KT&G celebrated the expansion of its Turkiye factory to fulfill its goal to leap to a 'global top-tier' and to expand its global operations.
Photo shows major participants of the ceremony held including KT&G c.e.o. Kyung-man Bang (fourth from right), Tire District governor Vural Karagul (third from right), and Korean ambassador to Turkiye Yeon-doo Jeong (fourth from left). Photo credit: KT&G
In its ambition to become a top-tier global tobacco company, South Korea’s leading tobacco manufacturer, KT&G, continues its international expansion with significant investments in overseas manufacturing facilities. On January 20, the company announced that it had expanded its cigarette production site in Turkey by 1.5 times, following a US$60 million investment to install two new high-tech manufacturing facilities. After the expansion, the Turkey plant, which was established in 2008 as the company’s first overseas factory, now boasts a production capacity of 12 billion sticks annually. The Turkish facility will serve as a core overseas production hub and an export base for the North African and Latin American regions, KT&G’s chief executive, Bang Kyung-man, said in a statement.
The announcement came just one week after the company revealed its plans to convert its Uzbekistan office—opened in 2023 to pioneer the market by exporting localized versions of its flagship ultra-slim cigarette brand, Esse—into a full-fledged corporate entity. In 2024, KT&G sold a total of 270 million Esse-branded cigarettes in Uzbekistan. The company aims to increase its local workforce more than fourfold and expand its distribution network by establishing detailed sales channels, further solidifying its market presence. According to a KT&G spokesperson, the establishment of an Uzbekistan subsidiary is part of the company’s strategy to strengthen its competitiveness in the Eurasian region.
To accelerate its international growth, KT&G introduced company-in-company (CIC) structures in the Eurasia, Asia-Pacific, and US regions in 2023. That same year, it launched a full-scale expansion into Europe, introducing Esse in Romania in April, followed by launches in Spain, Portugal, and Andorra.
In Indonesia, the company plans to invest KRW600 billion (US$410 million) by 2026 to construct two new factories, adding to its existing plant. The goal is to develop an export hub for the Asia-Pacific and Middle Eastern markets. With a sales volume of 9.55 billion cigarettes in 2023, Indonesia accounted for 22.6% of KT&G’s total export volume, making it the company’s largest market outside Korea.
A top priority in KT&G’s strategy is the global expansion of its heated tobacco products (HTP) segment. In the third quarter of 2024, the company, known for its HTP brand lil, generated revenues of KRW193.2 billion from next-generation products (NGPs), with KRW156.6 billion coming from domestic sales.
Since early 2020, KT&G has had an agreement with Philip Morris International (PMI), granting PMI exclusive rights to commercialize KT&G’s innovative smoke-free products in markets outside Korea. In July 2024, the two partners announced their collaboration on a US regulatory submission for KT&G’s heated tobacco products. These products are expected to launch in international markets first before KT&G and PMI proceed with a pre-market tobacco product application (PMTA) submission for review by the US Food and Drug Administration (FDA).
As of now, KT&G has not yet released its full-year financial results for 2024. However, in 2023, the company’s total revenue stood at KRW5.872 trillion, with an operating profit of KRW1.168 trillion. A significant portion of this record revenue, KRW1.139 trillion, was driven by strong growth in the overseas combustible cigarette segment.
The first nine months of 2024 also showed promising results. In the first half of the year, KT&G generated total revenues of KRW2.85 trillion and an operating profit of KRW643 billion. The third quarter of 2024 marked the first time the company generated over KRW 1 trillion in revenue across its three core businesses in one quarter: combustible cigarettes, next-generation products, and health functional foods.
By 2027, KT&G aims to overtake Imperial Brands to become the world’s fourth-largest cigarette manufacturer. As of December 2024, KT&G was present in 143 countries worldwide.