KT&G Accelerates HNB Expansion: New Central Asia Plant Completed, Leadership Reshuffle, Lil Hybrid 3.0 Enters Japan

Key Points：

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

2. KT&G appoints global business expert Hong Da-hwa as the Head of the HNB Business Division. 

3. Starting from April 15, PMI has begun selling the Lil Hybrid 3.0 in Japan. 

4. Following the collaboration with PMI, KT&G's HNB products have been launched in 34 countries worldwide.

According to The Korea Daily on April 23, 2025, the Korean tobacco company (KT&G) announced that its tobacco factory located in the Central Asian country of Kazakhstan has been completed. The factory will serve as the company's major 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 capable of producing 4.5 billion tobacco products per year.

In addition, KT&G recently appointed Hong Dahwa as the head of the HNB product division, replacing his previous position as head of the HNB product department. With this personnel adjustment, KT&G plans to accelerate the expansion of HNB products in the global market by stabilizing the organizational structure.

According to reports, KT&G's HNB product is expected to achieve significant results in the global market this year. The company is accelerating its expansion in overseas markets with its HNB product "Lil Hybrid 3.0".

KT&G is collaborating with the global tobacco market leader, Philip Morris International (PMI), to accelerate its expansion into overseas markets. In 2020, KT&G signed a contract with PMI for the overseas supply and sale of HNB products, and in 2023, they signed a long-term contract lasting 15 years (until January 2038).

After maintaining a partnership with PMI, KT&G's HNB products have continued to increase in the number of countries they are sold in overseas markets. As of now, their products have been launched in 34 countries worldwide, including Russia, Japan, Italy, Poland, Kazakhstan, Czech Republic, Greece, and more.

Especially the overseas sales of the third generation Lil Hybrid 3.0 model are expanding comprehensively, attracting attention to its future growth potential.

Starting from April 15th, PMI has begun selling Lil Hybrid 3.0 in Japan, with a sales range that includes various channels such as the official IQOS online store and convenience stores. Considering Japan is the world's largest HNB market, the launch of Lil Hybrid 3.0 is of significant importance.

According to data from the market research company IMARC Group, as of 2024, the market size of Heat-Not-Burn (HNB) products in Japan has reached $20.5 billion (approximately 29 trillion Korean 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. Due to positive market response, the company is actively considering expanding supply. The release of Lil Hybrid 3.0 in other countries is highly anticipated in the future.

With the diversification of KT & Ge-cigarette devices leading to an increase in exports, it is expected to have a positive impact on performance.

In fact, thanks to the launch of the Russian Lil Hybrid 3.0, KT&G's overseas HNB product sales increased by 29% year-on-year. The introduction of a new HNB product platform is also one of the expected factors for future growth. KT&G introduces new HNB devices every year.