PH seen driving Japan Tobacco growth in Asia

TOKYO, Japan: International cigarette maker Japan Tobacco Inc. said its acquisitions in Asia including the Philippines were expected to help drive volume growth by 4 percent this year despite the challenging environment in other markets.

“Industry volume will remain challenging in 2018,” Japan Tobacco said in a report distributed to reporters during a briefing here over the weekend.

The company said it expects a continued contraction in Russia, broadly in line with last year’s trend, and accelerated declines in markets such as France, Taiwan and the United Kingdom, mainly due to excise tax increases.

Nevertheless, JT said it was targeting about 4 percent volume growth this year as it benefits from the volume contribution of its acquisitions in Asia and more recently in Ethiopia.

“Our organic growth will continue to be completed by business development initiatives in markets of importance, like the recent acquisitions in Ethiopia, Indonesia and the Philippines,” the company said.

“We are confident that this strategy will enable us to sustain our business momentum in the conventional tobacco products category for the years to come,” it added.

JT said total shipment volume in 2017 was stable, down by a marginal 0.1 percent to 398.5 billion cigarette equivalent units. Shipment volume was supported by strong organic growth in Brazil, Egypt, Iran, the Philippines and Tunisia, acquisitions in Indonesia and the Philippines, as well as market share gains in the key markets of France, Russia Spain and Taiwan.

“Our two sizeable acquisitions in Indonesia and the Philippines boosted our total volume and strengthened the outstanding organic growth in Asia Pacific,” it said.

JT’s Philippine unit acquired the assets of local cigarette manufacturer Mighty Corp. in September 2017, which JT said consolidated its business through expanded distribution and a strengthened brand portfolio, enabling the company to grab a 29 percent share of one of the largest tobacco markets worldwide.

Based on the latest data from JT, the Philippines ranked as the world’s 10th largest cigarette market by volume in 2016.