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KT&G aims big for overseas expansion

Feb. 5, 2023 - 16:36 By Lee Yoon-seo
KT&G logo (Herald DB)

KT&G, South Korea's dominant tobacco company, is making aggressive inroads into overseas markets in a bid to increase its sales and market share abroad, according to the company on Sunday.

Aiming to foray into foreign markets, the company recently signed its first long-term sales and purchase agreement with global tobacco maker Philip Morris International.

Under the 15-year agreement that lasts until January 2038, KT&G will be providing PMI with its heat-not-burn "lil" brand products, while PMI utilizes its distribution network across the globe to sell them.

Led by the lil brand, KT&G estimates its annual e-cigarette sales to see an annual 20 percent growth over the next 15 years. Stick sales alone will grow at annual pace of 24 percent, the company added.

KT&G said it will also make aggressive capital expenditures, which refers to money invested by a company to acquire or upgrade assets, in the global e-cigarette market.

The company previously worked with global consulting firm Boston Consulting Group to prepare 3.9 trillion won ($3.12 billion) in investment for the company's future growth. According to the company, of the 3.9 trillion won, 1.2 trillion won will be used to increase global demand, secure overseas production bases and develop global innovation platforms for KT&G's Next Generation Products, which refer to its heat-not-burn products.

Meanwhile, KT&G will be disclosing the sales of its electronic cigarettes, including global performance, on Thursday. It had not been disclosing its performance overseas under the agreement it made with PMI three years ago, for reasons unknown.

"We were able to secure stable basis for our overseas business and upgrade our global competitiveness by advancing our strategic partnership with PMI," said an official from KT&G.

"We will increase our global competitiveness in order to become a top-tier NGP company and lead the next-generation cigarette market."