Tobacco Asia

Volume 20, Number 3

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18 tobaccoasia / Issue 3, 2016 July / August By Nattira Medvedeva Korea Record-breaking overseas sales KT&G, Korea's leading and the world's fifth larg- est tobacco company, had a great start to 2016, re- porting US$293.40 million in overseas sales in Q1, its highest quarterly achievement since KT&G first started exporting in 1988. This figure was a 38% increase from 2015. Contributing to this achievement was a 30% hike in sales in key regions that include the Middle East, Central Asia, and Russia. New markets such as the Americas, Southeast Asia, and Africa also saw in- creased sales, achieving 48% more than last year. In Africa and Latin America sales went up by 59% and 186%, respectively. In the Middle East, KT&G is trying to increase its business in Iran, following the lifting of inter- national sanctions against Iran this past January. Esse and Pine products manufactured by KT&G have proven to be popular in Iran, with high brand awareness. KT&G's success there is largely due to its aggressive marketing efforts when other mul- tinational companies were still reluctant to invest in the country. KT&G pioneered a new market in Iran, focusing on low-tar and super slim Esse opposed to the high-tar cigarettes that was at the time favored by smokers there. KT&G entered the Iranian market in 2007 when it partnered with the state-owned ITC to produce cigarettes. In 2008 the company set up KT&G Pars. Then, a factory was set up in Tehran to produce Esse and Pine cigarettes In 2011 KT&G started exporting Esse ciga- rettes to Iran. That year its sales was at $1.1 mil- lion. In 2015, that figure grew to $24.7 million. Currently KT&G enjoys a 10% share in the Irani- an market, following Japan Tobacco International and British American Tobacco. 2015 results KT&G's overall overseas cigarette sales surpassed domestic cigarette sales for the first time in 2015, with overseas cigarette sales, including both ex- ports and local production, reaching 46.5 billion sticks, while domestic cigarette sales were 40.6 bil- lion sticks. Over half of the exports was Esse ciga- Despite influencing factors that included higher cigarette taxes, tougher regulations, and a challenging economic climate both domestically and internationally, the two leading tobacco manufacturers in the East Asia market has been able to increase their overseas markets while handling challenged domestic ones. East Asia Companies Hitting It Big Overseas KT&G's popular Esse cigarettes

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