Smokers to pay the price

In announcing that it had applied to increase the retail prices of its tobacco products, Japan Tobacco Inc. said today that declining sales made it difficult to maintain quality and services with cost reductions alone.
JT said it had applied to the Minister of Finance for approval to ‘amend’ retail prices of tobacco products in Japan in conjunction with a planned tobacco-excise-tax hike on October 1.
JT said it had applied to increase the retail prices of 143 products, including 122 cigarettes, one cigarillo, three pipe tobaccos, three cut tobaccos and 14 snuff tobaccos. Additionally, it said it had applied for seven Ploom TECH product price rises in the tobacco vapor category.
‘The Japanese domestic tobacco market continues to experience decreasing sales volumes due to structural factors including the aging and declining adult population, as well as increasingly stringent smoking restrictions,’ the company said in a note posted on its website. ‘At the same time the cost per pack for providing the same quality and services has been increasing.  Under these circumstances, JT had been maintaining the quality and price levels through cost reducing efforts.
‘However, since JT is projecting a further sales volume decline, it is very difficult to maintain the same quality and services with cost reduction initiatives alone. In this context, JT has applied to amend the retail prices of cigarettes, which exceeds the excise tax hike of ¥1.0 per cigarette, considering further increases in costs including materials. Retail price increases will vary among different brands and products, to ensure that the quality of each product will be maintained and that consumer expectations continue to be met.’
JT added that, within the tobacco vapor category, a new tax system would be imposed in stages over a five-year period. JT said it had decided to apply a ¥30 increase to the retail price of Ploom TECH, whose tax was expected to be increased by ¥30.89 a pack.
A table of representative brands presented in the note indicated that the retail price of a pack of Mevius cigarettes would rise by ¥40 to ¥480, while the price of Winston and Hi-Lite would increase by ¥30 to 450, and the price of Hope would go up by ¥20 to ¥250.
‘New retail prices will be effective on October 1, 2018, following the Minister of Finance’s approval,’ JT said.