'KT&G-Philip Morris' Join Hands for Lil Overseas Supply
15-Year Long-Term Contract... Overseas Cumulative Sales Expected to Reach 31 Trillion Won
Win-Win Strategy to Dominate Global E-Cigarette Market
KT&G and Philip Morris International (PMI), the two major players in the domestic heated tobacco market, have once again joined forces to target the overseas electronic cigarette market. With a long-term partnership spanning 15 years, cumulative overseas sales from this long-term contract are expected to exceed 31 trillion won.
On the 30th of last month, Baek Bok-in, President of KT&G, and Jacek Olczak, CEO of PMI, shook hands at the product supply contract signing ceremony for overseas sales of the electronic cigarette Lil, held at the Conrad Hotel in Yeouido, Seoul. Photo by KT&G
On the 30th of last month, KT&G signed an overseas sales contract with PMI and officially launched efforts to expand market share abroad through the electronic cigarette lil device. This contract involves supplying electronic cigarette products using Philip Morris’s global distribution network, specifically including devices such as the lil Solid, lil Hybrid, and lil Able, as well as dedicated sticks like Fit, Mix, and Aim. Products that KT&G will release in the future will also be supplied through PMI.
This contract between the two companies is an extension of the partnership maintained over the past three years. Since forming the partnership in 2020, KT&G and PMI first launched lil products in three countries including Japan. Subsequently, focusing on the lil Solid 2.0, they expanded export territories to Kazakhstan, Serbia, Albania, and in November last year, launched products in Guatemala, marking their first entry into Central America. Over the past three years, they have entered more than 30 countries, averaging the successful establishment of one new country market per month excluding holidays in both countries.
Given the 15-year duration of this contract, it is more advanced than the previous three-year agreement. PMI guarantees the sale of at least 16 billion cigarette sticks every three years from this year through 2025. The companies plan to review performance every three years to flexibly respond to changing market conditions. Both parties expect the guaranteed quantity to increase throughout the contract period.
KT&G forecasts an average annual sales growth rate of 20.6% for its overseas NGP (Next Generation Products) business and a 24% average annual increase in stick sales volume over the next 15 years. To respond to the rapidly growing NGP demand, KT&G recently announced an investment plan worth approximately 1.2 trillion won aimed at securing global production bases. This includes building new factories in Kazakhstan and Eastern Europe. Currently, KT&G operates overseas production plants in three countries: Russia, Indonesia, and Turkey.
A KT&G official stated, "By additionally leveraging PMI’s global capabilities and distribution infrastructure, we have maximized financial efficiency and resource savings." They added, "Based on increasing global demand, we will make efficient investments and allocate them to research and development (R&D) and securing bases to achieve maximum results."
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