Tobacco sales slowly rise after post-price hike dip

Once-dwindling sales of cigarettes have recently started to rise again despite a new price increase this year on cigarettes.

According to one domestic convenience store chain, tobacco sales in the first week of January had decreased by 40.3 percent compared to January 2014. In the last week of March, however, sales had dropped just 14.5 percent compared to the same period last year.

On Jan. 1, the nation’s smokers saw the price of a pack of cigarettes increase by 2,000 won ($1.83), the result of a government-approved tax hike on tobacco the previous year.

The current boost in sales, a tobacco industry official explained, has likely resulted from the fact that “people who at one point quit smoking have started again, and those who hoarded cigarettes have depleted their stocks.”

With the rise in sales, the nation’s largest tobacco vendor KT&G has restored its market share, while British American Tobacco (BAT) Korea, which previously expanded its reach into the Korean market with its cheaper foreign cigarettes, has seen its grasp weaken.

Compared to last year, KT&G’s occupancy in another convenience store chain decreased from 53 percent in December to 44.8 percent in January. However, its presence last month was seen to be rising again, up to 48.7 percent.

BAT Korea recorded 15.3 percent of the market share last month. Though earlier this year, the manufacturer was able to expand its hold from 14.3 percent to 20.3 percent by selling low-priced Vogue cigarettes for just 3,500 won as domestic tobacco was sold for 4,000 per pack.

“Foreign cigarettes succeeded in expanding market shares with cheaply priced tobacco, but [despite the lesser cost], consumers have since returned to their past tastes,” the official said.

The current situation mirrors that in 2005, when the government increased cigarette prices by 500 won. According to an association representing four major tobacco manufacturers, at the time, the decline in cigarette sales in January 2005 stood at 58 percent.

The sales gap slowly started to close in subsequent months, however, with 44.8 percent less sales in February; 32.4 percent in March; 27.2 percent in April; and 21.5 percent in May.

BY SOHN HAE-YONG [nam.yoonseo@joongang.co.kr]