KT&G, South Korea’s dominant tobacco company, is expected to focus on strengthening its position in global markets next year by exporting cigarettes to a record 120 countries.
The expansion in overseas sales networks is in response to static sales in the domestic tobacco market. Announcing the company’s medium-term and long-term strategies In 2017, CEO Baek Bok-in set a goal of KT&G becoming the No. 4 global player by 2025.
In the first part of the strategy, KT&G exported its cigarettes to more than 80 countries last year, up from 59 in 2018 and 56 in 2017. It started to sell its tobacco products in 20 more countries this year, including Portugal, Croatia, Tanzania and the Central African Republic.
Issues that have kept the tobacco company from growing have also been resolved this year. KT&G signed a long-delayed cigarette supply deal in the Middle East in February worth $1.8 billion under which it will provide its traditional products to Alokozay International until June 2027. The Middle East accounts for about half of KT&G’s traditional tobacco exports.
The company also started exporting its e-cigarette heating devices to Ukraine, Russia and Japan in accordance with the company’s agreement with Philip Morris International (PMI).
KT&G’s consolidated overseas tobacco sales grew more than 10% in the third quarter from the same period in 2019. Along with its improving financial performances, the firm obtained a Grade A rating in an environment, social and corporate governance evaluation by investment information provider Morgan Stanley Capital International, up one notch from its rating of BBB last year. The company scored a higher grade than PMI, British American Tobacco and JT International, which are the top three global cigarette makers.
KT&G will concentrate on exporting traditional tobaccos and e-cigarettes to overseas markets next year, especially in African and Latin American countries. It has to enter 20 new countries a year on average to meet the goal of achieving 200 export markets by 2025 and boosting the portion of overseas sales to 50%. (Reporting by Hyo-jeom Jun)