Issue link: https://read.dmtmag.com/i/699960
tobaccoasia 19 rettes, which has been the top-selling super-slim cigarette in Korea for more than a decade and now counts for more than a third of the global super- slim market. In 2015 KT&G reported domestic sales of US$1.64 billion (KRW1,927 billion), a 2% drop from 2014, and overseas sales of US$581 billion, a year-on-year 27.8% increase. Looking ahead Moving forward, KT&G is undaunted and re- mains positive, despite Q1 results showing a 25.5% drop in its domestic sales from US$485.6 billion to US$361.8 billion. Its plans for 2016 in- clude retaining its leading position in the domestic tobacco business and recovering a market share of 60%. In its overseas tobacco business, KT&G will continue to focus on making inroads into large emerging markets with high growth potential, in- cluding Africa and Latin America, while increas- ing profitability and stability in existing overseas markets. Japan Focus on Africa KT&G is not the only transnational tobacco company looking closer at Africa. Japan Tobacco International (JTI) is, too, as evidenced from its recent bid of US$510 milion to acquire 40% of Ethiopia's National Tobacco Enterprise (NTE). JTI's offer was more than double of that of BAT's bid of US$230 million. JTI already has established presence in other African countries, such as Tan- zania and Sudan. NTE is the only company allowed to trade, manufacture, or sell tobacco products in Ethiopia, Africa's second-most populous nation with about 100 million people. It owns a factory in Addis Ababa and four farms. Making a bigger footprint Like KT&G, JTI also expanded its geographical footprint in 2015, as well as achieving increased market share in most of its key markets and dou- ble-digit profit growth at constant currency. In Iran, JTI acquired Arian Tobacco Industry (ATI) by JTI PARS. The acquisition of ATI com- plements the JTI PARS set up, bringing strong value brands to an already robust premium and mid-price portfolio. JTI's international shipment volume in 2015 de- clined a mere 1% compared to 2014 to 393.9 billion cigarette equivalent units, due to significant industry contraction and a volatile operating environment in the Middle East. What helped lessen the drop in volume was driven by its global flagship brands (GFB), which are Winston, Camel, Mevius, Benson & Hedges, Silk Cut, Sobraine, Glamour, and LD. JTI's GFB sales actually grew by 4.3% to 273.6 billion cigarette equivalent units. As a result, GFB counted for 69.5% of JTI's total shipment volume, an in- crease of 3.6% from the previous year. JTI gained market share and shipment volume in Italy, France, and Spain and achieved top spot in the UK market share. JTI now has the top spot in three of its seven key markets, namely Russia, Taiwan, and the UK. It has also achieved record market share in France, Spain, and Turkey and is the fastest-growing tobacco company in Italy. In 2015 Winston held its market share in Russia while becoming the number two brand in France and Spain, and number three in Taiwan. Camel became the number one brand in Turkey. LD achieved re- cord market share in Russia and returned to the number three position in this market. Domestic market still strong JTI reported that the domestic industry volume decline in 2015 was moderate compared to their initial forecast. In 2015, industry volume was 182.3 billion units in Japan, one of the largest markets in the world. JTI owns 9 of the top 10 selling products in the Japanese domestic market and en- joys a 60% market share. Domestic sales volume was also in line with the company's forecast, fall- ing 2.8%. Forecast for FY2016 JTI projects that it will be able to increase its 2016 operating profit for its international tobacco busi- ness by 9%, driven by top-line, and increase oper- ating profit for its domestic business by 3% mainly through cost optimization. JTI's Q1 2016 results are promising. Total and GFB shipment volumes increased 7.1% and 10.7%, respectively, in the international business side. In the domestic tobacco business, JTI's ad- justed operating profit grew 15.4% due to an in- crease in demand ahead of retail price changes for some of JTI's products, the acquisition of Natural American Spirit, as well as the effects of measures taken by JTI to strengthen the competitiveness of its domestic tobacco business. The company's domestic sales volume for cigarettes in Q1 2016 was 35.1 billion sticks, a 1.3% increase from 2015, generating US$66.5 billion (JPY 201.5 billion) in revenue, a 2.6% increase year-on-year. JTI's Mevius brand