I. Overseas sales surpassed domestic sales in South Korea for the first time, marking a key shift in business focus.
This year, KT&G's globalization strategy has achieved a milestone breakthrough, with overseas markets becoming the core growth engine for the company's tobacco business. According to data released by the company on the 9th, overseas cigarette sales reached 1.4423 trillion won in the first three quarters of this year, approaching the total overseas sales of 1.4501 trillion won for the entire year of 2018. The third quarter was particularly strong, with overseas cigarette sales exceeding 500 billion won for the first time at 524.2 billion won, representing a year-on-year increase of over 20%.
In terms of business structure, as of the third quarter, KT&G's domestic cigarette and e-cigarette sales in South Korea totaled 614.9 billion won, while overseas cigarette sales reached 635 billion won, officially exceeding 50% of its total tobacco business. Company officials explicitly predicted that overseas sales would continue to maintain a leading advantage over the domestic market in the fourth quarter, and that 2025 is expected to be a pivotal year in the company's history, marking the first time that overseas sales have surpassed domestic sales for an entire year, signifying a complete shift in the company's tobacco business focus overseas.
II. Targeting a market worth hundreds of billions, and developing a new track in nicotine bags.
KT&G's strong performance in overseas markets has laid the foundation for its diversified expansion, and the company is accelerating its efforts to capture a share of the rapidly growing global nicotine bag market. According to Euromonitor data , the market size surged from $1.647 billion (approximately 2.41 trillion won) in 2020 to $11.232 billion (approximately 16.46 trillion won) in 2024, and is projected to further grow to $14.755 billion in 2025, indicating enormous market potential.
To quickly enter this market, KT&G plans to complete its joint acquisition with Altria of the Nordic nicotine bag company ASF this year. According to its strategic plan, KT&G will officially enter the nicotine bag market in 2026, initially starting in Northern Europe and gradually expanding to Europe, Asia, and North America to build a new growth curve.
III. Increase investment in overseas infrastructure and improve the global value chain layout.
While consolidating its traditional overseas cigarette business, KT&G is continuously upgrading its global production and distribution system to provide hardware support for its globalization strategy. In January of this year, the company completed the expansion of its Turkish factory; in April, the new factory in Kazakhstan was officially completed; and in the first half of next year, construction of a new factory in Indonesia will also begin, forming a production network covering key markets in Eurasia.
The Indonesian market is particularly promising. Thanks to strong local consumer demand, Indonesia is expected to become KT&G's largest single overseas market in terms of sales revenue.
IV. Multi-dimensional strategies to support and pursue both profitability and growth goals
Regarding its future development path, KT&G has clearly defined its strategic direction. A company representative stated that it will leverage its local production bases and overseas subsidiaries to reduce operating costs by optimizing its value chain structure; simultaneously, it will continue this year's success by increasing the proportion of high-priced products in sales and implementing strategic price increases, achieving sustained growth while ensuring profitability.
From its overseas expansion into traditional cigarettes to its early investment in the new nicotine pouch market and the continuous improvement of its global production system, KT&G is deepening its globalization strategy through diversified measures. It is expected to seize more opportunities in the structural adjustment of the global tobacco market and consolidate its market position as an international tobacco giant.
Source: ajunews
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