For the first time in nearly three decades, foreign cigarette makers in Korea outperformed Korean brands in market share on the strength of their low-price strategies, data showed Sunday.
According to data from the nation’s two convenience store chains, foreign brands earned about 55 percent market share in sales and 60 percent in volume in January, dethroning the long dominant KT&G, the only Korean cigarette-maker.
This is the first time in 29 years that KT&G lost grip of its dominant market share against the combination of the big-three foreign players. Philip Morris temporarily beat Korean products in sales when it first entered the local market with Marlboro in 1986.
KT&G’s share fell to the 40 percent range while the rest is split among Philip Morris, British American Tobacco and Japan Tobacco International.
The convenience stores reported 43.2 percent in sales volume for KT&G’s products in January, compared to 56.8 percent for the big-three foreign makers, with Philip Morris’ 24.4 percent, BAT’s 23.4 percent and JTI’s 9 percent.
In terms of the number of packs sold, KT&G’s share fell to 38.3 percent of the total cigarette packs sold in the month, while Philip Morris sold 21.1 percent, BAT 21.1 percent and JTI 10.8 percent.
Market analysts attributed KT&G’s fall to its drastic price hike to meet the government’s new tax policy on tobacco while foreign makers cut prices of some brands to win over price-sensitive smokers.
With the turn of the year, the local price of a pack of cigarettes produced by KT&G, Philip Morris, BAT and JTI nearly doubled from 2,500 won to 4,500 won ($2.30 to $4.15).
But BAT sold its Vogue brand at 3,500 won per pack and Philip Morris adjusted its Marbolo and Parliament brands by 200 won from 4,700 won.
By Chung Joo-won (
joowonc@heraldcorp.com)
