Tag: JT Group

  • JT Launches New Infused Tobacco Device

    JT Launches New Infused Tobacco Device

    Photo: JT

    Japan Tobacco is launching a new brand named “With” and a new device named “With 2” for infused tobacco capsules in Japan this summer, the company announced on its website.

    The company will discontinue its Ploom TECH, Ploom TECH + and Ploom TECH + With infused tobacco capsule devices, which are only in Japan. They will be available until stocks are sold out.

    Ploom X, which is a device for heated tobacco sticks, is unaffected by this announcement and will continue to be sold and rolled out in a number of markets including Japan.

    JT says it remains committed to investing in reduced-risk products. The company competes in the heated-tobacco segment with its Ploom brand and participates in the e-cigarette market with its Logic brand.

    The discontinued devices
  • Robust Pricing Boosts JT Results

    Robust Pricing Boosts JT Results

    Masamichi Terabatake (Photo: JT Group)

    The JT Group reported revenue of ¥2 trillion ($13.5 billion) for the first nine months of 2022, up 13.7 percent over the comparable 2021 period.

    Core revenue at constant currency exchange rates increased by 4.1 percent to ¥1.77 trillion. Adjusted operating profit at constant currency increased by 6.5 percent to ¥78.4 billion. On a reported basis, adjusted operating profit increased by 17.5 percent to ¥637.8 billion. Operating profit increased by 20.5 percent to ¥579.3 billion while profit increased by 19.2 percent to ¥403.8 billion.

    “In the nine-month results, the JT Group delivered a strong performance, mainly driven by robust pricing in the tobacco business,” said JT Group President and CEO Masamichi Terabatake in a statement. “We are also encouraged by the Ploom X volume and share performance in Japan. We have launched Ploom X in the U.K. starting in London. We will accelerate Ploom X launches internationally from 2023.”

    Terabatake said he had high expectations of the recently announced joint venture with Altria Group to market and commercialize heated-tobacco sticks products in the U.S. “I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for JT and Altria,” he said.

    “We have revised our 2022 full-year guidance upward, driven by business momentum as well as favorable currency movements against the Japanese yen,” said Terabatake. “Following the upward revisions of our guidance, we are pleased to share our plan to increase our annual dividend guidance by ¥38 to ¥188.”

  • Altria and JT to Sell Heated Products in U.S.

    Altria and JT to Sell Heated Products in U.S.

    Photo: ASDF

    The JT Group and Altria Group, through their Japan Tobacco International and Philip Morris USA subsidiaries, have established a joint venture to market and commercialize heated-tobacco sticks (HTS) products in the U.S. with Ploom-branded devices and Marlboro-branded consumables.

    The two groups also signed a long-term, nonbinding global memorandum of understanding (MOU) to explore commercial opportunities for a wide range of potentially reduced-risk products (RRP).

    “As part of our strategic focus on HTS, we’re very enthusiastic to launch our Ploom brand in the U.S., the world’s largest RRP market in value, through our partnership with the market leader, Altria,” said  Masamichi Terabatake, president and CEO of the JT Group’s tobacco business, in a statement.  

    “We also look forward to entering into a long-term strategic collaboration with Altria to further explore global commercial opportunities in the RRP category. I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    “We are excited to begin a new partnership with JT Group, a leading international tobacco company,” said Altria CEO Billy Gifford in a statement. “We believe this relationship can accelerate harm reduction for adult smokers across the globe.”

    “We believe moving beyond smoking in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated-tobacco products position us well to increase adoption of smoke-free products.”

    The joint venture establishes a new company, Horizon Innovations, for the U.S. commercialization of current and future HTS products owned and developed by either party. Horizon will commercialize HTS products in the U.S. under the Ploom and Marlboro trademarks.

    JTI will have a 25 percent economic interest in Horizon to reflect its HTS product contribution. PM USA will have a 75 percent economic interest, reflecting the company’s strong distribution network and infrastructure, as well as its initial capital contribution of $150 million to Horizon.

    Subsequent capital contributions made to Horizon will be split according to the parties’ respective economic interest. JTI and PM USA will both maintain independent ownership of their respective intellectual properties, including any IP acquired after the formation of the joint venture that supports the development of future HTS products.

    “I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    As part of the joint venture, JTI and PM USA will combine their scientific and regulatory expertise to jointly prepare U.S. Food and Drug Administration filings, including a premarket tobacco product application (PMTA) for the latest version of Ploom HTS products. The parties currently expect to submit the PMTA for these products in the first half of 2025. Upon PMTA authorization, JTI will supply HTS devices and PM USA will manufacture HTS consumables for Horizon. In addition, JTI and PM USA have agreed to commercialization milestones for Horizon, which include distribution requirements and minimum levels of cumulative marketing investments.

