According to a report by N News on October 8, at a national policy inspection meeting in Seoul targeting the Ministry of SMEs and other agencies, vice president of South Korean tobacco company KT&G, Do Hak-young, stated during questioning by Democratic Party lawmaker Oh Se-hee that they will adjust the profit margin of e-cigarette devices to seek a way to coexist with store owners.
According to reports, KT&G currently holds the top position in the e-cigarette device market with a 72% market share. Since entering the market in November 2017, the company has maintained its leading position for seven consecutive years.
Senator Oh Se-hee pointed out that KT&G's market leading position is thanks to the support of 55,000 convenience stores nationwide. However, in recent years, there have been unfair practices in the transactions with convenience stores due to a lack of a win-win cooperation.
According to the Tobacco Industry Act, e-cigarette devices are classified as non-tobacco products and are sold with a 6.1% profit margin, while also bearing the credit card processing fees. They are not tobacco but rather small grocery items, and the profit margin needs to be adjusted.
The lawmaker further explained that KT&G's main purpose in promoting e-cigarette devices in convenience stores is to increase tobacco sales, despite lower profits, as it effectively attracts customers into the stores. Since 2018, convenience store owners have been calling for improvements in unfair trading practices, but have not seen any progress.
He urged KT&G to develop a win-win solution.
In response, Dou Xuerong stated that KT&G is considering actively adjusting its profit margin to achieve a more fair and reasonable cooperative relationship.
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