KT&G Expands Global Production Capacity to Meet Rising Tobacco and Vape Demand
In response to the growing global demand for tobacco and vapes, South Korea’s KT&G is expanding its factories in Indonesia and Kazakhstan, with plans to increase its production capacity in the coming years.
KT&G Increases Overseas Investment Amid Strong Global Demand
According to Startup Today, on July 1, South Korean tobacco and e-cigarette maker KT&G is making a major investment in its overseas factories in response to rapidly growing global demand.
Overseas Tobacco Sales Continue Strong Growth
KT&G’s overseas tobacco sales have continued to grow in recent years, from 38.8 billion in 2021 to 49.4 billion in 2022 and 53.2 billion in 2023. In particular, in Indonesia, KT&G’s cigarette sales amounted to approximately 12 billion last year.
Indonesia Becomes a Key Growth Market
From 13.4% in 2021 to 25.2% in the first quarter of this year, Indonesia doubled its share of KT&G’s overseas tobacco business.
Esse Brand Drives Market Expansion
The main reason for KT&G’s growth is the popularity of KT&G’s “Esse” tobacco, made from Indonesia’s unique cloves and Kretek tobacco.
New Surabaya Factory to Boost Production Capacity
To cope with this growth, KT&G is constructing a new 190,000-square-meter factory in Surabaya, East Java, Indonesia, which is expected to be operational by 2026. Upon completion of the new plant, KT&G’s annual production capacity in Indonesia will reach approximately 35 billion cigarettes, bringing the country’s total to approximately 35 billion cigarettes.
Kazakhstan Facility Supports European and Asian Markets
In addition, in January of this year, KT&G established a sales and manufacturing subsidiary in Kazakhstan and constructed a new factory in Almaty Oblast with an area of approximately 200,000 square meters to meet the needs of Europe and Asia.
Esse Tobacco Brand Now Available in More Than 90 Countries
KT&G’s Esse was first exported to the Middle East and Russia in 2001. The brand has since expanded across Indonesia, Latin America, and Africa. It is now sold in more than 90 countries worldwide and accounts for about one-third of global sales of ultra-thin tobacco products.
KT&G Strengthens Global E-Cigarette Presence Through Philip Morris Partnership
Meanwhile, KT&G’s e-cigarette brand “lil” has a strategic partnership with Philip Morris that extends to 32 countries and has been in place for nearly 15 years.
Company Leadership Monitors International Vape Market Growth
In response to the growing demand for e-cigarettes, KT&G recently announced that Chief Executive Officer Kyung-man Bang has been visiting offices and factories in the Asia-Pacific and Eurasian regions, including Mongolia and Taiwan, to assess local market conditions and operations.
KT&G Aims to Strengthen Its Position as a Global Brand
A KT&G representative said, “In the future, we will continue to enhance KT&G’s position as a global brand through innovative technology and products that reflect a variety of consumer preferences.”
