The extended agreement extends the three-year-old partnership that has seen the US-based tobacco company commercialise KT&G's products in over 30 markets
Philip Morris International (PMI) has signed a long-term agreement with South Korean tobacco and nicotine maker KT&G to continue to market the latter’s smoke-free devices and consumables exclusively outside South Korea.
The extended agreement extends the three-year-old partnership that has seen the US-based tobacco company commercialise KT&G’s products in over 30 markets.
The agreement has a 15-year term that runs through 29 January 2038.
According to Philip Morris, performance review cycles and corresponding volume-based commitments will be confirmed every three years to accommodate changing market conditions.
Over the course of the agreement, both firms anticipate that these commitments will go up, starting with a total commitment for the first three years corresponding to 16 billion consumables.
Philip Morris CEO Jacek Olczak said: “We have been pleased with the success of our cooperation with KT&G so far and believe a long-term collaboration will accelerate the achievement of a smoke-free future.
“We want everyone who does not quit smoking to switch to a better alternative, for the benefit of their own health, public health, and society at large.”
The deal grants Philip Morris continuous exclusive access to the South Korean firm’s smoke-free brands and product pipeline. These include items for low- and middle-income markets, which are expected to supplement the former’s current portfolio of smoke-free goods.
In order to help KT&G’s continuous growth of its smoke-free business outside of South Korea, Philip Morris’ global commercial infrastructure and experience in commercialising smoke-free goods will be made available to the former.
The US-based tobacco company said that the products sold under the agreement will be evaluated to make sure they adhere to its standards of quality and scientific justification as well as the regulatory requirements in the markets where they are launched.
On a market-by-market basis, Philip Morris and KT&G will apply for all applicable regulatory permissions.