    “By forming this JV [joint venture], we are bringing together the marketing, innovation, R&D and science capabilities that JTI has developed over the years with Altria’s science, U.S. regulatory experience and vast infrastructure to create a very strong proposition for the U.S. adult smoker,” said JTI CEO Eddy Pirard.

    Separate to the JV, the JT Group and Altria also announced the mutual signing of a nonbinding MOU. Under this MOU, the parties aim to structure a strategic partnership over time to market and commercialize a wide range of potentially reduced-risk products and strengthen their shared development capabilities and geographic reach. The companies believe this collaboration will accelerate global tobacco harm reduction solutions and bring significant value to their respective businesses.

    Altria’s pipeline of heated-tobacco products includes tobacco-heating product formats and new-to-market technologies. “We believe HTC products can appeal to U.S. adult smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes,” the company wrote. “This audience includes the millions of U.S. adult smokers who tried, but ultimately rejected, e-vapor products.”

    Altria expects to finalize the design of its HTC platform 1 technology (HTC1) by the end of this year and then begin regulatory preparations for a PMTA submission by the end of 2024.

    The company also expects to partner with JT to launch the HTC1 technology in an international test market in late 2024 or early 2025 using JT’s sales and distribution network.

    Prior to the recent agreement with the JT Group, Altria terminated its noncompete agreement with Juul Labs and sold its exclusive U.S. commercialization rights for the IQOS tobacco-heating system to Philip Morris International for about $2.9 billion.

  • Tools Of The Trade

    Tools Of The Trade

    Photo: JTI

    At a summer event in London, JTI showcases some of the devices that may help England achieve its smoke-free ambitions.

    By George Gay

    In his U.K. government-commissioned review, “Making Smoking Obsolete” [in England], Javed Khan said he had seen no evidence of a plan by industry to move toward meeting the ultimatum “for industry to make smoking obsolete,” which was included in the government’s 2019 prevention green paper. I’m not certain what is meant by “industry” here, but assuming it means partly or exclusively the tobacco industry, and perhaps the nicotine industry, this statement seems extraordinary. After all, one of Khan’s reviews, “Critical Interventions,” recommends promoting as effective tools to encourage smokers to quit their habit some of the products that, for well over a decade, the tobacco and nicotine industries have been developing, making available and promoting insofar as they have been allowed to do so.

    The independent e-cigarette industry has arisen almost solely for the purpose of converting as many smokers to vapers as possible—to making smoking obsolete, if you like. That is its raison d’etre. Of course, a purist might complain that individual vaping industry firms also want to make a profit, but making a reasonable profit provides funding for new developments and, more generally, makes the world go round.

    So perhaps the government’s ultimatum was aimed only at the tobacco industry. But even in this case, it seems somewhat uncharitable not to give recognition to the enormous investments and efforts that have been made by tobacco companies in developing what I am comfortable calling lower risk products and, especially, in the scientific validation of their products’ lower risk credentials. And this is not to mention that, as far as I am aware, it was individual tobacco companies that first started to apply the concept of “harm reduction” to tobacco/nicotine consumption and that, in the U.K., first suggested setting a target date for ending smoking: 2027.

    If my memory serves me correctly, the emergence of the tobacco harm reduction principle predated the arrival of vaping products and was based on snus, a product that is without doubt one of the least risky tobacco products of all but one that, inexplicably, was and is banned in the U.K. and one that Khan believes should remain banned. And it is worth mentioning that the country might conceivably have been well on the way to meeting the 2027 target if the government had been more ambitious and reacted more positively in 2017, when the target was suggested, largely based on the use of heated-tobacco products (HTPs). Certainly, I think the U.K. would have been in a better place if e-cigarette companies had been allowed to advertise the consumption of their vaping products as being 95 percent less risky than the consumption of combustible cigarettes, a figure that, to its credit, the government had long accepted.

    Coincidentally, a range of U.K.-market, lower risk products was on display during Japan Tobacco International U.K.’s summer event held at the Mandarin Oriental Hotel in London on July 13, one of which was launched in 2019 and another of which was launched in 2020—so, in line with the government’s ultimatum, though not necessarily in response to it. There were three products in all—a vaping device, an HTP and a nicotine pouch—so, at the very least, JTI U.K. must be given credit for having made a huge effort, if not toward making smoking obsolete per se but toward providing as far as it can the tools and encouragement for smokers to switch to less harmful products. It is, after all, beyond the power of a single company to “make” smoking obsolete; only the government has the power to come close to doing that and, no doubt for good reasons, it has chosen not to do so.

