KT&G’s HNB Expansion Blueprint: Factory Launch, Leadership Shift & Lil Hybrid 3.0 Targets Japan

Key point：

1.On April 22, 2025, KT&G announced that their new factory in Kazakhstan had been officially completed.

2. KT&G has appointed international business expert Hong Daehwa as the director of the HNB product division. 

3. Starting on April 15th, PMI will begin selling Lil Hybrid 3.0 in Japan. 

4. After collaborating with PMI, KT&G's HNB products have been launched in 34 countries worldwide.

According to the Korean newspaper "The Korea Daily" on April 23, 2025, the Korean Tobacco & Ginseng Corporation (KT&G) has announced that their tobacco factory in Kazakhstan, a country in Central Asia, has been completed. This factory will become the company's main production and export base for the growing Eurasian market. The new factory covers an area of 52,000 square meters (559,723 square feet) and has three production lines, with a capacity to produce 4.5 billion tobacco products per year.

Furthermore, KT&G recently appointed Hong Dahuá as director of the HNB products department, a position he previously held as head of the HNB products office. With this personnel reorganization, KT&G plans to further accelerate the expansion of HNB products in the global market through a stable organizational structure.

According to reports, it is expected that the overall performance in the market of heated tobacco products by KT&G will achieve significant results this year. The company is accelerating market expansion overseas with its heated tobacco product "Lil Hybrid 3.0".

KT&G is collaborating with the global tobacco market leader, Philip Morris International (PMI), to accelerate expansion in the international market. In 2020, KT&G signed a supply and sales contract abroad for HNB products with PMI, and in 2023 signed a 15-year long-term contract (until January 2038).

After collaborating with PMI, the number of countries in which KT&G's HNB products are sold in the international market has continued to increase. To date, their products have already been launched in 34 countries worldwide, including Russia, Japan, Italy, Poland, Kazakhstan, Czech Republic, Greece, among others.

Especially the overseas sales of the third-generation Lil Hybrid 3.0 model are expanding, and much attention is being paid to its potential for future growth.

Starting from April 15th, PMI will begin selling the Lil Hybrid 3.0 in Japan, with sales through various channels ranging from the official IQOS online store to convenience stores. Since Japan is the largest market for heated tobacco products in the world, the launch of the Lil Hybrid 3.0 is of great significance.

According to market research company IMARC Group, by the year 2024, the HNB products market in Japan has reached $20.5 billion (approximately 29 trillion won), and is expected to continue growing at a compound annual growth rate (CAGR) of 10.12% until 2033.

In 2024, KT&G officially launched the Lil Hybrid 3.0 in Russia, and due to the positive market response, the company is actively considering expanding its offering. The launch of the Lil Hybrid 3.0 in other countries in the future is eagerly awaited.

With the diversification of KT&G's e-cigarette product range and the expansion of exports, it is expected to have a positive impact on performance.

In fact, KT&G's overseas sales of heated tobacco products without burning increased by 29% year-on-year thanks to the launch of Lil Hybrid 3.0 in Russia. The introduction of a new HNB product platform is also one of the growth expectations for the future. KT&G launches new HNB devices every year.