KT&G forges partnership with Philip Morris to make foray into global heat-not-burn product device market

Park Sae-jin Reporter() | Posted : January 29, 2020, 17:09 | Updated : January 30, 2020, 11:18

[Courtesy of KT&G]

SEOUL -- KT&G, a state-owned tobacco company in South Korea, forged a partnership with Philip Morris International, a global tobacco company, to release "Lil," a heat-not-burn product device brand, in the global market by the end of this year.

KT&G said in a statement on Wednesday that it signed a three-year deal with Philip Morris International (PMI) to release four Lil models in about countries. KT&G and PMI are the two leading companies in South Korea's HNB market that is growing at an annual growth of nine percent.

"The deal will benefit from the rich resources and know-how of PMI and its huge distribution and marketing infrastructure," KT&G CEO Baek Bok-in was quoted as saying. He said the deal will provide consumers with opportunities to choose from a variety of products.

The two companies also agreed to form a global cooperative system that would accelerate the sale of Lil devices. PMI will pay a portion of its profit generated by Lil's overseas sales to KT&G as a royalty. Fiit HNB products will also be distributed internationally along with Lil devices.

HNB products were first released in South Korea in 2017. PMI spearheaded the market with "Iqos," a dedicated heating device for HNB tobacco products, and a series of "Heets", an HNB product. KT&G followed suit with Lil and "Fiit," a lineup of HNB products.

Although the two companies have warned consumers from cross-using devices and HNB products of other companies, but their products work in perfect combination, allowing HNB product smokers to come up with their own combinations and use Heets tobacco products on Lil devices or vise versa. The cross-use boosted the popularity of HNB products.

HNB product users inhale vaporized nicotine and other substances when a tobacco stick is heated using dedicated electronic heating devices. Businessmen and married smokers with kids favor HNB products because no burning of tobacco is involved in the process of smoking HNB products.

The products for alternative smoking gained popularity in South Korea where an anti-smoking campaign prompted people to regard the act of smoking as vulgar and ignorant actions that harm the health of others.

Despite public health concerns, HNB products have been quickly adopted by smokers. According to the Ministry of Economy and Finance, about 360 million HNB packs were consumed in 2019, up 9.3 percent from 330 million packs a year ago.

South Korea's health watchdog unveiled test results in June 2018, saying there is no evidence HNB products are less harmful. As a result, HNB products were treated like conventional cigarettes. PMI refuted the test results insisting HNB products are less harmful to a human body than conventional cigarettes, citing a meaningful statistical difference in health risks.
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