Key Takeaways:
- Bloomberg reports that Japan Tobacco International (JTI) is emphasizing conventional cigarettes, even as PMI and BAT target smoke-free growth.
- After acquiring Vector Group for $2.4 billion, JTI saw U.S. cigarette volumes rise 2%, revenue 9%, and profits 10%.
- JTI projects “value” and “super value” cigarettes will surpass 40% of the U.S. market by 2027.
Reconfirming its strategic pivot, Japan Tobacco International (JTI) again has stated it’s refocusing on traditional combustible cigarettes rather than rushing toward smoke-free technology, according to a Bloomberg report titled “Japan Tobacco Is Doubling Down on Cheap Cigarettes.”
The news isn’t new. JTI told Reuters back in February that it expects a shift towards cheaper cigarette brands in the United States to reach more than 40% of the market by 2027, according to JTI’s finance chief.
Since completing its $2.4 billion acquisition of Vector Group in October 2024, JTI has used that move to strengthen its position in the U.S. tobacco market. The Bloomberg article notes that the acquisition has given JTI “an advantageous position, as smokers contend with inflation and higher taxes.”
The mixed results appear to support the strategy. U.S. cigarette volumes increased by 2%, revenue by 9%, and profit by 10% after the acquisition.
While major competitors like Philip Morris International and British American Tobacco invest heavily in e-cigarettes, heated tobacco, and nicotine pouches, JTI reportedly focuses on affordability and volume in its core cigarette business.
Bloomberg cites analysts saying premium brands have already lost market share—from 80% of tracked U.S. cigarette sales to about 70%.
JTI seems confident that the trend will continue. Its finance chief forecasts that value and super-value cigarette segments will make up over 40% of the U.S. market by 2027, up from about 32% in 2022. The company’s acquisition of Vector already increased its share of those discount tiers to 40% by late 2024.
The Bloomberg, not a name typically associated with nicotine industry news, article also notes that JTI continues to develop smoke-free alternatives, such as Ploom heated tobacco and Nordic Spirit nicotine pouches, but states that the company remains heavily reliant on its combustible products.
