Japan Tobacco To Acquire Foreign Sales Rights To Natural American Spirit Cigarettes

Japan Tobacco to acquire foreign sales rights to Natural American Spirit cigarettesJapan Tobacco Inc. (JT) will acquire the rights to sell the cigarette brand Natural American Spirit, popular with young smokers, outside the United States from major U.S. tobacco maker Reynolds American Inc.

The acquisition price will be 600 billion yen (about $5 billion), JT said on Sept. 29.

With the acquisition, JT aims to accelerate its growth in its domestic and overseas markets.

The production and sales of the Natural American Spirit brand was started in the United States in 1982 by Reynolds’ subsidiary Santa Fe Natural Tobacco Co. JT plans to purchase sales companies of the brand in regions outside the United States, including Europe, in addition to Japan.

Total sales of the brand in those regions stood at 17.6 billion yen in 2014. Pre-tax net profits were 2.1 billion yen. The acquisition will be completed in early 2016.

Natural American Spirit boasts of containing no perfume materials or additives. It is priced at 480 yen per package, including tax. In spite of the high price, however, sales in Japan grew 2.5 times in the past three years, being particularly popular among young smokers living in urban areas.

“We want to nurture the brand into a leading one in Japan,” said JT.

JT is avoiding doing business in the United States where an anti-smoking trend is becoming stronger and the risk of being embroiled in lawsuits is high.