Japan Tobacco International seeks becoming number one cigarette company in UK
Published on November 25, 2009 9:29 AM
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JTI, the third largest cigarette company in the world is willing to make use of the constantly increasing popularity of its flagship brands among British smokers, and decided to hike its average price by 10 pence per pack. The Japan Tobacco brand portfolio in British cigarette market includes Silk Cut, More, former top seller Benson and Hedges and Mayfair, which recently became UK top-selling brand.
According to Daniel Torras, director of Japan Tobacco International branch in the United Kingdom they decided to rise the prices, since the momentum is the most appropriate for the price change, as the leading brand is manufactured by the company, and even if a part of customers will switch to cheaper brands, but the majority would stay with the favorite brands, despite a slight increase.
He said that the increased cost of tobacco leaves and their processing is to be blamed for the price rise. The producer of Mayfair and Benson & Hedges cigarettes also admitted that increased market presence contributed to the decision to increase prices, as the company seeks taking the leadership on pricing from the major rival Imperial Tobacco in the nearest future.
Other tobacco giants, among which are British American tobacco, Philip Morris International and Imperial Tobacco declared they have no intention to hike prices.
JTI acquired UK cigarette maker Gallaher two years ago and is currently planning to spend approximately $150 million in the next three years to increase its presence in British cigarette market even more, since the United Kingdom is one of five markets of primary priority for the company. Mr. Torras confirmed that JT market share went up to 40.5 % in the third quarter of 2009 compared to 39.3 % in 2008, whereas, as reports demonstrate, Imperial tobacco, owner of Lambert & Butler dropped to 42.6 percent in comparison to 44.0 percent last year.
However, Imperial Tobacco spokesman said the reports by JTI were not reliable, as the company’s market shell indeed dropped but the figures are much more moderate, as their current market share is 45.3 percent from 45.9 percent mainly because of strong rivalry in the cheaper products segment.
Imperial Tobacco has seen a major success during the last couple of years as British smokers switched to the its inexpensive flagship brands Lambert & Butler and Richmond, from Gallaher’s luxury brands Silk Cut and Benson & Hedges.
JTI switched its attention to discount brands and has gained first major success recently, as its low-cost brand Mayfair topped Lambert & Butler to become the number one seller in August 2009.
The largest privately-owned cigarette company in the world Philip Morris International is at the third place in UK market with a 7 percent share and British American Tobacco has a 6 percent share.
