Company history

Japan Tobacco began in 1949 not as a business but as an arm of the state. The Japan Tobacco & Salt Public Corporation (日本専売公社) was established on 1 June 1949 “to carry out the nation’s monopoly business soundly and efficiently”, and as the operator of the tobacco monopoly system it was charged with securing both a stable supply of cigarettes and fiscal revenue. The monopoly covered tobacco and salt; the salt monopoly would run until the system was abolished in April 1997. Through the 1970s the growth rate of the adult population slowed and concern about smoking and health rose, so demand stopped growing and volumes moved roughly sideways — a change the corporation read not as a dip but as structural.

The industry outside Japan had already shifted. A wave of consolidation ran through the majors in the late 1960s and pressure to open monopoly markets grew, and in 1968 the corporation drew up a long-range plan — the 四三長計 — whose gist was that if the monopoly ever ended and global firms came in, it would go abroad and win the volume back. Italy and France abolished their monopolies in 1976 and lost share to the US and UK majors at once: imports took 32% in Italy and 40% in France. At home, foreign makers were meanwhile winning real market access, calls to open the market outgrew what the monopoly framework could absorb, and in March 1981 the Provisional Commission for Administrative Reform was convened; its third report of 30 July 1982 called for root-and-branch reform of both the monopoly and the public-corporation system.

The reform package passed the 101st Diet on 3 August 1984 and was promulgated on 10 August: the Tobacco Monopoly Law was repealed to free imports, a new Tobacco Business Law took its place, and the Japan Tobacco Inc. Law converted the corporation into a joint-stock company subject to the minimum necessary public regulation. On 1 April 1985 Japan Tobacco Inc. was established on a full contribution of the corporation’s assets, valued at ¥836.4 billion, against which 2,000,000 shares were issued and transferred without charge to the government, leaving the Finance Minister holding 100%. A business-development division was set up the same month and, by July 1990, had been reorganized into pharmaceutical and food divisions.

Tariffs on imported cigarettes were abolished in April 1987 and foreign prices fell by ¥20 to ¥80: BAT’s Lark dropped ¥30 to ¥250 against Mild Seven at ¥220, and the gap all but closed. President Nagaoka Minoru had forecast at privatization that imports would reach “only about 5%” within five years; foreign brands overtook that far faster. An internal projection in 1988 showed domestic demand turning down in 1998; the adult-male smoking rate fell to 59.8% in 1993, below 60% for the first time since surveys began in 1965. JT passed on a Greek acquisition and on RJR’s international business in 1988, then bought Manchester Tobacco in Britain in 1992 simply to learn how to run a foreign company — seven of the staff sent there were the first on the ground after the RJR purchase a decade later.

In May 1999 JT bought RJR Nabisco’s tobacco business outside the United States for $7.79 billion — at $7.8 billion the largest overseas acquisition ever by a Japanese company at the time. The auction reopened ten years after JT had walked away from the same asset; RJR International was by then debt-laden from its leveraged buyout, holding strong brands like Winston and Camel on starved marketing budgets. Talks opened on the evening of 8 March 1999 New York time with a single night to sign, run on JT’s side by Kimura Hiroshi, then head of corporate planning. The deal took overseas volume from about 20 billion to about 200 billion sticks, roughly tenfold, and the acquired business was rebuilt as JT International, headquartered in Geneva rather than Tokyo.

In 2007 JT went bigger still, buying Britain’s Gallaher for about ¥2.25 trillion — roughly £9.75 billion including net debt, and a record for a Japanese overseas acquisition. The first bet had paid off: overseas tobacco operating profit, once mocked as a reckless trillion-yen gamble, was set to rise 42% to $567.6M (¥66bn) for the year to March 2006, with Russia alone earning ¥10 billion. But the same years demanded relentless restructuring at home: eight plants and seven sales bases announced for closure in July 2002, 4,000 voluntary redundancies announced in August 2003 — about a fifth of 17,500 unconsolidated employees — and eight more factories closed in March 2005. The Marlboro licence ended in April 2005, taking with it 11% of domestic volume and ¥50 billion of operating profit; the group’s domestic share fell from the monopoly-era 98% toward the mid-60s by 2006.

The portfolio was also being pruned, not only widened. JT had entered food with a 2008 tender offer for Katokichi, but in 2015 it sold its beverage brands and vending operations — the latter to Suntory Beverage & Food — left manufacturing in September and abolished the beverage division that December. On 29 September 2015 it agreed to buy the non-US business of Natural American Spirit for about ¥600 billion: the trademarks and nine overseas sales companies. The target had 2014 revenue of ¥17.6 billion, so the effective ¥470 billion cost after tax benefits equalled some twenty-six years of sales, and the shares fell as much as 10% to ¥3,556 the next day. President Koizumi Mitsuomi argued the case on price band — American Spirit at ¥480 a pack against Mevius at ¥430 — rather than volume.

Philip Morris International created the heated-tobacco category, testing IQOS in Nagoya in 2014 and going national in April 2016; by April 2017 it held 10% of the Japanese tobacco market by volume. JT only began selling Ploom TECH in Tokyo on 29 June 2017, through specialist stores in Ginza and Shinjuku, and by July its distribution reached just 100 tobacconists. Its capsule cartridge proved complex to make, capacity fell short, and it lost more than a year to IQOS. Newly appointed president Terabatake Masamichi named reduced-risk products the top priority, took Ploom TECH national in June 2018, and that October merged the heated and combustible sales forces so that more than 1,700 people were selling heated products.

In January 2022 JT moved the headquarters of its tobacco business wholesale to Geneva. The Tokyo head office had been built around the domestic business and could not directly read foreign regulation or rivals — a governance friction visible ever since the 1999 RJR purchase. Placing decision-making next to the main overseas markets marked the practical completion of JT’s transformation into a global tobacco company; Tokyo kept oversight of domestic tobacco and the food and pharmaceutical businesses, formalizing a two-tier structure some thirty-seven years after privatization began.

Then the portfolio swung back toward focus. In October 2024 JT bought America’s Vector Group for about $2.4 billion, or roughly ¥378 billion, finally entering the US mainland market it had avoided over litigation risk. In May 2025 it agreed to hand its pharmaceutical business and Torii Pharmaceutical to Shionogi in a deal worth some ¥160 billion, tendering for Torii at ¥6,350 a share; pharma had contributed ¥94.4 billion of consolidated revenue in 2024, about 3% of the group. Torii’s shares went in September 2025 and the business itself that December, ending forty years in medicine. In heated tobacco, Ploom AURA lifted JT’s domestic share to 15.7% and into second place in the second half of 2025, though IQOS still held close to 70%.