South Korea monopoly goes up in unsmoke

By Yoolim Lee
Bloomberg News Service

SEOUL, South Korea — South Koreans, the world's second-heaviest smokers, are trying to kick the habit — a health drive that may also hamper the government's effort to sell a stake in its tobacco monopoly.

Korea Tobacco & Ginseng Corp. shares tumbled 18 percent this year, second worst among South Korea's 100 biggest stocks, after the government raised cigarette taxes, companies banned workplace smoking and the nation's most famous comedian, now dying of lung cancer, urged Koreans to quit.

"It's no secret that the Ministry of Health and Welfare and the Ministry of Finance and Economy have contradictory goals," said Korea Tobacco spokesman Park Won-rak. "The Ministry of Finance would like to see a high stock price to ensure the share sale is successful."

Tobacco's health hazards haven't loomed large in South Korea, whose 47 million people lag only China in terms of consumption, averaging 2,100 cigarettes a year. Low prices help: a pack of Marlboros costs $1.40 (about one-third the price in Hawai'i).

Last July, however, the government banned cigarette sales in restaurants, cafés and bars, with the intent of reducing the medical costs linked to caring for sick smokers.

In January, it raised the health tax on cigarettes, increasing prices by 14 percent.

The campaign got a boost from comedian Lee Joo-il, 62, a former chain-smoker, who spoke from a hospital bed with oxygen tubes in his nostrils.

The TV spot was "shocking," said Park Kap-soo, a 59-year-old businessman who is trying to quit his 40-year habit. "It was just about the most realistic way to show smokers what kind of risk they're taking."

Korea Tobacco, meantime, is battling the erosion of its traditional business with Humming Time menthol cigarettes, which contain less nicotine, and its own ginseng health drinks.

Ginseng drinks, pills and roots account for a tenth of sales.