Japan - JTI will increase cigarette prices, PM and BAT will not come October 1, 2010..

April 30, 2010 - The Cabinet approved a plan to raise the duty by 3.5 yen (4 cents) per cigarette from October 1, 2010 next year, with tobacco companies charging an extra 1.5 yen each. A pack of 20 cigarettes would increase by an average 100 yen, or 33 percent, to 400 yen (4.26 USD).

Japan Tobacco Inc (JT) said Wednesday, April 28th it will raise the prices of around 100 cigarette brands on Oct 1 as it reported double-digit sales and profit declines in the just-ended business year. JT will raise the price of its popular Mild Seven brand to 410 yen (4.37 USD) a pack from 300 yen (3.20 USD) and that of Seven Stars to 440 yen (4.69 USD) from 300 yen (3.20 USD) in line with a hike in the cigarette tax slated for October.

The tax increase will impose a levy of 3.5 yen per cigarette, or 70 yen (0.75 USD) per pack. The price hike will exceed the additional tax and is aimed at compensating for declining sales due to tougher rules on smoking, the company said.

Tobacco companies need the Finance Ministry's permission to change their prices in Japan.

JT also said it recorded a group operating profit of 296.50 billion yen in fiscal 2009 ended March, down 18.5% from the previous year, on sales of 6.13 trillion yen, down 10.2%.

JT attributed the sluggish performance to a 5% fall in domestic cigarette sales as well as foreign exchange losses due to the yen’s appreciation against the dollar when overseas subsidiaries converted dollar-denominated earnings into yen for account settlements. But net profit increased 12.2% to 138.45 billion yen thanks to a decline in extraordinary losses.

The tax increase, the biggest since Tokyo-based Japan Tobacco Inc. was privatized in 1985, is part of Prime Minister Yukio Hatoyama’s pledge to discourage smoking to curb health insurance costs as the population ages. Japan Tobacco, the world’s third-largest publicly traded cigarette maker, may raise prices by more than the tax gain to offset an expected drop in smoking rates, President Hiroshi Kimura said this month. (Japan’s Tobacco Tax to Raise Cigarette Prices by 33% (Update1) by Naoko Fujimura (nfujimura@bloomberg.net), Bloomberg.com, 12/22/2009)

Japan ranked fourth in cigarette consumption by volume after China, the U.S. and Russia in 2007, according to ERC Group, a U.K.-based market researcher.

Philip Morris Japan KK, the nation's second-largest tobacco company, said it will not follow through on a cigarette price increase set for June 1, 2010. With the Health Ministry calling for a ban on smoking in public places and Kanagawa Prefecture instituting its own prohibition, the company behind the Marlboro brand appears to see a risk of a sharp drop in demand for cigarettes. Philip Morris is the first to back away from an approved hike.

British American Tobacco (BAT)Japan Ltd., Japan's No. 3 tobacco company, withdrew on March 15 its application for a similarly timed price hike. (PHILIP MORRIS JAPAN CALLS OFF CIGARETTE PRICE HIKE, TradingMarkets.com, 4/15/20010.)

Reference: JT to raise cigarette prices on 100 brands from Oct 1, JapanToday.com, 4/30/2010.

Some JT news briefs containing Mild Seven:
Japan Tobacco (JT) - Mild Seven adding a new menthol and redsigning 15 varieties to keep domestic market sharegrowth..;
Japan - new government administration considering raising cigarette taxes..;
Japan Tobacco raises net forecast on currency gains and gains in market share for brands..;
Japan Tobacco International - Business Results for January – June 2009..;
Japan Tobacco International profits to fall this year..;
Japan Tobacco International annual report January - December 2008..;
Japan Tobacco Starts Petition To Fight Tax Increase..:
Japanese lawmakers want to triple cigarette prices..;
Japan Tobacco's (JTI) market share up in Japan in FY 2007 for 1st time since 1985..;
Mild Seven cigarettes..;
Mild Seven family of cigarettes expands..;