SOUTH KOREA. South Korean tobacco products company KT&G unveiled the new ESSE Black and Silver cigarettes at the TFWA World Exhibition last month – its latest strategy in reaching out to “the more modern and sophisticated urban consumer”.
Speaking to The Moodie Report at the TFWA World Exhibition in Cannes, KT&G Brand Management’s Jeon Sang Mok said that the ESSE Black and ESSE Silver 84mm super slim cigarettes are the “main highlight” of the 2009 showcase. This is KT&G’s fourth time exhibiting in Cannes.
ESSE Black and Silver 84mm super slim targets stylish and modern male/female smokers in their late 20s to mid-30sESSE Silver and ESSE Black have a different positioning from the ESSE mother brand, which is more targeted at women. Equipped with a super-activated filter, the 84mm super slim targets stylish and modern male/female smokers in their late 20s to mid-30s.
Jeon pointed out a growing trend towards shorter cigarettes that deliver a fuller taste and feel, a result of new and more restrictive smoking laws that make smokers averse to long smoking sessions.
Since being launched in 1996, ESSE has quickly become one of the best-selling brands in Korea, and is also gaining popularity in the overseas markets such as Russia and the Middle East. It remains KT&G’s leading and main brand in the international market, having sold approximately 10 billion cigarettes in 2008.
In 2008, KT&G introduced a new pack design for ESSE cigarettes and launched ESSE Bamboo, which has a bamboo-activated carbon filter, in overseas markets.
Besides the new Black and Silver, the ESSE family comprises the following lines: ESSE Golden Leaf, Special Gold, ESSE, ESSE Lights/Blue, Menthol, Field, One, Bamboo, Bamboo Menthol, Classic King Size, Slims and Blue Slims.
According to Jeon, the main strengths of KT&G’s portfolio lie in the super slim cigarettes and the low-tar cigarettes.
The company’s low-tar cigarette brands include Raison, Seasons and The One, which have tar contents ranging from 0.10 to 0.55.
Raison, which comes in Red, Blue, Green and Black varieties, is said to be popular among young university students in Korea. The cat motif on the packs symbolises the culture and attitudes of the early 20s age group, KT&G said.
In line with its name, Seasons changes its pack design with the seasons. Special version packs feature celebrities including movie directors, artists and musicians. The target consumers are white-collar workers.
The One, claimed by KT&G to be the first and most successful brand in the ultra-low tar market in Korea, contains less than 1mg of tar. “It also has a good tobacco taste and aroma. The One is especially well-known for its clean aftertaste,” KT&G said.
KT&G’s low-tar cigarette brands include Raison, Seasons and The One, which have tar contents ranging from 0.10 to 0.55KT&G Brand Management Dept Assistant Manager Kelly Song told The Moodie Report that she was “very happy” with the business results from Cannes. “We had many productive meetings with operators and distributors. Some of the meetings will most likely end up in actual exportation, and the main regions will be Africa and Eastern Europe.”
In 2010 KT&G is also planning to launch various extended products for the ESSE brand in the CIS and other regions, Song added.
KT&G unveils third-quarter results
For the third quarter of 2009, KT&G reported a +9.7% rise year-on-year in net sales to 706.0 billion Won (US$0.61 billion), while operating profit dropped -22.3% to 217.1 billion Won (US$0.19 billion).
Third-quarter domestic sales volumes went down by -3.0% to 16.2 billion sticks, while total market volume grew +1.9% to 25.9 billion sticks. The domestic value sales decline was slightly lower than the volume drop at -2.0% to 524.7 billion Won (US$0.45 billion).
Source: KT&G CorporationIn contrast, third-quarter export volume rose significantly, registering a growth of +33.9% to 10.0 billion sticks. Sales soared in the main markets, including the Middle East/CIS (+31.5%), Russia (+56.7%) and southeast Asia/Others (+44.2%).
Value sales growth continued to exceed volume growth in the third quarter, registering 147.2 billion Won (US$0.13 billion), a rise of +59.1% year-on-year. The sales upswing was attributed to ASP growth in the US Dollar and foreign-exchange benefits, contributing significantly to profitability. KT&G’s premium sales portion has increased, with its flagship ESSE brand now comprising 29.8% compared to 17.1% in the prior-year period.
Export’s contribution ratio to total sales is still on the rise in the third quarter: in terms of volume, the ratio increased +7.2% to make up 38.1%, while sales by value rose +6.7% to make up 20.8%.
Source: KT&G CorporationThe sales contribution of Russia and other emerging markets has also increased year-on-year: Russia’s portion grew +0.7% to make up 5.4% while China’s share grew by the same percentage to make up 4.3%. While the Middle East/CIS is up 2.0 billion sticks, its contribution to sales dropped from 86% in the third quarter of 2008 to 84.5% in 2009.
Sales for the first three quarters of the 2009 financial year totalled 2,066.7 billion Won (US$1.8 billion), up +9.8% from the previous year. Operating profit fell -1.8% to 755.4 billion Won (US$0.65 billion) while net income dropped -3.0% to 607.1 billion Won (US$0.53 billion).
Source: KT&G Corporation About KT&G
KT&G’s history in Korea dates back to 1899, when the Imperial Household formed a monopoly bureau to control sources of tax revenues. In December 1948, a bureau was established by the Korean government to monopolise all tobacco and ginseng products.
In 1998 KT&G was reformed to a government-run public corporation. In 2002, following the abolishment of the tobacco monopoly law, KT&G was transformed into a public corporation in an effort to liberalise tobacco importing, selling and manufacturing.
Today KT&G is the largest manufacturer, distributor and marketer of cigarette products in Korea and is also the world’s fifth biggest cigarette company. The Korean market is the company’s main market, where it is responsible for more than 65% of the total market sales, providing a strong basis for its overseas business.
Direct investment for building manufacturing facilities has been made in countries such as Turkey, Russia (to be established in 2010) and Iran.
KT&G exports its products to more than 40 countries, mainly to the Middle East and CIS, including Russia, and is currently widening its markets in southeast Asia, the US and Eastern Europe. In 2008 KT&G exported 38.9 billion cigarettes, making up 38% of total sales.
175 billion ESSE cigarettes – KT&G’s flagship brand – were sold in the Korean market between 1996 and 2008, and 41.4 billion more cigarettes were exported to 40 countries between 2003 and the first half of 2009. Other brands including PINE and ZEST are also gaining popularity in the Middle East and Central Asia.
For more information, contact Kelly Song, Assistant Manager/Brand Management Dept, KT&G Corporation, Global Business Headquarters, 17th Floor Kosmo Tower 1002, Daechi-dong, Gangnam-gu, Seoul 135-280, South Korea, tel: +822 3404 4825, or e-mail: 20050019@ktng.com. Visit www.ktng.com.
AdvertisementMORE STORIES ON KT&G
KT&G gears up for major ESSE cigarette debut – 17/08/09
