Economy, Domestic Economy

Japan Tobacco Buys Iranian Cigarette Maker

Japan Tobacco Buys Iranian Cigarette Maker Japan Tobacco Buys Iranian Cigarette Maker

Japan Tobacco International has bought an Iranian cigarette maker to reinforce its position as the market leader in a country that hopes to open up to western companies once sanctions over its nuclear program are removed.

JTI is the international tobacco division of Japan Tobacco, a leading international tobacco product manufacturer.

The company said JTI Pars, its Iranian subsidiary, had recently acquired the privately owned Arian Tobacco Industry for an undisclosed amount, the Financial Times reported.

“A growing number of major companies from various countries are now investing or reinvesting in Iran,” JTI said. “Our Iranian subsidiary just finalized the acquisition, so clearly this is very recent but we are confident that it will enhance our business in Iran from next year onwards.”

The FT quoted an unnamed person “with knowledge of Iran’s tobacco market” as saying that the purchase was likely a response to expectations that Philip Morris, maker of Marlboro cigarettes, was expected to enter the market.

“This acquisition will double JTI’s market share and helps to maintain its competitive advantage—thanks to JTI Pars’ presence in Iran since 2002—before Marlboro steps into this market,” he said.

The other foreign tobacco companies operating in Iran are British American Tobacco, through its subsidiary BAT Pars and KT&G of Korea.

Cigarette smuggling is a major issue in Iran. About 40% of cigarettes smoked in the country enter the market illegally, according to the Ministry of Industries, Mining and Trade.

The major brands produced at the JTI Pars factory in the northern Gilan Province are Winston, Magna and Monte Carlo.

The ATI acquisition means more production will take place in Zanjan, about 300 km northwest of Tehran, said people familiar with the deal. The companies jointly employ about 1,000 people.

“ATI has some strong brands in the growing value segment, the largest in volume and a state-of-the-art local production facility, very similar to JTI standards,” JTI said.

Asked how sanctions have affected its business, the company added: “We have always believed in Iran’s economic future and look forward to consolidating our presence, even more so with the business climate improving.”