KT&G continues to invest in Indonesia, its largest overseas market. Photo credit: KT&G
KT&G plans to invest KRW600 billion (US$454 million) in Indonesia by 2026 to build new factories, strengthening its foothold in the country and paving the way for expansion into the broader Asia-Pacific and Middle Eastern regions, reports Korea JoongAng Daily.
The project, which is expected to create about 1,000 jobs, reflects the company's strategy to extend its reach beyond domestic markets.
“KT&G chose Indonesia as the company’s center of production for the Asia-Pacific market,” KT&G Indonesia’s president director, Jeong Yun-sig, told the publication. Indonesia is KT&G's largest overseas market, contributing 22.6% of the company's total exports in 2023.
The company has allocated KRW3.5 trillion for expanding its manufacturing capacity both domestically and internationally, with KRW600 billion specifically designated for its Indonesia operations.
KT&G entered the Indonesian market in 2011 by acquiring the local tobacco company Trisakti. By 2023, its cigarette sales had surged to 9.55 billion units (477.5 million packs), marking a 159-fold increase since the acquisition.
With a 4.4% market share in 2023, KT&G now ranks as the fourth-largest tobacco company in Indonesia, ahead of British American Tobacco and Japan Tobacco International. The company operates 41 stores and 75 offices throughout the country.
In April last year, KT&G began building two new factories in Surabaya. When completed, these plants will produce 21 billion cigarettes annually, making Indonesia KT&G’s largest overseas production hub with a total output of 35 billion cigarettes each year.
“We have consistently invested in the Indonesian market, building a local r&d center and hiring experts for localization efforts,” Jeong said. “The localized version of Esse and new brands for the Indonesian market worked well for the company.”
KT&G’s rapid growth in Indonesia has been driven by the launch of innovative cigarette products tailored to local preferences. One of the standout products, Esse Berry Pop, introduced in 2017, sold over 250 million units in its first year. Esse, KT&G’s most popular brand in Korea since 1996, was localized to appeal to Indonesian smokers by offering a kretek version—a blend of tobacco and cloves that is favored in the country, where 95% of cigarette sales are kretek.
KT&G has consistently introduced new products to the market, including Juara in 2018, inspired by Indonesia’s popular sweet tea, teh manis. The company’s efforts paid off with the release of 21 new products in 2021, which nearly doubled cigarette sales from 4.84 billion in 2021 to 8.48 billion in 2022. KT&G continued its product rollouts with 11 new types in 2022 and eight more in 2023.