Tobacco firm to produce 4.6 billion cigarettes annually in factory near Moscow

KT&G Corp., Korea’s tobacco monopoly, has recently completed the construction of a plant in Russia to expand its presence in the world’s second-largest tobacco market.

The company has invested $100 million in building the plant located on a 103,000 square-meter site near Moscow.

Focusing on its flagship slim cigarettes, Esse, the plant will produce 4.6 billion cigarettes annually, KT&G said. It began operating Friday.

Installed with up-to-date raw material processing facilities and production lines, the plant will significantly cut costs and delivery time, KT&G CEO Min Young-jin said in a statement

“We will make Esse the No.1 brand in the Russian super-slim cigarette market within three years,” he added. 

Launched in 2002, Esse is the No.3 best-selling brand in the super-slim category in Russia, making up over 10 percent of the market.

Russia consumes nearly 400 billion cigarettes a year with about 44 percent of adults known to smoke.

Slim cigarettes have gained popularity among younger Russians, particularly women, over the past few years.

Between 2006 and 2009, slim cigarette sales soared 91 percent, accounting for 13 percent of the total cigarettes sold in Russia, according to Euromonitor International, a London-based market research firm.

Esse is also making a strong showing in Eastern Europe, ranking third in the super-slim category in Poland and Ukraine.

The construction of the Russian plant is the latest in KT&G’s efforts to expand international business and localize overseas operations.

Its growing presence abroad has offset declines in domestic demand resulting from health concerns.

The world’s sixth-largest tobacco company currently operates plants in Turkey and Iran.

It exported more than 38 billion cigarettes worth 553 billion won ($492 million) to 40 countries last year.

The firm’s largest international market is the Middle East including Iran, Afghanistan and Iraq according to its 2009 revenues report. It has also shipped products to the U.S., China and Central Asia.

By Shin Hyon-hee (heeshin@heraldcorp.com)