[THE INVESTOR] Korea’s top tobacco company KT&G announced on Nov. 7 the launch its new heat-not-burn cigarette, also known as e-cigarette, Lil to take on its foreign rivals who have been gaining market share.

The e-cigarettes will be available starting Nov. 20 at all GS25 convenience stores located in Seoul. As a pilot launch, the new tobacco products will be available at 259 stores from next week. 

The announcement comes as tobacco firms Philip Morris International and British American Tobacco have been aggressively expanding into the e-cigarette market here. According to industry sources, PMI’s market share has already reached 2.5 percent since its launch in June.

As a late mover, KT&G tried to make sure in advance that the company’s products have a price advantage over its competitors.

The firm decided to sell its new cigarette stick Fiit at 4,300 won (US$3.87) per pack, the same price as its competitors. However, PMI and BAT recently said they are considering raising prices of their e-cigarettes due to the government‘s decision to raise consumption taxes up to 90 percent of the regular cigarette sticks. If the bill successfully passes the floor this month, the taxes will hike to 529 won per pack of 20 cigarettes from the current 126 won.

“For now we do not have any plans of raising our prices,” Lim Wang-seop, chief of innovative product department, emphasized at press conference in Seoul. He also added that the firm might consider a more aggressive pricing strategy based on the market situation.

Moreover, the Lil device costs 95,000 won but is actually available at a discounted price of 68,000 won for consumers who log into their website to attain coupons. The price is cheaper than PMI and BAT’s devices which are sold at 97,000 won and 70,000 won, respectively, after discounts.

The company’s technology was another key factor that KT&G emphasized at the press conference.

“We used a circle-shaped blade (for Lil). This is our own technology and does not intrude any patents of our competitors,” Lim said.

Furthermore, similar to BAT’s Glo, Lil can power up to 20 cigarette sticks with a full charge, which takes around two hours. This distinguishes it from the main competitor PMI’s IQOS which has to be charged after smoking each stick.

KT&G also added that although not recommended due to safety reasons, their sticks can also fit into the PMI’s device.

Meanwhile, health issues remain questionable, since the Korean company denied to disclose any specific information related to the harmful effects of Lil.

“We can only say that our product’s harmful effects are at the same level as our competitors,” Lim said, while declining to disclose specific data.

By Song Seung-hyun (ssh@heraldcorp.com)