JTI is maintaining a focus on traditional cigarettes in Japan and internationally. Photo credit: Nichijyou123, CC4.0.
Japan Tobacco International (JTI), the world’s third-largest tobacco maker, is taking a different approach from rivals Philip Morris International (PMI) and British American Tobacco (BAT), doubling down on traditional cigarettes, particularly low-cost brands, even as competitors push smoke-free alternatives, says Bloomberg.
“People who used to buy expensive brands are now going for cheaper ones,” said Gary Buchholtz, owner of Twin Peaks Liquor in Longmont, CO. Rising prices and economic pressures in the US, one of the world’s most profitable tobacco markets, have driven growing sales of discount brands such as Eagle 20’s, Pyramid, and Montego — all now owned by JTI after its US$2.4 billion acquisition of Vector Group last October.
JTI expects discount cigarettes to account for more than 40% of the US market by 2027, up from roughly 32% in 2022. The Vector purchase reinforces JTI’s strategy of prioritizing combustible products over “smoke-free” alternatives.
“It might not be a fashionable view, but cigarettes make money, and lots of it,” wrote Panmure Liberum analyst Rae Maile in February. “JTI has been unashamed about this.”
While PMI and BAT invest heavily in vapes, heated tobacco sticks, and nicotine pouches, JTI has focused on conventional cigarettes. Its previous acquisitions include Bangladesh’s Akij Group tobacco business in 2018 and Indonesian clove maker Karyadibya Mahardhika in 2017. The company also markets Winston and Camel outside the US, boosting its presence in Europe, including Germany, Spain, and Italy.
JTI has emphasized improving packaging, flavors, and product quality, a spokesperson said. That approach produced results, as in 2024 cigarette volumes rose 2%, revenue went up 9%, and profit increased 10%.
Despite growing global demand for alternatives, JTI is expanding its reduced-risk product (RRP) portfolio more slowly than PMI or BAT. Its offerings include Ploom heated tobacco devices and Nordic Spirit nicotine pouches. Ploom AURA launched in Japan in May and in Switzerland this September. JTI also has a strategic joint venture with Altria to sell Ploom in the US.
Between 2022 and 2024, JTI invested about ¥300 billion (US$2 billion) in RRP development and plans to spend more than ¥650 billion (US$4.3 billion) between 2025 and 2027.
Hazel Cheeseman, chief executive of Action on Smoking and Health, said she hoped emerging markets with rising smoking rates would implement more policies to curb tobacco consumption. “Clearly JTI are betting in the other direction,” she said. “They see themselves as a cigarette company in the future.”
Acquisitions have helped JTI expand globally, including the 2007 purchase of UK-based Gallaher Group and deals in Sudan, Egypt, Iran, Bangladesh, and Russia. Its acquisition of Donskoy Tabak in 2018 raised its Russian market share to almost 40%. While it suspended new investments in Russia in 2022, JTI remains the country’s largest cigarette manufacturer by sales volume.
Other key markets include Italy, the Philippines, and Japan. In its home market, JTI has raised cigarette prices while promoting Ploom devices. Although PMI’s IQOS dominates the heated tobacco segment, Ploom’s market share in Japan rose to 13.6% in Q2 2025, up from 7.6% three years earlier. Analysts forecast declining tobacco demand in Japan over the next five years.
In the US, the Vector acquisition gives JTI a strategic advantage as inflation and higher taxes push smokers toward lower-priced products. Premium brands’ share has fallen from about 80% of tracked cigarette sales in 2021 to roughly 70% now, according to Consumer Edge analyst Connor Rattigan.
“Unlike the old days, people have become less loyal to any particular brand,” said Audrey Silk, founder of Citizens Lobbying Against Smoker Harassment. “They will choose price over brand.”
BAT’s US cigarette volumes fell 10.1% last year, prompting the company to test a cheaper version of Doral in Louisiana and West Virginia. Altria has expanded a discount product priced at US$5.10 per pack compared with Marlboro’s US$9.50, according to UBS.
JTI has maintained a focus on traditional cigarettes in international markets as well. A spokesperson said the company tracks trends and introduces reduced-risk products where consumer demand exists.