Battle over sales to military

| April 6, 2016

Philip Morris International Korea has filed a lawsuit against the Korean government demanding it nullify its decision of last year to allow the sale to soldiers of only KT&G cigarettes, according to a story in The Korea Times.

On April 18, 2015, the ministry chose four cigarette brands, all manufactured by KT&G, to be sold at post exchanges, a military version of a convenience store.

Sales to soldiers are estimated to account for about one percent of the company’s volume sales.

KT&G, which accounts for more than 60 percent of the country’s cigarette market, has been the sole supplier to the military since 2007 when the defense ministry held a bid, opening the door to foreign cigarette makers for the first time.

However, PMI Korea, which accounts for about 21 percent of the country’s cigarette market, and the other two non-Korean tobacco firms, British American Tobacco Korea and Japan Tobacco International Korea, have not been able to break KT&G’s monopoly.

This is despite the facts that soldiers tend to be young and young smokers tend to favor foreign brands.

The ministry plans to announce its cigarette supplier for this year on April 14.

Meanwhile, the ‘foreign’ cigarette manufacturers have been complaining also about Korea Expressway’s exclusive deal with KT&G, under which only KT&G products are made available at the nation’s highway service areas.

Category: Breaking News

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