KT&G is expanding its business in Iran as the Islamic country is requesting more investment from Korea’s largest tobacco firm, company officials said Wednesday.

The Iranian market is drawing attention from global companies as international sanctions against its nuclear programs were lifted last month.

“Our Esse and Pine products are gaining a lot of popularity and our high pricing policy is boosting profitability,” said Bang Kyung-man, who heads global marketing in KT&G.


Company officials said it plans to increase investments in Africa and South America, using its success in the Middle East, including Iran, as a stepping stone.

Company officials said Esse and Pine products were selling well in Iran, adding that KT&G, like Samsung Electronics and LG Electronics, have a high brand awareness there. 

What made KT&G successful in Iran, where global tobacco-makers have experienced difficulties due to security issues?

First, the company pushed for bold marketing in Iran, whereas other multinational companies had been reluctant to invest in the country, according to KT&G officials.

“At the initial stage, KT&G aggressively sought to acquire market share in the Iranian market with a can-do spirit and high technology,” a company spokesperson said.

“In addition, we pioneered a new market in Iran, a country long dominated by high-tar cigarettes, by focusing on sales of low-tar and super slim Esse,” the official added.

KT&G only logged $1.1 million in sales of Esse in Iran in 2011, the first year of exports of the compact-type cigarette to the Islamic nation. But in 2015, exports surged to $24.7 million.

Another reason behind the success was the formation of pro-Korean sentiment among Iranian consumers due to the Korean wave, or hallyu, according to company officials.

They said Iran has maintained a favorable attitude toward Korea after its dramas “Jewel in the Palace” and “Jumong” gained high popularity there a few years ago. Furthermore, anti-American sentiment among Iranians helped increase sales of KT&G’s products, they said.

KT&G advanced into the Iranian market in 2007 when it concluded a contract with Iran’s state-owned tobacco maker ITC to jointly produce cigarettes. A year after, the Korean company established its branch KT&G Pars in Iran. Then, the company set up a factory in Tehran to churn out Esse and Pine. It is the only Korean firm with an overseas branch in Iran.

KT&G has also experienced some difficulties in its business in Iran. It was hit hard by severe fluctuations of the Iranian currency exchange rate in 2013, prompting the Korean company to suffer a deficit for the first time.

But now, KT&G boasts a 10 percent market share in Iran, closely following global rivals Japan Tobacco and British American Tobacco. (joowonc@heraldcorp.com)