Japan Tobacco Inc: Expansion in Asia Pacific

Japan Tobacco Inc’s strategy in Asia Pacific

With tougher government regulation, cigarette consumption is observing a decline internationally. In response, in order to maintain its competitive edge, Japan Tobacco Inc’s acquisitions in Asia Pacific, namely in the Philippines and Indonesia, are seen as part of its international strategy to maintain long-term growth.

JTI lags behind PMI and BAT in geographical presence

The challenging operating environment observed in the tobacco industry has resulted in Japan Tobacco Inc (JTI) adopting an international strategy of acquisitions, ensuring its mid- and long-term growth.

JTI lags behind PMI and BAT in geographical presence

Unlike PMI and BAT, JTI is not as well-balanced internationally. Japan alone accounts for 70% of JTI’sretail volume sales in Asia Pacific.

Philippines: JTI’s acquisition of Mighty Corp

In early 2017, domestic player Mighty Corp was found to have implemented fake tax stamps during a government raid, in its bid to evade government taxation.

Impact of JTI’s acquisition on the local cigarette market

With the acquisition, JTI’s volume share in the Philippines will increase from 6% to 26%, strengthening its position to become the second player behind Philip Morris Fortune Tobacco Corp, which currently accounts for 65%.

Focus on the economy segment may limit value growth for JTI

By placing its focus heavily on economy cigarettes, this might potentially limit growth in value sales for JTI.