Japanese Tobacco (JTI) to Keep Russian factories Open

According to a report by Russian media outlet Krestyanskie Vedomosti, Manabu Hirose, the assistant to the director of Japan Tobacco (JTI), stated on March 13th that JTI's four factories in Russia will continue operating.

Two of the four factories are finished product factories located in St. Petersburg and Rostov-on-Don, while the other two tobacco processing factories are located in Lipetsk and Leningrad Oblast.

According to Hiroshi Goto, the factory continues to operate in Russia and Ukraine despite the tense and complex situation. He stated that the company is continuing its business in Russia while complying with all domestic and international sanctions and regulations. "Our JTI Russia branch employs 4,000 staff, including production and management," he said.

The company sells brands such as Donskoy Tabak in Russia, as well as well-known global brands like Winston, LD, Mevius, Camel, Glamour, and Sobranie.

On March 10, 2022, JTI's Russian subsidiary announced that it would be suspending new investment and additional marketing activities in Russia. A spokesperson for JTI stated that the company is considering various options for its Russian business but declined to comment on potential buyers. In the 2021 fiscal year, the Russian market contributed approximately 8% of JTI's group revenue and 15% of adjusted operating profit.

JTI products are sold in 130 countries. Japan Tobacco made its entry into the Russian tobacco market in 1992. In the last 20 years, JTI has invested more than $4.6 billion in Russia. The Japanese Ministry of Finance is JTI's largest shareholder, owning a third of its shares and providing approximately $1 billion in annual dividend income to the government.

Earlier, the Russian Ministry of Finance suggested imposing criminal liability on those engaged in the illegal production and sale of tobacco products as a means of strengthening enforcement against such activities. The representative of Japan Tobacco International (JTI) in Russia has expressed support for the comprehensive legislation proposed by the Ministry of Finance.

Previously, PMI stated in an interview that it will strongly resist any withdrawal from the Russian market and will fight with the Kremlin to the end.

Further reading:

Reuters: Japan Tobacco Inc. (JT) is reportedly considering selling its operations in Russia.

References:

Four factories of Japanese cigarette company JTI are still operating in Russia.