#South Korea #Kazakhstan #Almaty #KT&G #ESSE

KT&G Constructs New Production Facility in Kazakhstan

In a strategic move to enhance its international presence, KT&G (KRX:033780) has commenced the construction of a production facility in Almaty, Kazakhstan. The groundbreaking ceremony took place in October 2023, marking a significant milestone for the company as it aims to meet the increasing global demand for its products, particularly from its overseas markets.

The new factory will cover an area of approximately 200,000 square meters and is set to operate as a hybrid production hub. This facility is expected to bolster KT&G’s manufacturing capabilities and serve as a key supply point for markets in Europe, the Commonwealth of Independent States (CIS), and the broader Eurasian region once it is completed in 2025.

Expanding Presence in Eurasia

Earlier this year, KT&G laid the groundwork for its expansion in the region by establishing a subsidiary in Kazakhstan, dedicated to both sales and manufacturing. This strategic establishment aimed to create a robust local business infrastructure, which is essential for KT&G's growth in Eurasia. Currently, the company boasts a workforce of over 150 local employees, with expectations that the completion of the new plant will generate further job opportunities, thereby fostering a complete local value chain encompassing production, marketing, and sales.

KT&G's significant investment in the Kazakh factory is pivotal to realizing its ambition of becoming a global top-tier entity in the tobacco industry. The company has set an ambitious target to derive more than 50% of its total revenue from international sales by 2027. As part of this plan, KT&G is focusing on enhancing its competitive edge, particularly through international markets.

Performance and Future Outlook

The performance of KT&G in overseas markets has already shown promising growth. By the end of the third quarter of 2023, the company reported overseas cigarette sales reaching 163.2 million pieces, marking the highest sales volume recorded by the company for two consecutive quarters. One of the flagbearers of their product line is the ESSE brand, known for its superslim cigarettes, which has garnered a substantial following globally.

KT&G stands as the leader in several sectors within South Korea, including e-cigarettes, Next Generation Products (NGP), health functional foods, and combustible cigarettes. With a significant global presence, KT&G operates 717 brands across 143 countries and employs over 5,184 individuals worldwide as of the end of 2023. The establishment of the Kazakh production hub is anticipated to play a crucial role in achieving the company’s ambitious sales objectives, specifically the KPI of 50% of sales from international business by 2027.

Conclusion

Overall, KT&G’s investment in a new production facility in Kazakhstan reflects its commitment to expanding its global footprint and addressing the rising demand for its tobacco products. With the successful execution of this venture, KT&G is poised to reinforce its market position and elevate its status as a formidable player in the international tobacco industry, while also contributing positively to local employment and the economy in Kazakhstan.