Cigarette consumption is expected to reach a record low in the first half of this year due to increased regulations against smoking and heightened health awareness, according to industry data.
The consistently falling consumption of cigarettes is likely to further dent the bottom lines of tobacco giants such as KT&G, Philip Morris and BAT, market analysts said.
Korea’s aggregate sales amounted to 89.3 billion cigarettes in Korea last year, down almost 1 percent from 90 billion a year ago.
KT&G, Korea’s largest cigarette maker, saw its cigarette sales decline 1.5 percent to 26.6 billion, despite a market share increase in the first half of 2013.
This means that the Korean tobacco maker was able to grab a bigger slice of the shrinking market by luring customers away from other competitors, analysts noted.
KT&G’s market share is expected to decrease by about 1 percent to around 62 percent in the third quarter of this year after hovering around 58-59 percent in 2010-2011.
The rest of the market is shared by foreign brands ― BAT, Philip Morris and JTI.
The Korean company’s exports are also not faring well as analysts forecast about a 30 percent decrease in outbound shipments from July to September this year. Its top export destinations include the Middle East and Central Asia.
The four giants will face fiercer competition in the shrinking market as governments ― central, regional and city ― are moving to apply tougher rules against smoking both inside and outside of buildings, facilities and residential areas.
The Seoul government, for example, aims to make the capital a smoke-free city by 2020 in line with the World Health Organization’s policy encouraging its members to reduce smoking.
Also, a growing number of consumers are opting to quit smoking not only because of health reasons and regulations, but also due to an increase in cigarette prices.
By Park Hyong-ki
(hkp@heraldcorp.com)
