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JT price hike?

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Japan
Japan Tobacco Inc. has announced that it has applied to the Minister of Finance for approval to amend retail prices of Japanese domestic tobacco products in conjunction with the planned tobacco excise tax hike on October 1, 2010. 
In Japan, under the Tobacco Business Law, list prices for JT’s and imported tobacco products must be approved by the minister of finance. Tobacco retailers are only permitted to sell tobacco products at list prices that have been approved by the minister of finance.
In the Japanese domestic tobacco market, sales volume continues to decrease due to structural factors including aging and declining adult population as well as increasingly stringent smoking restrictions. In addition, cost per pack has been increasing as a reflection of recent sharp increases in raw material costs. Under these circumstances, JT had been maintaining the quality and price levels through cost reducing efforts.
However, this planned tobacco excise tax hike of ¥3.5 (US$0.04) per cigarette is unprecedented whereby JT is projecting a sales volume decline that is unparalleled to any of the excise tax increases of the past.
“In order to continue providing the quality and services which will satisfy our consumers as we face substantial declines in sales volume, JT has applied for an amendment of its retail prices which exceed the excise tax hike, given our cost reduction efforts alone will be insufficient to absorb the impact,” according to a statement released by JT. “Further, retail price increases will vary among different brands and products, in order to ensure the quality of each brand and product will be maintained, consumer expectations will be met and their support will be secured.”
Out of JT’s portfolio of 105 products in total, JT has applied for retail price amendment of 103 products, including 100 cigarette products, two snuff products (including refill cartridges) and one cut tobacco product which will be effective on October 1, 2010, following the finance minister’s approval.
“We will strive to meet the higher consumer expectations through improving quality and services” said JT in its statement.
 

 

Quarter 4, 2011


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