Tobacco maker adds footholds in Bahrain, Kyrgyzstan, Istanbul as overseas sales grow
KT&G is gaining new shelf space across global airport duty-free retail, from Kyrgyzstan to Bahrain to Istanbul, drawing on a 25-year run at Incheon Airport, where it has ranked among the top-selling brands.
The push comes as global duty-free retail swells and KT&G turns its buyer network from trade shows into new markets.
Incheon's top duty-free seller
The South Korean tobacco maker has sold cigarettes at Incheon's duty-free shops since the day the airport opened in March 2001, and now sells about 100 products there, ranking among the airport's top-selling brands.
For three straight years, from 2015 through 2017, KT&G topped duty-free sales by brand. In 2017, its sales reached 159 billion won ($118 million), nearly double those of the second-place brand, Louis Vuitton, according to data from Incheon International Airport Corp.
KT&G's rise mirrors Incheon's. Foreign tourist arrivals to Korea reached 10.7 million in the first half of this year, up 21.3 percent from a year earlier, while duty-free sales climbed 11.2 percent from the second half of last year.
Global duty-free stage
That record now anchors KT&G's march into the world's duty-free hubs.
The company has cultivated ties with international buyers year after year at TFWA World Exhibition in Cannes, France, the world's largest duty-free and travel retail trade show, held this year from Sept. 27 to Oct. 1.
Those relationships have opened doors to new duty-free markets this year, at airports in Bahrain's Muharraq and Kyrgyzstan's Bishkek. The company credited its continued presence at the exhibition for the tangible results.
"Major global hub airports, including Incheon Airport, are important meeting points where consumers and brands from around the world converge," a KT&G official said.
More recently, KT&G set its sights on Istanbul Airport, a crossroads linking Europe, Asia and the Middle East that handles roughly 84 million passengers a year, and is among the world's six-busiest airports by international traffic. The company rolled out five products from Esse, its flagship cigarette brand, at the airport's duty-free shop in August.
Esse generated about 2 trillion won in total sales last year, with more than 1 trillion won coming from overseas.
Apart from TFWA, KT&G also turned up at duty-free and industry trade events in Singapore and Germany this year, extending its international touchpoints as airport retail grows in global prominence.
The global travel retail tobacco market is projected to grow to $13.47 billion by 2029 from $8.04 billion in 2024, according to the Business Research Company. Asia-Pacific led regional markets in 2024 with 42 percent of the total, while airports accounted for 60.7 percent of sales, the largest share by channel.
"We will continue engaging with the global duty-free industry, including through TFWA, and expand partnerships with overseas partners to strengthen our brand competitiveness in the global duty-free market," the KT&G official noted.
Overseas payoff
KT&G's overseas operations have climbed alongside that broader shift.
KT&G extended its run of double-digit profit growth to a fourth straight quarter. Second-quarter operating profit jumped 18.5 percent on-year to 414.5 billion won on revenue of 1.7 trillion won. Overseas revenue climbed 18.9 percent to 557.7 billion won.
Across its full tobacco segment, quarterly sales rose 11.7 percent to 1.22 trillion won, with operating profit up 18.8 percent to 382.5 billion won.
KT&G revised its full-year outlook upward, targeting 5-7 percent revenue growth and 10-13 percent operating profit growth, compared with previous guidance of 3-5 percent and 6-8 percent.
minmin@heraldcorp.com
