Japan Tobacco pulls back beverage business

Japan Tobacco pulls back beverage business

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Government based Japan Tobacco Inc has announced the shutdown of its beverage business. The decision was taken by the company after it failed to pick up business in the soft-drink market.

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With the recent announcement, the company will continue its focus on the overseas tobacco operations. JT announced that it will end the manufacturing and sales of the its beverages by the end of September 2015. The recent announcement by JT is likely to consolidate the Japanese beverage market. Industry officials have said that too many beverage companies lead to lack of shelf space and scarcity of vending machine slots. Executive deputy president of JT Noriaki Okubo in a news conference said that the retailers preferred only the top products in every beverage category and that the competition has increased due to aggressive promotional efforts of firms. Okubo said, “We are not in top market positions”.

The beverage business of JT has been the tenth largest in terms of domestic sales volume accounting for 1.6% of the Japanese beverage market. The company has been facing competition from some of the bigger companies including Coca Cola Co and Suntory Beverage & Food Ltd. JT had started off its business in 1988 to improve the revenue sources of the government.

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