Tobacco Facts.

YEONGJU, North Gyeongsang - Stepping inside the KT&G tobacco manufacturing plant in Yeongju, which is two hours away from Seoul, a countless number of cigarettes is being quickly filtered, sorted and packed by a group of automated state-of-the-art machines, leaving the smell of freshly packed cigarettes hanging in the air.

Although the recent economic downturn and increased awareness of the dangers of smoking have decreased the number of smokers here - from 67.6 percent of the male population in 2000 to 40.4 percent last year - the local tobacco industry is more competitive with foreign cigarette makers than ever.

The Korean government only began allowing imported cigarettes to be sold here in 1988. But support for local brands remained strong even after the import ban was lifted, and it was difficult for foreign tobacco manufacturers including Philip Morris, British American Tobacco and Japan Tobacco to penetrate the market.

However, times have changed. Although the Korean tobacco market is not seen by foreign firms as fully open in terms of regulations, consumers are more open to purchasing foreign products, allowing foreign companies a bigger market share.

The KT&G tobacco manufacturing plant in Yeongju, North Gyeongsang, is largely automated and equipped with state-of-the-art technology. Provided by the company
“With the increase in the number of Korean students studying abroad, local consumers easily become acquainted with foreign brands from all industries, including the tobacco industry,” said a KT&G official. “Many Koreans, especially the younger generation, now have a favorable view of foreign goods.”

Reflecting this shift, KT&G’s market share in the domestic tobacco industry has fallen in the past several years to less than 70 percent. With more imported cigarettes flowing into the market, the local cigarette company had a market share of 68.1 percent in the first quarter of last year that dropped to 64.3 percent in the first quarter of this year. The three major foreign cigarette makers hold the remainder of the market share.

“We are ready to compete, to regain and retain our domestic market share,” said a KT&G official, noting that the company is aiming for a 76 percent market share by next year.

The manufacturing plant in Yeongju, which opened in 2003, is the company’s biggest asset. The 343,200-square-meter (3.7 million-square foot) factory is the largest in Asia in terms of size - it is 15 times bigger than a football field. The plant can produce 2.2 billion packs of cigarettes a year, which is equivalent to 40 percent of local cigarette demand.

The company also oversees a growing export business. Its overseas sales reached 253.4 billion won ($215.9 million) for the first half of this year, a 13 percent increase on-year. It currently has manufacturing plants in Iran and Turkey, and is planning to open one more in Russia late next year.

Meanwhile, the company is also working to diversify, and is moving into the pharmaceutical, real estate management and investment asset management sectors.

By Lee Eun-joo, October 06, 2009 Joongangdaily

Related posts:

1. Virginia ready to trade more with Cuba Many Virginia businesses would welcome the U.S. dropping the embargo...
2. Lorillard, maker of Newport cigarettes, could be a takeover target Lorillard Inc, maker of Newport cigarettes, could be a takeover...
3. The Winfield chapter of Veterans of Foreign Wars battles ban on smoking Winfield City will soon have a legal fight on its...
4. Manufacturers release tons of pharmaceuticals into US water supplies U.S. manufacturers, including major drugmakers, have legally released at least...
5. Team Sports Can’t Compete With Films to Keep Kids From Smoking Taking part in team sports lowers the odds of children...
6. Tobacco maker group hands over taspo user data to prosecutors TOKYO — The Tobacco Institute of Japan, the industry...
7. Spain Is Ready For Full Smoking Ban MADRID -(Dow Jones)- Spain is ready for total smoking...
8. Oil Pushes Up Manufacturers’ Costs LONDON - Manufacturers’ raw material costs rose at their fastest...
9. Smoking in Ghana: A review of tobacco industry activity Background: African countries are a major potential market for the...