KT&G Corp

South Korea

OWNERSHIP

Publicly Traded

RANK

(out of 15)

FINAL SCORE

2.33

(out of 5)

Operating Environment

KT&G Corp (KT&G) operates in three of the four Index Regions, and in nine of the 36 Index Countries. Its top five countries by Volume Sales are South Korea, Indonesia, Russia, Nigeria and Vietnam.

KT&G operates across HMICs (five Index Countries) and LMICs (four Index Countries).

KT&G’s product portfolio consists of cigarettes, heated tobacco and closed system vaping products.

Publicly Stated Position on Tobacco Harm Reduction

"KT&G will secure leadership in the future tobacco business by developing responsible products, launch innovative platforms, and strengthening R&D capability.”
(KT&G Report, Bok-in Baek, CEO, 2020).

Change Since 2020 Index

KT&G’s Product Sales category score declined as its Volume Sales of cigarettes increased at the highest rate in 2019-2021 (CAGR: +6.8%) compared to other Index Companies. Its cigarette exports grew faster than its domestic sales.

KT&G’s heated tobacco Volume Sales also increased following a distribution deal with PMI in January 2020, offsetting in part the cigarette volume growth.

KT&G’s Strategy and Management category score increased as KT&G clarified its objectives related to tobacco harm reduction (“become a global top tier NGP player by 2025”).

Category Scores

Strategy & Management

KT&G does not publicly acknowledge its role in, nor make a formal commitment to reducing, tobacco-related death and disease.

KT&G has an objective related to tobacco harm reduction, (“to become a global top tier player by 2025 in the NGP market”), but the objective is not time-bound or measurable.

Product Sales

KT&G has the eighth-highest Volume Sales of HRPs (2021: 73.9 billion stick equivalents).

With 0.3% of its total volumes coming from RRPs, KT&G has the sixth-highest score for Ratio of Volume Sales (RRPs versus HRPs).

Capital Allocation & Expenditure

At 60%, KT&G’s allocation of R&D Expenditure on RRPs (versus its total R&D expenditure) is the seventh-highest of the Index Companies.

At 15%, KT&G’s allocation of Capital Expenditure (RRPs versus HRPs) ranks it in seventh place.

Product Offer

KT&G offers HRPs (cigarettes) in six Index Countries, and RRPs (heated tobacco, closed system vaping products) in five Index Countries.

In terms of product categories, KT&G has one HRP and two RRPs in its portfolio.

Marketing Policy & Compliance

KT&G’s Youth Access Prevention Policy (“Protection of Minors” principle) is outlined in its Responsible Marketing Policy, which is published on KT&G’s corporate website.

KT&G discloses numbers but no details of reported violations of its Youth Access Prevention Policy.

Lobbying & Advocacy

KT&G does not disclose its policy positions related to tobacco harm reduction.

KT&G discloses its lobbying activities and memberships in all jurisdictions in which it operates.

Net Value Sales

In 2021

High-Risk Products

89.0%

Reduced-Risk Products

11.0%

Products Offered

In 2021

High-Risk Products

Reduced-Risk Products

Capital Allocation & Expenditure

In 2021

High-Risk Products

65.0%

Reduced-Risk Products

35.0%

ppts = Difference in percentage between 2021 and 2019