Japan Tobacco Group

Japan

OWNERSHIP

Publicly Traded^*

RANK

(out of 15)

FINAL SCORE

2.41

(out of 5)

Operating Environment

Japan Tobacco Group (JT) operates in all four Index Regions, and in 34 of the 36 Index Countries. Its top five countries by Volume Sales are Japan, Russia, Turkey, the UK and Italy.

JT operates across HMICs (24 Index Countries) and LMICs (10 Index Countries).

JT’s product portfolio consists of cigarettes, fine cut tobacco, cigarillos, shisha, heated tobacco, e-liquids, pipe tobacco, closed system vaping products, cigars, snus, and non-tobacco nicotine pouches.

Publicly Stated Position on Tobacco Harm Reduction

"Smoking is a cause of serious disease including lung cancer, coronary heart disease, emphysema and chronic bronchitis. JT supports efforts to advise smokers accordingly. Everyone should be appropriately informed about the health risks of smoking. Reduced-Risk Products: We believe products that do not involve combustion and do not produce tobacco smoke are products with the potential to reduce the risks associated with smoking. We are committed to developing and bringing to market Reduced-Risk Products that meet consumer expectations.”
(JT corporate website, “Our Six Core Principles”)

Change Since 2020 Index

JT’s Strategy and Management category score increased as JT announced in 2021 that for the first time the board's bonus would partly (10% of the total) depend on RRP performance.

JT’s Product Sales and Product Offer category scores declined following the company’s decision to withdraw its closed system vaping product (Logic) from Ukraine in January 2021, citing a “lack of demand”.

JT’s Product Sales category score was also negatively impacted by the company’s increasing (CAGR 2019-2021: +0.8%) HRP Volume Sales.

Category Scores

Strategy & Management

JT publicly acknowledges its role in, and has made a formal commitment to reducing, tobacco-related death and disease as part of its “Six Core Principles.”

JT has an objective related to tobacco harm reduction, and the objective is time-bound and measurable (setting objectives for RRP market share in “key” countries by 2027).

Product Sales

JT has the fourth-highest Volume Sales of HRPs (2021: 545.6 billion stick equivalents).

With 1.8% of its total volumes coming from RRPs, JT has the seventh-highest score for Ratio of Volume Sales (RRPs versus HRPs).

Capital Allocation & Expenditure

At 77%, JT’s allocation of R&D Expenditure on RRPs (versus its total R&D expenditure) is the fifth highest of the Index Companies.

At 25%, JT’s allocation of Capital Expenditure (RRPs versus HRPs) ranks it in sixth place.

Product Offer

JT offers HRPs (cigarettes, fine cut tobacco, cigarillos, shisha, pipe tobacco, cigars) in 34 Index Countries, and RRPs (heated tobacco, e-liquids, closed system vaping products, snus, non-tobacco nicotine pouches) in 14 Index Countries.

In terms of product categories, JT has six HRPs, compared to five RRPs, in its portfolio.

Marketing Policy & Compliance

JT’s Youth Access Prevention Policy (“Minors Should Not Smoke and Should Not Have Access to Tobacco Products” principle) is outlined in its Code of Conduct and in its Six Core Principles, which are published on JT’s corporate website.

JT does not disclose numbers or details of any reported violations of its Youth Access Prevention Policy.

Lobbying & Advocacy

JT discloses its policy positions related to tobacco harm reduction on a specific section of its corporate website (“Our Views on Regulation”).

JT does not disclose specific lobbying activities and memberships in all jurisdictions in which it operates.

Net Value Sales

In 2021

High-Risk Products

95.0%

Reduced-Risk Products

5.0%

Products Offered

In 2021

High-Risk Products

Reduced-Risk Products

Capital Allocation & Expenditure

In 2021

High-Risk Products

52.0%

Reduced-Risk Products

48.0%

ppts = Difference in percentage between 2021 and 2019

*Japan Tobacco Group is publicly traded but the Government of Japan owns 33.3% of the company.