacco farmers are generally older than other farmers, requiring greater attention to healthcare.
KT&G has been providing welfare support to leaf tobacco farmers annually since 2013. Thus far this year, the company has donated KRW2.85 billion. Nearly 8,000 farmers have received medical checkup fees and scholarships for their children.
As part of its ESG management, KT&G has initiated various projects to help its farmers. KT&G says it is the only domestic tobacco company that purchases its farmers’ entire harvests to protect their livelihoods. In addition, each year, company employees volunteer to help farmers with leaf tobacco transplantation and harvest. Also, KT&G pays 30 percent of each farmer’s sales in cash up front.
“We are continuing the project to support farmers’ welfare to solve their difficulties and provide practical help,” said Shin Song-ho, head of KT&G’s raw materials division, in a statement. “I hope this support will help farmers improve their health and economic conditions. We will continue to give back to society.”
May 28, 2021
KT&G Volume Surges by Nearly One-Third

Photo: KT&G
KT&G’s sales surged 30.1 percent to 9.5 billion cigarettes in 2020, reports The Korea Times, citing recently released regulatory filings. In terms of value, the company’s sales rose 15.8 percent year-on-year to KRW193.7 billion ($171.68 million).
KT&G attributed the performance to its expansion into new markets as well as customized strategies for different regions.
Last year alone, KT&G launched its products in 23 new markets with the total number of export countries exceeding 100.
In South Korea, KT&G sales rose by 60 million cigarettes from the previous year. Boosted by product launches such as “88 Returns,” the company’s domestic market share rose 0.6 percent to 64.5 percent—a remarkable accomplishment at a time when the Korean cigarette market shrunk by 0.1 percent.
In the vapor segment, KT&G posted growth too. The company’s Lil tobacco-heating product accounted for more than a 60 percent market share at convenience stores in October.
Starting this year, the company intends to enter new markets. In the first quarter of 2020, KT&G signed a strategic partnership with PMI to cooperate in exporting Lil while introducing the product in Russia, Ukraine and Japan, where it gained positive feedback.
May 19, 2021
KT&G Helps Farmers Affected by Covid-19

Photo: KT&G
KT&G provided a leaf tobacco planting service in Jecheon, Chungcheongbuk-do, to help leaf tobacco farmers struggling due to manpower shortages in the aftermath of the Covid-19 pandemic.
Employees of KT&G’s Raw Materials Headquarters and Gimcheon Plant, who participated in the volunteer work, visited a leaf tobacco farm in Baegun-myeon, Jecheon-si, Chungcheongbuk-do, where they helped raise and plant seedlings in farmland of about 10,000 square meters.
“In addition to the declining population and aging population in rural areas, labor shortages have worsened due to the Covid-19 pandemic, and farmers are experiencing great difficulties,” said Shin Sang-ho, head of KT&G’s raw materials division, in a statement.
“KT&G has been working to alleviate the grievances of farmers by deploying leaf tobacco planting and harvesting volunteers every year and will continue to strive for win-win growth with farmers through various activities.”
In addition to the declining population and aging population in rural areas, labor shortages have worsened due to the Covid-19 pandemic.
Shin Sang-ho, head of KT&G’s raw materials division
KT&G is the only tobacco company operating in Korea to purchase domestic leaf tobacco and is making various efforts to protect farm households, such as prepaying 30 percent of the sales price of leaf tobacco for each farmer in cash. In addition, from 2013 to the present, the company has provided health checkups for farmers and scholarships for their children.
April 20, 2021
Philip Morris Korea Wins Trademark Fee Battle

Photo: Tobacco Reporter archive
Philip Morris Korea (PMK) has won a legal battle against South Korea’s tax authority over trademark usage fees, reports The Korea Herald, citing legal sources.
The Seoul Administrative Court on March 1 ruled in favor PMK, ordering Seoul Main Customs to cancel a KRW9.82 billion ($8.7 million) tax.
The ruling comes four years after the Korea Customs Service ordered the company to pay KRW3.4 billion in customs duties, KRW3.7 billion in value added tax and KRW2.6 billion in penalty tax over royalties paid to its headquarters.
PMK appealed the decision.
PMK has been producing tobacco products in Korea with raw materials exported from its headquarters since 2012. The tax authorities moved against the firm, believing the Korean unit had been paying royalties to use the company’s trade secrets.
According to Korea’s Customs Act, companies are subject to a levy when importers pay their business partners a low price and make the rest of the payment in royalties to evade taxation.
The March 1 ruling dismissed the argument by the tax authorities, saying that the royalties paid by PMK include trademark fees as well as tobacco leaves and business secrets and that the tax needs to be recalculated.
March 1, 2021
Record Tobacco Spending in South Korea

