(LEAD) KT&G to add new heat-not-burn products in S. Korea

All News 13:46 November 09, 2022

(ATTN: RECASTS throughout; CHANGES headline and lead)

SEOUL, Nov. 9 (Yonhap) -- KT&G Corp., South Korea's dominant tobacco company, said Wednesday it will add all-new heat-not-burn products in the domestic market to diversify its cigarette-focused lineup.

KT&G will release the lil ABLE heat-not-burn, or smokeless tobacco products, and its premium version lil ABLE PREMIUM initially for local customers on Nov. 16, the company said in a statement.

KT&G has exported its heat-not-burn products, including its lil SOLID and lil HYBRID products, to more than 30 countries since 2020 through the sales networks of the New York-based Philip Morris International Inc.

Currently, KT&G earns 90 percent of its overall sales from the cigarette business division and the remaining 10 percent from the heat-not-burn division.

"Some shareholders have recently suggested the company raise the ratio of the heat-not-burn division to 50 percent of the total sales by 2025. We don't see achieving the figure is impossible because the smokelss tobacco market is rapidly growing amid concerns for health," Lim Wang-seop, who leads KT&G's next generation product team, said in a press conference.

The company will focus on 10 major markets, including Russia and Japan, to sell its heat-not-burn products in the coming years, the executive said.

"We expect demand for heat-not-burn products in the West Europe and Eurasia markets to report an 'explosive' growth for years to come though the ratio of sales in the Asia-Pacific region will likely fall," he said.

Lil ABLE is KT&G's second heat-not-burn "platform" after lil SOLID released in 2017. The new product is available in three types of sticks -- tobacco leaves, granular and liquefied.

Heat-not-burn products are electronic devices that, unlike e-cigarettes, contain tobacco. The tobacco is heated to a high temperature without setting it alight and creating smoke that the user sucks in.

In the July-September quarter, KT&G's net profit jumped 29 percent to 463 billion won (US$325 million) from 359 billion won a year earlier, helped by increased exports and a weak won.

From January to September, net income climbed 21 percent to 1.06 trillion won from 878.58 billion won in the same period of last year.