[Intl-tobacco] Tokyo rolls out smoking salons

[robert weissman]

Tokyo rolls out smoking salons -
FTD (Financial Times Deutschland)

July 19, 2006


von Mariko Sanchanta

In a lax regulatory environment, Japan Tobacco is using new techniques to w=
oo the
key youth market. Although the legal smoking age is 20, it is almost never =
enforced
allowing companies to come up with new and inventive ways of marketing ciga=
rettes to
young adults.

On a summer night in Shibuya, the high-tech heart of Tokyo and a hang-out f=
or
teenagers, a group of youngsters are chatting away in a caf=E9 close to the=
 station.
Upon closer inspection, though, something seems odd: every person in the ca=
f=E9 has a
cigarette in their (sic) hands. Unlike the owners of smoke-free caf=E9s and=
 bars in
the west, where health regulations are becoming increasingly stringent, the=
 presence
of cigarette smoke does not perturb the proprietor of the Shibuya caf=E9. F=
or its
owner is Japan Tobacco (JT), the world's third-biggest tobacco company.

Faced with a shrinking Japanese population and a declining percentage of sm=
okers JT
has come up with inventive ways to market cigarettes to its most crucial de=
mographic
group: young adults. Overall, the number of smokers has declined in Japan. =
In 2005,
46 per cent of Japanese men smoked, compared with 61 per cent in 1990, acco=
rding to
the ministry of health. But among those in their twenties, 52 per cent of m=
en and 21
per cent of women smoked in 2005. "The fastest growing group of smokers are
20-year-olds, particularly women. There is the perception that they will lo=
se weight
by smoking and look cool at the same time," says Manabu Sakuta, professor o=
f
neurology at Kyorin University.

JT, a former state-owned monopoly, opened the Shibuya caf=E9 two years ago,=
 and its
appeal has grown steadily. Last month it attracted about 340 smokers a day =
during
the week and 470 a day at the weekend. The caf=E9 is staffed by two women, =
who
scarcely bat an eyelid when apparent teenagers amble in. Although the legal=
 smoking
age in Japan is 20, it is almost never enforced and cigarettes are readily =
available
to anyone tall enough to reach the buttons of a vending machine. It is esti=
mated
that there is one cigarette vending machine for every 50 people in Japan.

"Our objective in opening this space was to communicate information about o=
ur
products, since Shibuya is the trend-setting city of Japan," says JT's Yosh=
ihisa
Fujisaki, head of marketing operations. Although Mr Fujisaki says that, in
principle, the two attendants are supposed to check identification, they do=
 not if a
person looks of legal age. "The people who come into this space are also ou=
r
customers. We try to make an effort not to create any unpleasant feelings,"=
 he says.


JT is prohibited from selling cigarettes in the caf=E9, yet it serves as an
indispensable tool for market research and advertising. "Shibuya is an area=
 where
our competitors are strong,"says Mr Fujisaki, referring to Philip Morris an=
d British
American Tobacco. "We wanted to hear more views and opinions from young adu=
lt
smokers." The two attendants sometimes offer smokers who enter the caf=E9 a=
 newly
launched cigarette line and ask them for their opinion on taste and other
attributes.

Ritsuko Tsunoda, tobacco analyst at Merrill Lynch in Tokyo, says: "The effo=
rts to
woo young smokers are universal in the industry and crucial. Once these peo=
ple start
smoking they become hooked and steadily increase the number of cigarettes t=
hey
consume. "JT has become more aggressive in marketing its brands, for exampl=
e by
changing the design of its Mild Seven cigarettes to appeal to younger smoke=
rs. They
are trying to prolong the cash-flow generating period from their brand asse=
ts."

Japan is a peculiar market for tobacco because the government retains a 50 =
per cent
stake in JT. The country's tobacco policy does not lie with the health mini=
stry but
with the ministry of finance, which critics say creates an inherent conflic=
t of
interest within the government. A near absence of tobacco-related litigatio=
n in the
country, and relatively lax regulations, have made the environment for toba=
cco
companies in Japan a virtual nirvana, say critics.

"In Japan, it's still seen as uncool to be associated with anything that ad=
vocates a
non-smoking lifestyle. But I hope this will change in the future, and perha=
ps Japan
will be a bit more like America in that regard," says Dr Sakuta.



http://www.ftd.de/karriere_management/business_english/97455.html