Photo: Tobacco Reporter archive
South Korean households spent a record KRW4.3 trillion ($3.96 billion) on liquor and cigarettes between July and September—6.2 percent more than in the same period the previous year, reports The Korea Herald, citing data from the country’s central bank.
The figure marks the highest quarterly figure since the central bank started keeping records in 1970.
The bump in spending follows stricter social distancing measures as coronavirus cases surged in South Korea.
Economic slumps have led to an increase in alcohol and tobacco spending in the past.
The first and second quarters of 1997 saw liquor and cigarettes spending increase by 20 percent and 18.6 percent, respectively, in the runup to the Asian financial crisis.
According to data from Statistics Korea, South Korean households spent an average of KRW43,000 on alcohol and tobacco during the same period, posting a 10.7 percent year-on-year increase.
January 6, 2021
New Graphic Health Warnings in Korea

Image: Ministry of Health and Welfare
South Korea will require cigarette manufacturers to print nine new graphic health warnings from Dec. 23, reports The Korea Herald.
The new warnings include images depicting lung cancer, oral cancer, heart disease and stroke. The current images of laryngeal cancer and sexual dysfunction will not be replaced as they are thought to be highly effective, officials said.
The changes are intended to boost effectiveness of the warning against smoking and tobacco use by replacing the existing warning pictures that had been used for too long, according to the Ministry of Health and Welfare.
Under the Enforcement Decree of the National Health Promotion Act, the warning images and messages on cigarette packs should change every two years. The current images had been displayed on the tobacco packs since Dec. 23, 2018.
Tobacco sales and smoking rate among adult males have steadily decreased since the installation of warning pictures and phrases on cigarette packs in 2016.
The ministry also plans to introduce standardized packaging in South Korea.
December 22, 2020
Healthcare Cost Recovery Suit Rejected

Photo: jessica45 | Pixabay
The Seoul Central District Court rejected South Korea’s National Health Insurance Service’s (NHIS) request to seek KRW53.7 billion ($48 million) from KT&G and local units of British American Tobacco and Philip Morris International for compensation to offset the NHIS’ treatment costs resulting from smoking-related diseases.
The NHIS announced that it intends to appeal the District Court’s ruling. The NHIS originally filed the lawsuit in 2014, which sought reimbursement for treatment of long-time smokers who suffered diseases such as lung cancer.
The court’s decision noted that the NHIS is not a direct victim and therefore has no right to seek damages from the cigarette makers. The court added that the NHIS failed to prove a direct connection between the patients’ diseases and their smoking and concluded that there was insufficient proof that the cigarette makers produced “flawed” products.
“The outcome is extremely shocking and deplorable,” said NHIS President Kim Yong-ik. “We want to have a legal confirmation about the clear damages caused by smoking, but it was not as easy as we had expected.”
November 20, 2020
South Korea to Double Liquid Taxes

Photo: Purilum
The government of South Korea will double taxes on e-liquids in 2021.
The “health promotion tax” on nicotine solutions will be raised from the current KRW525 ($0.45) to KRW1,050 a milliliter, according to a story in The Korea Herald.
Ministry of Health and Welfare officials said the revisions are intended to achieve a fairer taxation on varying types of tobacco products. Currently, the tax rate for e-cigarettes is only 43 percent of that for conventional cigarettes.
The ministry has also warned against the use of e-cigarettes or vaping products, citing global instances of lung injuries associated with their use.
September 23, 2020
KT&G Supports Downpour Victims

KT&G volunteers help restore tobacco farms in affected areas. (Photo: KT&G)
KT&G has donated KRW500 million ($420,000) to expedite the restoration process of areas affected by recent torrential rains. More than a week of downpours in South Korea has left at least 30 dead and 12 missing in landslides, floods and other incidents.
The donation was provided by Sangsang Fund, a voluntary charity system of KT&G employees. Sangsang Fund is a unique charity system where the voluntary contribution of employees is matched by KT&G every month.
“In the midst of the Covid-19 recession, the flood victims are in desperate need of help,” said KT&G President Baek Bok. “I hope that the hard work and care from the employees of KT&G would swiftly restore the damaged areas and help people return to their normal life.”
On August 6, KT&G volunteers started restoring tobacco farms in Bongyang-eup in Jecheon-si, Chungbuk. Twenty volunteers provided raw materials, cleaned flooded houses and assessed the damaged goods.
“We wanted to give a hand to the farmers who are suffering from the torrential rains,” said a KT&G official. “As a corporate citizen, KT&G would like to continue its philanthropy and to support the community.”
Previously, KT&G donated KRW500 million to those impacted economically by Covid-19
August 11, 2020
Cigarette Sales Up in South Korea

Photo: KT&G
Sales of cigarettes in South Korea rose 3.8 percent in the first half of 2020, according to data compiled by the Ministry of Economy and Finance.

South Korean smokers purchased 34.8 billion cigarettes from January until June, compared with 33.4 billion cigarettes in the same period last year.

Meanwhile, sales of heat-not-burn tobacco products fell 6.6 percent to 180 million units in the first half of 2020. Sales of e-cigarettes plunged 80.3 percent to 1.2 million pods during the period as the government strongly advised people against vaping.

The longer-term trend of tobacco sales remains firmly downward. Compared with the first half of 2014, cigarette sales declined 14.7 percent.

In January 2015, South Korea increased the price of cigarettes by 80 percent to KRW4,500 ($3.76). In 2016, it required tobacco companies to place graphic images depicting the harmful effects of smoking on cigarette packs.
August 4, 2020