KT&G popular in Indonesia

A customer buys a pack of KT&G cigarettes at a convenience store in Indonesia. / Courtesy of KT&G

Indonesia, one of the fastest growing Southeast Asian economies with demographics, is considered a market hard to break into, especially its tobacco sector.

Indonesia’s tobacco market is dominated by kretek cigarette makers that use local tobacco blended with cloves, offering a unique flavor. They account for about 90 percent of the Indonesian market, the world’s third-biggest tobacco market.

To appeal to local consumers, KT&G, Korea’s largest tobacco producer, had to change its tactics by developing a brand customized to local kretek smokers.

Thus, it created and introduced Esse Change kretek cigarettes in Indonesia two years ago and the result has turned out to be much better than the company expected - it has sold some 300 million Esse Change cigarettes there since its beginning.

Next came KT&G’s Esse Berry Pop for Indonesian consumers. That brand sold more than 42 million cigarettes since its introduction six months ago.

“The thin Esse brands customized to local consumers also gained popularity,” a KT&G official said. “Brisk sales came as a result of Indonesian consumers' keen interest in our brands.”

KT&G made inroads into the Southeast Asian country through the acquisition of Trisakti, Indonesia’s sixth largest tobacco maker, in 2011.

The Korean tobacco company has some 550 employees with sales networks in Jakarta and Bali, the company said.

Another market in which KT&G is seeing a sales boom is Mongolia. It was able to gain an 18 percent market share with its flagship Esse brand there.

But that took some time. It advanced into Mongolia in 2000, and was able to achieve record sales last year, or twice that compared to 2014, KT&G said.

In the U.S., KT&G managed to become the sixth largest tobacco company by market share, thanks to its Time cigarettes.

It also changed Time by making its cigarettes longer than those locally sold in Korea to appeal to U.S. consumers.

Due to its branding efforts abroad, the Korean company was able to gain 40 percent of its total turnover from overseas markets last year, up from 15.4 percent in 2010.

“We were able to diversify and expand our markets through customization,” the KT&G official said. (Advertorial)