KT&G to Invest in Overseas Factories for Global Demand

According to Startup Today's report on July 1st, South Korean cigarette and e-cigarette manufacturer KT&G is making large-scale investments in overseas factories to cope with the rapid growth in global demand.

In recent years, KT&G's overseas cigarette sales have been steadily increasing, from 388 billion units in 2021 to 494 billion units in 2022, and reaching 532 billion units in 2023. Particularly in Indonesia, KT&G's cigarette sales were approximately 12 billion units last year.

Indonesia's share in its overseas cigarette business has doubled from 13.4% in 2021 to 25.2% in the first quarter of this year.

The main reason for its growth is that KT&G's "Esse" cigarettes use Indonesian-specific clove flavor to produce "Kretec" products, which are widely popular in the local market.

In response to this growth, KT&G is building a new factory in Surabaya, East Java Province, Indonesia, covering an area of 190,000 square meters. The factory is expected to start operating in 2026. Upon completion of the new factory, along with existing factories in Indonesia, KT&G's annual production capacity in Indonesia will reach approximately 35 billion cigarettes.

In addition, in January of this year, KT&G established a sales and manufacturing subsidiary in Kazakhstan and built a new factory covering approximately 200,000 square meters in Almaty Province to meet the demand in the Eurasian region.

Since first exporting to the Middle East and Russia in 2001, KT&G's "Esse" brand has continuously expanded its market in regions such as Indonesia, Latin America, and Africa. Currently sold in over 90 countries worldwide, "Esse" accounts for approximately one-third of global sales of ultra-slim cigarettes.

At the same time, KT&G's e-cigarette "lil" has expanded to 32 countries, thanks to its 15-year partnership with Philip Morris International.

In order to address the growing demand for e-cigarettes, KT&G CEO Bang Kyung-Man has been visiting offices and factories in the Asia-Pacific and Eurasia regions, such as the Mongolia office and Taiwan branch, to inspect the local markets and operations.

A representative from KT&G stated that

In the future, we will continue to enhance KT&G's position as a global brand through innovative technologies and products that reflect various consumer preferences.