[Intl-tobacco] Japan: JT moves to rustle Marlboro market share

[Robert Weissman]

Financial Times
JT moves to rustle Marlboro market share
By Mariko Sanchanta in Tokyo
Published: June 10 2005 03:00 | Last updated: June 10 2005 03:00

Japan Tobacco, the world's third-biggest cigarette maker, yesterday
unveiled 13 tobacco brands to add to its 100-plus stable, marking the
single biggest product launch in its history.

The move is part of JT's aggressive strategy to win back domestic market
share following the April termination of its Marlboro licensing
agreement. Under the agreement with Philip Morris International, JT had
exclusive rights to make and sell Marlboro products in Japan.

The company's market share is estimated to be about 66 per cent: before
the termination of the Marlboro licence, it was 73 per cent.

Including yesterday's launch, JT has introduced 31 cigarette brands
during the past two years. The company, which is 50 per cent owned by
the Japanese government, has focused on launching "premium" brands,
which carry a price tag of Y300 ($2.80) or above; low-tar and menthol
brands; and cigarettes that do not smell as much as conventional cigarettes.

Analysts said that blitzing the Japanese market with new products was a
good strategy for the company.

"It will be difficult for JT to come up with a blockbuster brand, now
that the climate for tobacco advertising has become so strict," said
Yukiko Oshima, analyst at CSFB in Tokyo. "Launching many new products at
the same time and selectively test-marketing them in various regions is
the most cost-effective way of increasing its market share."

JT will also be able to step up domestic marketing efforts of its
flagship Camel, Winston and Salem brands now that it no longer sells the
Marlboro brand. It had been restricted under Japan's anti-monopoly act.

Among the products launched yesterday were peach, strawberry and
lemongrass-flavoured cigarettes. Nearly all were priced at Y300 and above.

"Thanks to the launch of these 13 new products and the renowned brands
in our international portfolio, we will cut into Marlboro's market
share," said Yasumasa Matsunaga, head of JT's tobacco product division.

Mr Matsunaga noted that, because of the Japanese market's
competitiveness, it was an ideal testing ground for products that might
one day be launched in the international market.

JT launched Lucia, a citrus-flavoured product, in Russia last year
following success in the finicky Japanese market.

Japan is the world's third-largest tobacco market after China and the
US, but the number of domestic smokers has steadily been declining
because of increasing health consciousness and non-smoking regulations.

Japan ratified the World Health Organisation's convention on
international tobacco control, leading to bigger warnings on cigarette
packets and more stringent advertising controls.