KT&G Corp. is pursuing an acquisition of a leading nicotine pouch company in Northern Europe for approximately 300 billion won ($200 million), according to investment banking sources, as South Korea’s dominant tobacco producer scrambles to adapt to changing consumer preferences and regulatory pressures.
The potential deal represents KT&G’s first significant overseas acquisition since purchasing a stake in Indonesian tobacco maker Trisakti Purwosari Makmur in 2011 for 140 billion won. The move comes as the company faces mounting challenges in traditional cigarette markets and seeks new revenue streams in the rapidly expanding smokeless tobacco sector.
The global nicotine pouch market, valued at approximately $7.6 billion in 2024, is projected to reach $143.1 billion by 2035, driven by consumers seeking alternatives to combustible tobacco products. Europe represents a significant portion of this growth, with the Scandinavian region expected to expand at a compound annual growth rate of 35.8% through 2030.
However, the timing presents both opportunities and risks. Several European countries have implemented or are considering restrictions on nicotine pouches, with France banning sales entirely in February 2025 and other nations tightening age restrictions and marketing limitations. The regulatory landscape remains fragmented across the continent, creating uncertainty for manufacturers.
For KT&G, which has struggled to maintain growth in traditional tobacco markets, the acquisition could provide access to established distribution networks and manufacturing capabilities in a lucrative segment. The company aims to generate half of its sales from overseas operations by 2027, compared to about one-third currently, as part of its broader international expansion strategy.
The South Korean company’s push into nicotine pouches also reflects the industry’s broader pivot toward reduced-risk products. Swedish Match, which dominates the category with its ZYN brand, was acquired by Philip Morris International for $16 billion in 2022, underscoring the strategic value established players place on the smokeless tobacco market.
KT&G’s acquisition appetite comes as the company faces headwinds in key markets. The firm suspended its U.S. tobacco operations in 2021 citing regulatory challenges and rising compliance costs, highlighting the difficulties traditional tobacco companies face in highly regulated jurisdictions.
The potential Northern European deal, if completed, would test KT&G’s ability to navigate complex regulatory environments while building a meaningful presence in the fast-growing nicotine alternatives market.
