Buying RJR Nabisco’s non-US tobacco business for $7.79 billion (1999)

Breaking out of the monopoly’s frame, into the world

The heart of this acquisition was that it was not a decision forced by financial crisis: while JT still held a protected position at home, it chose of its own accord to refuse the comfort of resting on the monopoly’s inheritance. For an operator whose shares the state held and whose production was shielded from competition, staying inside a shrinking home market promised safety for the time being. What JT chose, under President Mizuno Masaru, was to give up that safety and step into global competition while still carrying the weakness of its public-corporation temperament. The contemporary verdict of a “historic gamble” was at once a jibe and an accurate reading of the decision’s character.

At the end of the gamble, JT changed from a domestic monopoly operator into a tobacco maker with sales channels around the world. The overseas business gained through RJR Nabisco became the foundation for the large acquisitions that followed — Gallaher, then Vector — and has underwritten, for a quarter of a century, a strategy of offsetting the shrinking home market with scale abroad. Yet in a world of tightening regulation and a shift to heated tobacco, how to turn the scale bought by acquisition into the next stage of growth remains an unanswered question. The huge 1999 purchase, as the first decision to break out of the monopoly’s frame and go global, set the shape of the JT that followed.