KT&G Shifts HTP Production to Malaysia, 'lil Hybrid 3.0' Supply Normalizes

Key points:

South Korean tobacco company KT&G is transferring its HNB device production base from Vietnam to Malaysia.

Due to policy changes in Vietnam causing production interruptions, KT&G temporarily suspended sales of the "lil Hybrid 3.0.

After the production base was relocated, the supply issue was resolved at the beginning of this month.

After the supply is restored, KT&G is expected to consolidate its leading position in the South Korean HNB market.

Currently, KT&G's "lil" series holds a market share of approximately 46% in South Korea, surpassing Philip Morris International (PMI)'s "iQOS.

According to News1 on May 9th, South Korean tobacco company KT&G has relocated the production base of its HNB device "lil Hybrid 3.0" from Vietnam to Malaysia, and resumed normal supply earlier this month.

KT&G's subsidiary, which produces HNB devices, previously had a factory in Hanoi, Vietnam. However, due to a sudden notification by the Vietnamese government in December last year to shut down the factory without a transition period, production was interrupted and supply became unstable. This policy change led to KT&G halting the sales of "lil Hybrid 3.0" in convenience stores and other sales channels in February.

Although it was initially expected that supply issues would continue until the end of next month, KT&G sped up the relocation of its factories and ultimately resumed equipment supply and distribution in the Korean market at the beginning of this month.

With the supply issues being resolved, KT&G is expected to further solidify its leading position in the HNB market in South Korea in the second half of the year. Currently, the "lil" series holds about 46% market share in South Korea, ranking first and facing fierce competition from Philip Morris International's "iQOS" product, with only about a 1% difference in market share between the two.

Representatives from KT&G stated that: 

"Due to supply issues caused by changes in Vietnamese policies, the problem is being quickly resolved and products have been restored to supply since the beginning of this month. With the normalization of supply, we expect to further consolidate our leadership position in the HNB market."