In a recent regulatory filing, South Korea's KT&G Corp. announced the suspension of its business in the United States for an unspecified period, according to a report in the Korea Herald.
"We need to conduct a review of our business in the US amid intensifying regulations over tobacco and growing competition," the company said, referring to a hostile business environment, such as the US Food and Drug Administration's (FDA) recent move to introduce a bill to curb nicotine content and reduce tobacco addiction.
Korea Herald reported that the decision will cost the company about KW205.8 billion (US$174 million) in lost sales, amounting to around 3.9% of the company's overall sales revenue for last year. The company also said mandatory tobacco escrow accounts for smoking-related legal settlements have added additional burdens on top of the already difficult business environment.
"We will reconsider our business strategy in the US after reviewing the business environment and regulations," an official from the company said.
According to the company’s US website, KT&G is the world’s fifth largest tobacco company, but strives to be the fourth largest by 2025, as reported in Tobacco Asia magazine earlier this year. In 2019, Tobacco Asia reported that KT&G set up its US headquarters in Forth Worth, Texas including a distribution center.