Japan to Hike Tobacco Taxes Slightly
Published on January 4, 2010 10:06 AM
Japan is known to be one of the last remaining smoker-friendly countries, with lack of anti-smoking policies and low prices. However, the government is eager to change this situation, as they are set to implement the landmark tax hike on tobacco products, what would definitely have long-term consequences for major tobacco companies in the country – Japan Tobacco Int., British American Tobacco and Philip Morris International.
The decision to increase duties – in a country where smokers account for nearly a half of all male population and the average price of cigarettes is 300 yen ($3.40) – appears when tobacconists are struggling with slowly but constantly declining market.
Japan tobacco market is the fifth-largest across the globe, as low prices and lack of indoor smoking bans permits people to smoke anytime they want to. However, many people are quitting due to health worries and a general drop in the population numbers.
Therefore, the three tobacco giant will battle for every smoker, in order to boost their market presence. JTI accounts for the largest market share with 65 percents, the world’s leading tobacconist PMI has a 25% market share and BAT the remaining 10% are owned by BAT. However, BAT is eager to grow its share through launching new products.
The new government headed byYukio Hatoyama, recently appointed Japan Prime Minister would raise the tax by 2-3 yen per cigarettes, resulting in a 40-60 yen hike for each cigarette pack, a groundbreaking hike in deflation-hit Japan.
Japan’s Finance Minister said they wanted to raise the tobacco tax much more significantly, to achieve a dramatic reduction in smoking rates, however, the economic reality forced them to choose gradual price increase.
Japan is home to the most extraordinary smokers, who love trying new products, and on average, are much less brand-loyal than smokers from other countries. Nearly 20% of local smokers are willing to switch to new products, what it two-times higher percentage in comparison to other nations.
BAT spokesman said that such fickle audience triggers huge competition between tobacco giants. For instance, BAT plans to capture a 20-percent market share in five years. Such a race has resulted in a inundate tobacco market overfilled with innovative products and fashionable eye-catching designs to capture smokers.
Mild Seven, the top-selling brand in the Japanese market offers 23 varieties, differing in size, strength and flavors. JTI, the manufacturer of Mild Seven often launches special editions of best-selling smokes, and other innovations to expand Mild Seven brand family.
Another product that caused a commotion in the cigarette market was Kool Bust cigarettes, manufactured by British American Tobacco. Similar to the U.S. Camel Crush by RJ Reynolds, Kool Bust cigarettes contain a crushable capsule with menthol that can be squeezed anytime smokers want to get menthol shot. The brand was such a success on Japan market that it was named “an iPod among cigarettes”. Currently it has a 1% market share.
Many smokers admit that tax increase is not sufficient for them to cut back on their smoking habit, so, if it had been implemented for public health objectives, it would not be a very effective anti-smoking measure for tobacco-loving Japan.
