[Intl-tobacco] Korea: KT strives to join world's top five tobacco makers by 2008

[rob@essential.org]

KT strives to join world's top five tobacco makers by 2008 - The Korea
Herald
February 9, 2004

Kim Min-hee( mhkim@heraldm.com )

KT, Korea's biggest tobacco maker, has made significant strides with its
overseas sales since it began exporting cigarettes in 1996.

Last year, KT exported 30.9 billion cigarettes, a 16-fold increase from
seven years ago. Currently ranked sixth or seventh in the world's tobacco
market, the company already enjoys a strong presence in the Middle East and
Central Asia.

This year, KT further raised its overseas sales target to 35 billion
cigarettes and plans to step up operations in newly explored markets such as
China.

Company officials said that in order to meet the target, KT will seek a more
firsthand management system on overseas markets while forming strategic
partnerships with local companies in more lucrative countries.

KT's primary export brands are "Pine," "Carnival" and "Esse," an extra-long
premium brand launched in 1996.

A good example of how KT is going about its overseas business is found in
Turkey, one of the fastest growing tobacco consumer markets. The Korean
company set up an operation there last December and simultaneously broke
ground for a cigarette factory, which will begin operations next year.

Officials said that KT plans to increase production volume in stages at the
Turkey factory starting with about 2 billion cigarettes annually. By 2009,
KT hopes to grab a 9-percent market share amounting to 10.2 billion
cigarettes, and in the long term, 20 percent.

A firm footing in Turkey's tobacco market is expected to enhance KT's
chances to achieve its goal of joining the world's top five tobacco
companies by 2008. Officials said that by then, KT's export volume will top
domestic sales.

Company officials that said despite an overall decline in tobacco
consumption due to increased taxes on cigarettes and challenges posed by
foreign competition, KT is also determined to strengthen its dominance on
the domestic market through product development and strengthening its
premium brands. Currently, KT enjoys about an 80-percent share of the local
tobacco market.

KT was founded more than a century ago, then as an agency of the Korean
Imperial Household for tobacco and ginseng.

By the mid 20th century, the agency evolved into a state-owned monopoly,
providing a steady source of revenue for both central and local governments.
It is also credited with popularizing high-quality Korean ginseng around the
world.

Following the opening of the Korean tobacco market to imports and the
passage of the Korea Monopoly Corporation Act, KT became a government-funded
entity in 1987 and began to implement reforms to become a company able to
compete based on market principles. In December 2002, KT was fully
privatized, keeping the company's acronym but changing its name from Korea
Tobacco  Ginseng to Korea Tomorrow  Global.

KT achieved record sales and net profit last year, marking 20.6-percent and
34.1-percent growth over 2002, respectively.

Company officials said KT is poised to branch out into non-tobacco
businesses this year, notably the real estate development and biotechnology
sectors, for which the company has been making preparations for some time.

As part of efforts to establish a strong biotech infrastructure, KT hopes to
complete the acquisition of Yungjin Pharmaceutical, once the nation's
third-largest pharmaceutical company, this year. KT already has indicated
its strong interest in the biotech area by investing 18.8 billion won in
Celtrion, a joint venture with VaxGen, a world-renowned AIDS vaccine
developer.

Officials said that KT will also support subsidiary Korea Ginseng Corp. and
achieve further growth by taking advantage of the recent health boom through
the development of high value-added products.