Are new tobacco investments such as vaping in Central Asia adjacent to Eastern Europe also on the rise?
I saw a piece of news today that attracted attention. The market in the region close to Eastern Europe continues to attract a large number of e-atomization investment factories. The e-atomization giant KT&G recently laid the foundation for its new factory in Kazakhstan to build a Eurasian production innovation base.
According to Korean media Mbnmoney.com, KT&G has held a groundbreaking ceremony for a new factory in Kazakhstan, with the goal of realizing its mid- to long-term vision of becoming a top global brand and establishing a production innovation base in Asia and Europe. More than 70 key stakeholders attended the ceremony, including KT&G President Baek Bok-in, Kazakhstan’s Almaty Governor Maraat Ilosevich Jovitch, and South Korea’s Consul General in Almaty Park Nae-cheon. This time KT&G chose Kazakhstan as the cornerstone of business growth in Asia and Europe to enhance global export competitiveness. Since its establishment as a sales and manufacturing company in Kazakhstan in January 2023, KT&G has been preparing to conduct business locally, and plans to enhance global business capabilities and profitability by establishing a complete chain management system from production to marketing and sales.
The purpose of construction is to promote the market of new tobacco. KT&G’s new Kazakhstan factory will promote NGP (next generation tobacco products, currently popular NGPs, including the increasingly popular tobacco heaters, e-cigarettes and liquids) and CC (cigarettes) in Europe, the Commonwealth of Independent States It also provides overseas sales in Asia and Europe, with a total factory area of approximately 200,000 square meters. The production capacity is directed towards new tobacco products such as HNB. It is a “hybrid production base” for global overseas sales.
What is also concerning is that it has also increased investment in factories in Indonesia.
Information also shows that KT&G previously held an agreement ceremony with the Indonesian Ministry of Investment and received an investment application for the construction of a new factory (export base) in East Java Province, Indonesia. After announcing the new factory in Indonesia as a production base in Southeast Asia, KT&G plans to use the new factory in Kazakhstan as the center of business growth in Eurasia to focus on realizing its future vision.
KT&G’s data shows that 50% of its business comes from overseas, and its new tobacco business revenue has soared. Regardless of channels such as convenience stores, they are increasing their entry into new tobacco products, especially HNB.
Kazakhstan, with more than 19.8 million people, is a Central Asian country and a country adjacent to Eastern Europe. This country encourages investment and is also the largest landlocked country in the world. Its territory includes the southwestern Urals in Eastern Europe. E-cigarettes are also very active here, but there are a lot of ash. This country has a strong tobacco culture, with nearly 30% being smokers, and the ratio of male and female users is very high, which is providing space for the development of new local tobacco.
However, the country itself is not friendly to vaping. In July this year, it proposed a comprehensive ban on the sale, import, export and production of vaping, including vaping and e-liquid products. In the past two years, the country’s vaping turnover has increased 300 times. Within two and a half years, approximately 3 million e-atomizers were imported to Kazakhstan. At the same time, many Chinese vaping products pass through the country’s customs. However, leading international public health experts have expressed serious concerns about Kazakhstan’s upcoming ban on vaping, which they believe is a “retrograde step.”
In any case, some international electronic atomization giants are already developing global base layouts and expanding global sales strategies, especially deepening their layout in Eastern Europe, which deserves attention.
