KT&G has commenced operations at its new factory in Indonesia, completing a global production network that connects South Korea, Indonesia, Russia, Kazakhstan, and Turkey.
On October 6, local time, KT&G held an opening ceremony for the new factory in Pasuruan, East Java, and officially began production. The event was attended by KT&G President Bang Kyung-man, East Java Provincial Secretary Adi Karyono, and South Korean Ambassador to Indonesia Yoon Soon-gu, among other key figures.
The new factory will house nine manufacturing lines for cigarettes, with a maximum annual production capacity of 21 billion units. When combined with the existing factory's capacity of 14 billion units, the total production capacity in Indonesia will reach 35 billion units, making it KT&G's largest overseas production site.
KT&G entered the Indonesian market in 2011 through the acquisition of a local company. Since then, it has sold ultra-slim brand 'Esse' and the locally exclusive brand 'Juara,' currently holding the fourth-largest market share in the region.
The new factory will serve not only the domestic market but also as an export hub, supplying products to Taiwan, Mongolia, Nigeria, and India. This strategy leverages Indonesia's geographical advantage, connecting the Pacific and Indian Oceans to expand its supply chain beyond the Asia-Pacific region to the global market.
The launch of this factory marks the final phase of KT&G's overseas production facility investments initiated in 2023. The company previously announced a plan to invest 2.4 trillion won to expand its overseas production capacity by November 2024. Last year, it completed a new factory in Kazakhstan.
The combined maximum production capacity of KT&G's four overseas factories in Indonesia, Russia, Kazakhstan, and Turkey is expected to reach 65 billion units annually in the future. KT&G aims to utilize these overseas production bases to reduce logistics costs and respond more quickly to local demand.
Recently, KT&G has shifted its global strategy from an export-focused business model to strengthening local direct operations and production. According to the company, overseas cigarette sales surpassed domestic tobacco sales for the first time last year, and it plans to continue improving cost efficiency and profitability through the expansion of overseas production facilities this year. KT&G aims to increase the share of overseas production to over 60% by 2028.
Currently, KT&G operates its overseas cigarette business in over 140 countries, emphasizing the expansion of direct overseas operations and local production bases as key growth directions.
Bang Kyung-man, President of KT&G, stated, "With the opening of the new factory in Indonesia, we have completed our large-scale overseas facility investments and established a 'global five-point production system' that will serve as the foundation for our global business and future growth. We will strategically utilize our domestic and overseas production bases to maximize profitability and enhance our competitiveness in international markets."
* This article has been translated by AI.
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