Bumpy Road Ahead
Imported cigarettes are losing ground in the Korean market due to the price hike last year, and the non-smoking trend of those in their 20s and 30s.
According to the Korea Tobacco Association, British American Tobacco (BAT) Korea’s domestic market share decreased 1.1 percentage points to 11.6 percent between the first halves of 2013 and 2014. The company, which supplies Dunhill, Kent and so on, had been second only to KT&G in the market until as recently as 2010. At that time, its market share had reached as high as 17.6 percent.
That of JT International (JTI) dropped 0.6 percentage points to 6.3 percent during the same period, and Philip Morris Korea, which had raised its share from 16.9 percent to 19.9 percent between 2010 and 2011, failed to increase its sales more recently. Meanwhile, KT&G’s share rose from 61.7 percent to 62.3 percent during the period, thanks to its new products. The Korean company’s market share had dipped below 50 percent in 2010.
Industry insiders attribute the decreasing popularity of imported cigarettes to the price hike in 2012 and 2013. Although the importers are trying to deal with the situation by means of large-scale restructuring, things are pretty unfavorable for them. BAT Korea recently reduced the number of its sales employees from 500 to approximately 300, and JTI is going through conflicts with its employees over the same issue.