Japan Tobacco International

JTI (Japan Tobacco International) is the successor entity to a nationalized tobacco monopoly first established by the Government of Japan in 1898 to secure tax revenue collections from tobacco leaf sales. In 1904, the government's leaf monopoly was extended to a complete takeover of all tobacco business operations in the nation, including all manufactured tobacco products such as cigarettes. The ostensible reason for the expansion of control was to help fund the 1904 Russo-Japanese War, but because all foreign tobacco interests in Japan at the time were forcibly evicted under the monopolization scheme, this also protected the domestic tobacco business for nearly eighty years.

The business operated within the Japanese government as an arm of the nation's Japanese Ministry of Finance until 1949 when the JTI and Salt Public Corporation was established to enforce restrictive labor relations policies under the U.S. and allied forces' Occupation of Japan. JTI and Salt Public Corporation remained a complete state monopoly under direct Japanese Ministry of Finance authority until 1985, when Japan Tobacco, Inc. was formed as a publicly traded stock company.

With periodic incremental sales of the public's ownership beginning in October 1994, JTI became two-thirds owned by the Japanese Ministry of Finance in June 2003, and the ministry continued to own 50% until March 2013. It was announced in May 2012 that the government would sell one-sixth of the company's outstanding shares to raise ¥500 billion to finance reconstruction from the 2011 earthquake and tsunami. In 2013 the Japanese government disclosed the details of its plans to reduce its equity interest in JTI by $10 billion, devoting the proceeds to reconstruction in northeastern Japan. The ministry of finance sold the stock in March 2013, selling about 333 million of the 1 billion shares it owned at that time. The government remains required by law to own at least one-third of Japan Tobacco's stock.

JTI acquired in 1999 from R.J. Reynolds, is an operating division of Japan Tobacco Inc., handling the international production, marketing and sales of the group's cigarette brands. It sells Camel, Salem, and Winston brands outside the USA. JTI also operates in foods, pharmaceuticals, agribusiness, engineering, and real estate. It left the beverage industry in September 2015. Japan Tobacco completed the largest ever foreign takeover in Japanese history through acquisition of Gallaher Group plc in April 2007. Japan Tobacco runs the Tobacco and Salt Museum in Shibuya, Tokyo.

JTI controls 66.4% of the cigarette market in Japan and will seek more takeovers from 2009 to build on the 1.4 trillion JPY (USD 15 billion) purchase of Gallaher Group, with then-President Hiroshi Kimura commenting that further acquisitions would be appropriate after the full integration of Gallaher by 2009.

In 2006/2007 JTI planned to start Serbia production, and also planned to invest another $100 million. JTI paid "$35 million euros" for 98.5 percent of Senta Tobacco Industry in May 2006, with a further $10 million invested since then. The plant has a production capacity of some five billion cigarettes a year.

In April 2012 it was announced that Mitsuomi Koizumi would become President, and president Hiroshi Kimura would become Chairman of JTI. and Chairman Yoji Wakui would retire. Wakui had previously been a bureaucrat at the ministry of finance. Koizumi assuming the presidency meant that for the first time since the 1985 privatization neither president nor chairman was from the ministry of finance. Koizumi, who had been Executive Deputy President, became president in June 2012.

As of 2013, although tobacco consumption was declining, the Japanese remained heavy smokers, consuming an average of 1,800 cigarettes a year, compared to about 1,000 per capita in the United States. On October 30, 2013 JTI announced that it would close four Japanese factories and cut 1,600 jobs in Japan through voluntary retirements. This was planned to be completed by March 2016. JTI also planned to consolidate 25 branch offices into 15 regional headquarters, and close leaf-processing and vending machine operations. In September 2015 it was announced that JTI would buy the rights for Natural American Spirit outside the US for $5 billion.




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