KT&G expands in Iran

| February 11, 2016


KT&G is expanding its business in Iran in the wake of relaxing sanctions against that country, according to a report in The Korea Herald.

The Iranian market has been drawing attention from global companies after international sanctions over its alleged nuclear programs were eased last month.

Korean companies, such as Samsung Electronics and LG electronics, have high brand awareness in Iran, according to KT&G officials.

“Our Esse and Pine products are gaining a lot of popularity and our high pricing policy is boosting profitability,” said Bang Kyung-man, who heads global marketing in KT&G.

Company officials said it also plans to increase investments in Africa and South America, using its success in the Middle East, including Iran, as a stepping stone.

The KT&G officials attribute their success to bold marketing at a time when other multinational companies had been reluctant to invest in the country, according to KT&G officials.

“At the initial stage, KT&G aggressively sought to acquire market share in the Iranian market with a can-do spirit and high technology,” a company spokesperson said.

“In addition, we pioneered a new market in Iran, a country long dominated by high-tar cigarettes, by focusing on sales of low-tar and super slim Esse,” the official added.

Exports of Esse to Iran surged to $24.7 million in 2015, up from $1.1 million in the first year after entering the Islamic Republic in 2011.

KT&G also benefited from the popularity of Korean culture and anti-American sentiment in Iran.

KT&G entered into the Iranian market in 2007 when it concluded a contract with Iran’s state-owned tobacco maker ITC to jointly produce cigarettes. A year after, the Korean company established its branch KT&G Pars in Iran. Then, the company set up a factory in Tehran to churn out Esse and Pine.


Nonetheless, KT&G has also experienced difficulties in Iran. It was hit hard by severe fluctuations of the Iranian currency exchange rate in 2013, prompting the Korean company to suffer a deficit for the first time.


KT&G boasts a 10 percent market share in Iran, closely following Japan Tobacco and British American Tobacco.



Category: Breaking News

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