    The summer event, dubbed “Innovating for Tomorrow,” was attended by about 300 people, including those representing trade and retail partners, community investment partners, agencies, think tanks and the media. About 20 politicians from across the political spectrum were also scheduled to attend, though whether they all tore themselves away from the Conservative Party’s leadership hustings in Westminster I don’t know. Given this attendance and an abundance of fine drinks and delicious food, it is not surprising that the evening was devoted, aside from two short speeches—by Charlie Cunningham-Reid, U.K. corporate affairs and communications vice president for JTI U.K., and Gemma Bateson, U.K. sales director—to relaxed discussions around and away from the product displays. On what was for England a hot day, the venue, with its two large, airy rooms and pleasant garden overlooking Hyde Park, lent itself to such discussions.

    One of the products on display was Logic Compact (more information on the products displayed is available at www.jti.com/europe/united-kingdom), a closed-tank e-cigarette that is used with pods of e-liquid available in a range of flavors. At the display stand for these products, much was made of the high level of testing that was carried out on the devices and e-liquids. And, interestingly, a figure from the Office of National Statistics that was on display had it that about 3.3 million people in the U.K. used e-cigarettes, which was something of a testament to the effort that had been made by the vaping and tobacco industries to deliver smoking obsolescence.

    The most recent JTI U.K. reduced-risk product to be made available on the U.K. market and that was on display at the summer event was Ploom, an HTP launched in 2020. Ploom is said to offer an authentic smokeless tobacco experience delivered through the action of an innovative heating technology that causes no combustion and no burning and therefore produces no smoke or tar. Consumers have already embraced e-cigarettes, and the government has largely accepted them, so JTI U.K. will be hoping to see the same level of acceptance for HTPs. These products are certainly likely to appeal to consumers on price, especially those used to paying around £9 ($10.77) for a pack of cigarettes. After an initial outlay of about £45 on a device, consumers pay about £4.50 for a pack of 20 EVO tobacco sticks, which come in a range of flavors and strengths.

    Meanwhile, JTI U.K.’s Nordic Spirit nicotine pouches, which were launched in the U.K. in 2019 and are available in a range of flavors and strengths, are said to comprise a discreet product that can be used at any time since, on consumption, they produce no smoke or vapor and contain no tobacco. Here is a product, I think, that indicates the length JTI U.K. has gone to cut the use of combustible products. When it launched Nordic Spirit, the company could have had little idea how the product was going to be received because there was little knowledge about such products among U.K. consumers, who, after all, had not been allowed to buy snus, a cousin of the nicotine pouch. Surprisingly, perhaps, but encouragingly, participants at the London event were told that sales growth had been good, which is perhaps an indication of the importance of choice in offering alternative products to smokers, who too often are treated as if they comprised one homogeneous group with one set of likes and aspirations.

    The news about the growing interest in nicotine pouches must be good, too, for the environment. This is a pared-back product that must have a low negative impact on the environment, a feature that we are all discovering is hugely important. I have to say, too, that during conversations around the display stands, I heard of the initiatives being undertaken by JTI U.K. to ensure that when alternative devices are no longer operable, they are disposed of properly. There is probably some way to go in regard to this, but you have to say that these efforts are likely to be some way ahead of those of the government. As I am writing this piece, of the five people still standing for the leadership of the Conservative Party and therefore to become the next prime minister, only one was unequivocally backing the government’s net-zero emissions by 2050 target.

    It’s worth noting that a small pamphlet, “JTI U.K. at a Glance,” that was made available to participants at the summer event indicated that JTI is still committed, throughout its global operations, to net-zero greenhouse gas emissions by 2050.

  • JT Reports ‘Robust’ Performance

    JT Reports ‘Robust’ Performance

    Masamichi Terabatake (Photo: JT Group)

    The JT Group reported net revenue of ¥1.27 trillion ($9.55 billion) for the second quarter of 2022, up 10.7 percent over that reported in the comparable 2021 quarter. Core revenue at constant exchange rates increased by 3.7 percent to ¥1. 14 trillion. Adjusted operating profit at constant currency increased by 8 percent to ¥386.7 billion.

    On a reported basis, adjusted operating profit increased by 15.8 percent to ¥414.9 billion. Operating profit increased by 18.9 percent to ¥383 billion. Profit increased by 17.3 percent to ¥264.1 billion.

