Japan Tobacco Inc. (JT) has announced a new operating model to further strengthen the competitiveness and profitability of its tobacco business.
The changes include the consolidation of the company’s current international and Japanese-domestic tobacco businesses into one tobacco business, as well as the optimisation of its operations in the Japanese market. These new initiatives will “firmly position the JT Group (JTG) to best address the changes in its operating environment in order to achieve long-term profitability and sustainable growth”.
JT Group President and CEO, Masamichi Terabatake commented: “Over the years, the JT Group has consistently anticipated new challenges and managed to successfully transform itself during rapidly changing business environments. […] Today’s announcement is an acceleration of our transformation and will elevate the JT Group to the next level. We are consolidating the organizations of the international and Japanese-domestic tobacco businesses to enable us to fully leverage our company-wide resources and clearly prioritize business investments globally. […] We believe this new model is essential to strengthen our worldwide competitiveness, especially in the RRP category, enabling us to deliver sustainable profit growth in the mid- to long-term. The RRP category in Japan is the most mature and competitive in the world, so maximizing the value offered to our consumers by strengthening our competitiveness is a clear priority. In reflection to this and the decline of the sales volume in recent years as well as a highly uncertain operating environment, we had to take some difficult yet necessary decisions.”
According to a press release, JTG concluded that a revision of its strategic focus in its tobacco business is necessary. The group’s objective going forward is to operate with a stronger consumer-centric mindset and prioritize investments in heated tobacco sticks in the RRP category while maintaining necessary investments towards combustible products. The combination of the two tobacco businesses will enable efficient and effective deployment of resources within the Group, says JTG.
The group’s planned initiatives are among others:
• Consolidate the headquarter functions of the tobacco business, including the Japan market, currently in Tokyo into the existing headquarters of the international tobacco business in Geneva
• Reform the Japanese Market Head-office and sales organization to address the changes in the operating environment, diverse consumer needs in a prompt and effective manner
• Optimization of workforce reflecting the reorganization of the sales operations and optimization of administrative tasks from April 2022 (Offer voluntary retirement program and seek retirement of about 1,000 employees)
Read the full press release here