K-cigarettes go global: KT&G lights up overseas markets

KT&G’s overseas cigarette sales outstrip domestic in Q1; market sees trend moving forward

KT&G’s localized cigarette brands, Esse and Raison (KT&G)

As beauty and food products lead the so-called K-frenzy, Korean cigarettes are becoming the next major export success, powered by KT&G, the country’s largest tobacco company.

In the first quarter of this year, the company’s overseas cigarette sales reached 449.1 billion won ($327 million), surpassing domestic sales of 373.6 billion won for the first time — momentum that analysts expect to persist throughout the year.

This quarter saw overseas cigarette sales rise 23 percent in volume and 54 percent in revenue from a year earlier, while domestic sales fell by 9.3 billion won.

“It underscores the shift toward an overseas-centered structure,” said an analyst at Kyobo Securities, noting that the overseas sales share in KT&G’s tobacco division rose from 39.5 percent last year to 47.5 percent this quarter.

KT&G’s overseas cigarette sales rose from 1.01 trillion won in 2022 to 1.13 trillion won in 2023, then climbed 28 percent to 1.45 trillion won last year.

According to financial information provider FN Guide, KT&G is forecast to post 6.34 trillion won in total sales for the full year, a 7.3 percent increase from last year, with operating profit rising nearly 10 percent to 1.31 trillion won.

The achievement manifests CEO Bang Kyung-man’s aggressive drive to build a fully localized global value chain, enhancing agility and profitability in local markets. “With a spirit of challenge, KT&G will continue to expand its global direct business to enhance both profitability and corporate value,” Bang said.

Backed by region-specific strategies and expanded direct sales channels, KT&G, which now exports to 135 countries, has positioned its ultra-slim cigarette brand, Esse, at the forefront of global markets.

The brand has gained significant traction across Asia-Pacific, with Indonesia accounting for over 20 percent of KT&G’s total overseas sales.

There, KT&G has pursued a successful localization strategy, offering products like Esse Berry Pop to cater to Indonesian consumers’ preference for clove-based cigarettes.

In Mongolia, KT&G has held over 50 percent market share since 2023, with annual sales rising from 300 million sticks in 2011 to 2.35 billion last year.

Starting in June, KT&G made inroads into India’s tobacco market by signing a distribution deal with local firm Kedara Trading LLP to launch its premium cigarette lineup in major cities such as New Delhi and Mumbai.

According to the company, India is expected to become a new growth engine thanks to its rapidly expanding middle class and increasing demand for premium foreign cigarettes.

“To strengthen our global business performance, we set up in-house independent units for the Asia-Pacific and Eurasia regions last year, establishing dedicated strategy and marketing teams within each to enhance direct regional operations,” said a KT&G official.

Esse’s popularity extends beyond Asia. In the first quarter, the United Arab Emirates was KT&G’s largest export destination, with shipments more than doubling to over 3,000 metric tons. From there, products are reexported throughout the Middle East.

In line with its expanding global footprint, KT&G is boosting its overseas production capacity. In April, it completed a new factory in Kazakhstan with an annual capacity of 4.5 billion sticks, and construction of a new plant in Indonesia is underway.

KT&G operates a global manufacturing network spanning plants in Korea, Indonesia, Russia and Turkey.