    “In the first half, the JT Group delivered a robust performance, mainly driven by strong pricing,” said JT Group President and CEO Masamichi Terabatake in a statement. “We are also encouraged by the Ploom X volume and share performance in Japan. In the second half of the year, we will be leveraging learnings from Japan for international Ploom X launches.

    “We have revised our 2022 full year reported adjusted operating profit and profit guidance upwards, driven by favorable currency movements against the Japanese yen. However, the adjusted operating profit at constant FX is revised downwards considering higher input costs impacting our supply chain operations. Dividend per share guidance for full year remains unchanged at 150 yen per share. The interim dividend is 75 yen per share.

    “Regarding Russia, while we continue to manufacture and distribute our products in full compliance with national and international sanctions, the operating environment is becoming increasingly complex. Under these circumstances, the JT Group continues to evaluate various options for its Russia business, including potentially transferring its ownership, and taking necessary decisions to address the changing situation in accordance with the group’s management principle.”

  • JT: Strong Quarter Despite Uncertainty

    JT: Strong Quarter Despite Uncertainty

    JTI’s headquarters in Geneva

    The JT Group reported revenues of ¥581.5 billion ($4.45 billion) in the first quarter of 2022, up 6.2 percent over that reported in the first quarter of 2021. Adjusted operating was ¥194.9 billion during the quarter, 9.4 percent more than in the comparable 2021 quarter. The JT Group posted an operating profit of ¥178.4 billion and a profit of ¥124.1 billion in the quarter, up 11.4 percent and 9.1 percent, respectively, over the 2021 quarter.

    “Following the combination of the tobacco businesses this year, the JT Group delivered strong results with adjusted operating profit at constant FX increasing by 4.5 percent,” said JT Group CEO Masamichi Terabatake in a statement. “However, several uncertainties remain, such as the changing operating environment in Russia, the rapidly evolving operational costs and a very volatile inflation. Considering these factors, as of the first quarter, we have decided not to revise the full year guidance.

    On March 10, the JT Group announced the suspension of new investments and marketing activities in Russia. The company is currently evaluating various options for its Russia business, including potentially transferring its ownership.

    Russia is one of the JT Group’s largest markets. The company has four factories and employs nearly 4,000 people in the country. Terabatake said the company remains committed to its employees in Russia, including to secure their employment.

    “We will continue to closely monitor the situation and prioritize the safety of our employees and their families by extending all possible support to affected people. We will take all necessary decisions to address the changing situation in accordance with the group’s management principle, which is to pursue the 4S model.”

    Under the 4S model, the JT Group strives to fulfill its responsibilities to consumers, shareholders, employees and the wider society.

  • JT Reports Robust 2021 Driven by Tobacco

    JT Reports Robust 2021 Driven by Tobacco

    Photo: JTI

    The JT Group’s revenue increased 11.1 percent to ¥2.32 trillion ($20.15 billion) in 2021. Adjusted operating profit a constant exchange rates was up 22.9 percent to ¥598.4 billion. On a reported basis, operating profit increased 25.4 percent to ¥610.4 billion. The company reported an operating profit of ¥449 billion, up 6.4 percent over that reported in the previous year.

    “The JT Group reported a robust performance in 2021, driven by strong momentum across the tobacco business,” said JTI President and CEO Masamichi Terabatake in a statement. “Our consumer-centric approach and strong brand portfolio have enabled share gains in the majority of our markets and resulted in a record sales volume in the international tobacco business.

    “Despite a challenging operating environment, including the ongoing pandemic, the group accomplished several important milestones in the year. We implemented measures to generate sustainable growth, notably in our priority investment category where we launched our new HTS [heated tobacco sticks] device, Ploom X, starting in Japan. We also successfully implemented various initiatives related to the new operating model for the consolidated tobacco business, which went live this January.”

    Going forward, JTI’s priority will be to expand its presence in the reduced-risk product (RRP) category, with an emphasis on HTS products. The company aims to break even in the RRP category by 2027 by achieving a heated tobacco segment share in the mid-teens across its key HTS markets.

    “To reach this goal, we are accelerating necessary business investments and expect an annual average growth rate of adjusted operating profit at constant currency to be mid-single digit during the 2022 business plan period,” said Terabatake. “Furthermore, we plan to grow profit, which in turn will increase shareholder returns, in line with our shareholder return policy.”

