PMI – KT&G Partnership

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KT&G’s lil has been the most successful contender to PMI’s IQOS so far and S. Korea is the only market where PMI lost its leadership in heated tobacco to a competitor. PMI Management acted swiftly and decisively on the “lil threat” and signed a deal with KT&G in Jan 2020 to distribute KT&G’s heated-tobacco and hybrid products outside of South Korea for an initial period of three years1.

In January 2023, PMI announced an agreement to extend and deepen collaboration with KT&G2

– Running for 15 years (to Jan 29, 2038)

– Performance-review cycles and volume commitments for each three-year period

– Commitment for the first 3-year period equivalent to 16Bn consumables.

KT&G Executives made multiple public statements on this partnership to re-assure the activist KT&G investors – underlining that $25Bn in total sales is aimed over the next 15 years via the PMI partnership. Nevertheless, Flashlight Capital (an activist shareholder) recently released an official statement3 on its court injunctions against KT&G filed on October 6, 2023. Among other points (i.e. export business profitability and consulting fees), these injunctions seek the disclosure of information related to the global distribution agreement with PMI. Flashlight Capital questions KT&G reliance on a competitor in a vital growth category and the absence of transparency surrounding the agreement’s terms & potential risks.

KT&G cited the confidentiality clauses as the reason for not disclosing the KPIs for its heated tobacco exports to PMI.


  1. PMI announces deal to distribute KT and G’s smoke-free products | Philip Morris International ↩︎
  2. Media – Press Details | PMI – Philip Morris International ↩︎
  3. Flashlight Capital Demands Enhanced Transparency From KT&G With Court Injunction | Business Wire ↩︎
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