Tobacco Asia

78 tobaccoasia Issue 6, 2025 November / December base for export products, driving expansion across Asia Pacific and the Middle East. While KT&G's overseas investments target the last remaining growth markets for cigarettes, the company is also carving out a niche in Eu- rope's otherwise declining combustible tobacco market. Since 2024, it has introduced its Esse su- per-slims brand—already a strong performer in the Middle East and Central Asia—in Romania, Spain, Andorra, and Bulgaria. In July, Esse en- tered Germany, Europe's leading slims market, with an 18% share according to Cognitive Market Research. Europe as a whole accounts for 27.9% of the US$36.9 billion global slims market in 2025. Highly competitive domestic market A top priority in KT&G's strategy is the global expansion of its HTP segment. To stay ahead of rivals, KT&G has pursued an aggressive r&d pol- icy in recent years, launching upgraded versions across its HTP and hybrid platforms. While the company continues to promote its 2023 lil Hy- brid 3.0 model—which combines a cartridge and a tobacco stick—with limited editions this year, it launched an upgrade of its premium, AI-driven lil Aible in late September. According to KT&G, lil Aible 2.0 Plus allows 3 consecutive charges instead of 2, offers faster charging, and features a remain- ing-charge display. In its domestic market, KT&G sold about 615 billion lil consumables in 2024, up 7% year on year. Its lil family led the heated-tobacco mar- ket with a 46% share in H1 2025, closely followed by Philip Morris International (PMI) at 45%, ac- cording to tobaccoinsider.com. British American Tobacco trails with about 10%, while JTI has only a minimal share. HTP are reshaping South Korea's overall tobacco market, accounting for roughly 18.4% of sales in 2024. Competition is fierce in the world's fourth-largest HTP market, where manufactur- ers vie for share through rapid product upgrades, expanded consumable lines, and steep device dis- counts. PMI invested US$480 million to expand its Yangsan plant in Gyeongsangnam-do to add IQOS production capacity. With a 66% share, KT&G remains the dom- inant player in South Korea's shrinking combus- tibles market. Outside its domestic market, KT&G has successfully partnered with PMI for 6 years. In January 2020, the two companies signed an MOU granting PMI exclusive access to KT&G's smoke- free brand and innovation pipeline, including of- ferings for low- and middle-income markets. In return, KT&G benefits from PMI's global infra- structure and commercialization expertise. The agreement was renewed in January 2023 as a 15- year contract, including volume commitments guaranteeing sales of at least 16 billion sticks be- tween 2023 and 2025. As a result of the collaboration, lil HTP are now commercialized in about 34 countries world- wide, including Russia, Japan, Italy, Poland, Ka- zakhstan, Czech Republic, and Greece. Little talk about HFF In contrast, the buzz around KT&G's third core pillar—health functional foods—has quieted re- cently. For HFF, KT&G set a revenue target of KRW2.1 trillion for 2027 in its 2027 Vision—an increase of more than 58% compared to 2022's estimated KRW1.4 trillion. The company intended to expand KGC's overseas footprint, especially in At the beginning of this year, KT&G's factory in Turkiye—its first overseas site—was expanded by 1.5 times to 25,000 square meters. Credit: KT&G. KT&G is emerging as a rising global force. Credit: KT&G.

• Cover