  • JT Group ups Forecast on Robust Nine Months

    JT Group ups Forecast on Robust Nine Months

    Masamichi Terabatake
    (Photo: JT Group)

    The JT Group reported year-to-date revenue of ¥1.77 trillion ($15.5 billion), up 10.9 percent over those in the first nine months of 2020. Adjusted operating profit at constant currency increased 21.9 percent to ¥538.1 billion. On a reported basis, adjusted operating profit increased 23 percent to ¥542.9 billion. The group’s operating profit was ¥480.7 billion, up 23.2 percent over last year’s period. Based on its performance, the JT Group increased its financial forecasts for the full year.

    “The JT Group reported a robust year-to-date performance, driven by strong momentum across the tobacco businesses. Our volume performance continued to be strong, driven by market share increases and stable industry volumes from longer than expected travel restrictions,” said JT Group President and CEO Masamichi Terabatake in a statement.

    “We revised our full year forecasts upward, reflecting the robust results delivered in the first nine months of 2021 and also favorable currency trends. Following the upward revisions of our forecast, we are pleased to inform our plan to raise our annual dividend guidance by ¥10 to ¥140 per share.

    “In Japan, we have received very encouraging feedback from consumers on Ploom X. However, the global semi-conductor shortage is impacting production of heated tobacco devices, so for the remainder of the year, we will prioritize the device supply in the Japanese market where we have already launched Ploom X. We will continue to strive to secure share growth.

    “In addition, with our one tobacco business new operating model from January 2022, we will further strengthen our business foundation as well as build a more agile and consumer-centric organization.”

  • JT to Consolidates Operations

    JT to Consolidates Operations

    International and Japanese operations will be run from the JT Group’s existing headquarters of the international business in Geneva (Photo: JT Group)

    The Japan Tobacco Group 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 optimization of its operations in the Japanese market.

    The headquarters of the tobacco business, including the Japan market, which is currently managed from Tokyo, will be consolidated into the existing headquarters of the international business in Geneva.

    “Over the years, the JT Group has consistently anticipated new challenges and managed to successfully transform itself during rapidly changing business environments,” said JT Group President and CEO, Masamichi Terabatake in a statement. “We achieved this through large-scale transformative acquisitions, such as RJRI and Gallaher, and geographical expansions into emerging markets. In parallel, we continuously enhanced our portfolio’s brand equity with a focus on global flagship brands and invested in reduced-risk products [RRP] to expand sales.

    “Since I assumed office as the CEO of the group, we have made progress in several areas to strengthen our global competitiveness and business foundation, including the formation of global teams for our R&D and RRP functions as well as transforming the operating and organizational structures in the international tobacco business.

    “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. I am confident that this organizational structure will efficiently and effectively deliver products and services, exceeding consumer expectations. 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,” said Terabatake.

    Masamichi Terabatake,

    According to the JT Group, rapid changes in the tobacco industry include perception of smoking and health, heightened tobacco regulations and tax reforms in various countries, increasingly diverse consumer preferences and expansion as well as intense competition in product development in the RRP category.

    Having closely reviewed the business environment from a long-term perspective, the JT Group 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.

    More details of the group’s planned restructuring are available here.

    The JT Group reported an operating profit of ¥469.1 billion ($4.48 billion) on revenue of ¥2.09 trillion in fiscal year 2020, down 6.6. percent and 3.8 percent, respectively, from 2019. Adjusted operating profit declined 5.6 percent to ¥487 billion. At constant currency exchange rates, adjusted operating profit was up 5.5 percent to ¥544.5 billion.

    The company’s international tobacco business sold 435.7 billion units in 2020, 2.3 percent less than in 2019. Volume sales in Japan declined 8.2 percent to 114.9 billion units. The company reduced-risk product sales volume increased by 0.7 billion units year on year to 3.9 billion. Its market share in the RRP category is estimated at approximately 10 percent on an offtake basis.

    “Despite the challenges impacting our operations, including Covid-19, the JT Group delivered a solid business performance in 2020, driven by the relentless efforts and passion of our employees worldwide,” said Terabatake. “During this period, we grew share in most of our key markets and captured pricing opportunities. I am also pleased to report that the JT Group continued its investments to strengthen our RRP business with the introduction of Ploom S internationally and Ploom S 2.0 in Japan.

    “We will further build on our solid momentum, by adopting a more focused prioritization of our investments towards heated tobacco sticks and combustibles. While we expect the operating environment in 2021 to remain highly uncertain, we expect to continue gaining market share globally both in combustibles and in RRP. Notably, our next generation device for heated tobacco sticks will be launched in Japan early in the second half of this year, followed by launches in Russia and other international markets.”