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JT looks to expand

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India
Shrinking domestic demand is behind an Indian investment push by Japan Tobacco International (JT), the world’s third largest cigarette manufacturer by volume.
JT is awaiting Indian government approval for its new investment plans, executive deputy president Masakazu Shimizu told Bloomberg. He would not provide specific figures, but added that the investment intended “to expand production and sales [in the Indian market].”
JT officials did note that they hope to raise the company’s stake in its Indian subsidiary from 50% to 74% as part of the plan.
The company has been awaiting approval since June 2008. The delay is a consequence of internal political dynamics in India that threaten to curb foreign direct investment in the country, particularly in the tobacco industry. 
Politics in JT’s home market are making things tough on the tobacco giant as well. Japan will raise tobacco taxes ¥3.5 per cigarette (US$ 0.04) this coming October as part of a growing campaign to snuff out smoking in the country. The domestic situation is adding urgency to JT’s international thrust.
“Overall demand may plunge by 20% because of the tax increase,” Shimizu said.

 

Quarter 4, 2011


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