Sources from Japan Tobacco, one of the world’s largest cigarette manufacturers, revealed on Wednesday that the company was making plans to close several of its domestic factories and lower production as response to Japan’s declining cigarette sales. It currently looks like four of JT’s nine facilities will be shuttered, but in addition there will be a downsizing of some 1,600 employees, over a fifth of the company’s 8,900 workforce.
The declining sales of tobacco and cigarettes in Japan are attributed to two main causes; the first being more smokers becoming aware of the health risks, as well as not wanting to put up with the country’s increased restrictions on where and when it is okay to light up. The second reason is simple economics, with Japan’s sales tax to increase from 5% to 8% in April 2014, JT is planning to raise prices on its products in order counterbalance, a move that is expected to further put a damper on purchasing habits.
In order to make up for the overall shrinking of Japan as a profitable tobacco market, JT is expected to shift its focus to overseas sales. As the owner of popular international brands Winston and Camel, JT is still a leader in worldwide cigarette sales. The firm also has several operations, both domestic and overseas, to lean on in the food and medical product fields.
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