The corporate logo of KT&G Corp. (KT&G)
KT&G Corp., South Korea’s dominant tobacco company, will suspend its tobacco business in the United States for an unspecified period, the company said in a regulatory filing Tuesday.
“We need to conduct a review of our business in the US amid intensifying regulations over tobacco and growing competition,” the company said, referring to a hostile business environment, such as the US Food and Drug Administration’s recent move to introduce a bill to curb nicotine content and reduce tobacco addiction.
The decision is estimated to cost the company about 205.8 billion won ($174 million) in lost sales, amounting to around 3.9 percent of the company’s overall sales revenue for last year.
The company also said mandatory tobacco escrow accounts for smoking-related legal settlements have added additional burdens on top of the already difficult business environment.
“We will reconsider our business strategy in the US after reviewing the business environment and regulations,” an official from the company said. (Yonhap)