KT&G’s flagship Esse brand, whose sales hit 2 billion in the Russian domestic market in 2005SOUTH KOREA. KT&G, the dominant player in the Korean cigarette market with 80% market share, is aiming to increase its distribution in all global duty free markets with its wide portfolio of premium and mass market cigarette brands.
The ambitious company, whose goal is to rank among the industry’s top five tobacco firms, began selling its brands in the duty free channel from 2001. Today, it has more than 80 retail stockists in the global duty free market, concentrated on Asia and the Middle East regions.
KT&G, which was fully privatised in 2002, supplies its products through a distributing agent in the UAE, Alokozay Corporation, which has been supplying duty free shops in the UAE since 2001.
Listings
In its home market of Asia, KT&G has duty free listings with KNTO, AK and JDC in South Korea; there is wide distribution at mainland Chinese airports with Sunrise Duty Free and CDFG as well as Sky Connection at Hong Kong International Airport; plus Thailand (King Power shops at the airport and downtown), Japan (JATCO, NAA, ANA and ASD), Vietnam, Laos and Cambodia, among other countries.
In the Middle East, the brands are present at Abu Dhabi Duty Free, Dubai Duty Free and Sharjah (Dufry) duty free shops. In the CIS, the firm is performing well. In particular, sales of KT&G‘s flagship brand, Esse, recorded 2 billion sticks in Russia during 2005. Sheremetyevo and Domodedovo airport duty free stores stock the brands, as do airport shops in Belarus, Kazakhstan, among others.
Inflight stockists are Air China, China Eastern, China Southern, China Northwest and Korean Air.
Brand portfolio
In order to satisfy varied consumer tastes and values, the firm says, its brand portfolio spans the following products:
ESSE: Described as the world’s number one super-slim cigarette, the flagship Esse brand targets the premium category, particularly career women.
CIMA: The octagonal packaged brand sits in the premium category.
PINE: The low-priced brand competes with other global brands in the mass category.
ZEST: KT&G recently launched a slide-type cigarette to attract young customers with a high standard of living.
About KT&G
KT&G’s core business is the production and sales of cigarettes. The company dominates the Korean tobacco market, enjoying a market share approaching 80%, and is a rapidly emerging power in global markets, with increasing domestic market sales in the US, China, and Central and Southeast Asia.
The company has focused on strengthening its competitiveness through rationalisation and modernisation. Since 1998, it has streamlined its workforce by over 40% and has raised productivity by plant closures and plant upgrades. Full privatisation in 2002 marked KT&G’s successful passage from government-owned monopoly to free-market competitor and signalled the beginning of a new era for the company.
In KT&G’s 2005 annual report, Chairman & CEO Young-kyoon Kwak said 2005 was a “challenging” year for the company, owing to “a weak domestic economy, tighter smoking regulations, and severe competition”.
In his message, he reported: “On volume basis, the domestic tobacco market decreased by -22.7% to 82.3 billion sticks compared to 2004, the year of high stockpiling ahead of tobacco tax hike. KT&G’s net sales fell -16.7% to KRW2,209.3 billion as our competitors stepped up their marketing efforts, including new brand launch. Nevertheless, we could achieve higher net profit, which increased by +9.2% to KRW515.9 billion, thanks to ongoing efforts to improve non-operating profits.”
Commenting on overseas sales, he said: “We strengthened our presence abroad and worked hard to meet the rapidly changing tastes of the export markets by bolstering sales of premium brand cigarettes, which in turn raised our export unit price.”
For details, e-mail Kim Hyesoo, KT&G Overseas Headquarters – Planning Department, at dearhs@ktng.com Visit www.ktng.com
