"Japan Tobacco to target young adults"

Last week, the Ministry of Finance announced that from July 1 2008, all retailer-owned and operated cigarette vending machines must be equipped with card readers that refuse sales to minors.

Only holders of Taspo IC cards, issued free by the Tobacco Institute of Japan specifically for this purpose, will be able to buy cigarettes from automated vending devices. However,because the cards do not require a password, people other than authorized cardholders can use them to buy cigarettes. "Features like fingerprint identification would run against the convenience of vending machines," said Vice Chairman Koji Nishihara of the Japan Tobacconist Federation.

This comes after Japan Tobacco announced that it will try to take the lead in consolidating the food sector in order to boost the company's competitiveness against US and European firms. JT became the world's No. 3 cigarette maker through the acquisition of Gallaher Group of the UK in an
astounding ￥2.25 trillion ($20.6 billion) deal last year. Perhaps rather oddly, JT has also been increasing its position as a major food producer through such steps as the purchase of frozen food company Katokichi, jointly with Nissin Food Products.

In an interview with the Nikkei Shimbun, JT’s President Hiroshi Kimura said of this investment: “The acquisition of Katokichi is aimed at solidifying our position in the Japanese food market by achieving economies of scale and boosting our earnings, which have been at the level of a midsize firm so far. The domestic food market is destined to gradually shrink, so we intend to expand our operations overseas. A number of Japanese supermarkets are entering the Chinese market, and we want to work closely with them. In Japan, we can form loose alliances with other firms if our brands complement each other.” He also said that the shrinking 5% market cannot be helped because of the declining population and they aim to boost sales abroad, especially in the UK and Ireland after acquiring the Gallaher Group.

He also spoke about JT’s 64.7% rise in September last year: “Our market share had been sliding little by little since the firm was privatized in 1985, and this was the first rise in six terms on a half-year basis. We are hoping to achieve growth for the full year as well. I believe our marketing campaign targeting young adults to commemorate the 30-year anniversary of our mainstay Mild Seven brand has begun to bear fruit.”

Rather oddly, the Nikkei do not question the “To ban or not to ban” dilemma experienced in other countries and the article quite positively highlights Japan Tabacco’s move to expand into the food retail sector as well as promote smoking to young adults. To be fair, this article and this publication is focused just on the business aspects of JT and not of any other ethical or social viewpoints that may concern others.

Japan may be trying to combat underage smoking with ID cards but with the country’s proposal for lowering the age of adulthood from 20 to 18 and the latest studies showing that 42% of boys and 27% of 3rd year high school students have experienced smoking before, are we likely to see an increase of young smokers in Japan, following countries such as the UK and Germany?

To view the full JT interview by Nikkei Shimbun, click here: http://www.nni.nikkei.co.jp/AC/TNW/Search/Nni20080114BB9TOBAC.htm

To find out more on smoking in Japan, click here to see the J@pan Inc Newsletter: http://www.japaninc.com/jin422