Published on November 4, 2008
Instead of the cowboy that has been the face of rival Philip Morris International’s signature brand, is Joe Camel, the advertising mascot for JTI’s Camel cigarettes.
Mr de Labouchere says with a laugh: “Our goal is to overtake PMI as the industry’s number one. So yes, I guess you can say there’s a subliminal message there [in the painting].”
JT, which also owns pharmaceuticals and food businesses, still has some way to go before it topples PMI from the top spot. But the space between it and British American Tobacco, the industry’s number two, became narrower last year after JT swooped up Gallaher, the UK maker of Benson & Hedges and Silk Cut cigarettes, for £7.5bn ($12bn). The deal, the largest foreign purchase ever made by a Japanese company, doubled the size of JT’s international operations overnight and gave it a 10.6 per cent share of the global tobacco market, against BAT’s 12 per cent and PMI’s 15.6 per cent. The Chinese state tobacco industry is still the biggest player, with 35 per cent of the market.
The acquisition has also enabled JTI to protect its dominance in Russia, the world’s third-biggest tobacco market behind China and the US. As in Western Europe and the US, cigarette sales in Japan have fallen amid rising health fears and stringent tobacco advertising legislation.
Mr de Labouchere says: “I think [Katsuhiko Honda, JT’s then chief executive] came to the conclusion that to run an international business, you cannot impose a Japanese management culture.”
But if JTI is today in a position to give BAT and PMI a run for their money, Mr de Labouchere states that is only because of JT’s consistent support. With the purchase of Gallaher, JTI now accounts for 70 per cent of its sales volume and 48 per cent of JT’s operating income.
In the longer term, JTI still faces gaps in its portfolio, notably in Africa and Asia, and particularly in Latin America. Mr de Labouchere says: “At the moment our priority is to combine Gallaher into JTI’s existing operations. But we are always looking. Asia is a region we would like to increase our presence in.”
