Sources close to the review suggest it has been prompted by BAT’s dissatisfaction with Grey/G2’s handling of its Japanese accounts. A transfer to Ogilvy would come as a considerable blow to Grey Group in Japan, where the tobacco giant is among its largest clients. Grey/G2 currently handles the bulk of BAT’s global business.
Anthony Pounds, MD of Ogilvy Action Japan, and Chris Beaumont, president and chief executive of Grey Japan, did not respond to request for comment.
According to Euromonitor, BAT is the smallest of the three major players in the lucrative Japanese market, with a share of 11 per cent. Rivals Japan Tobacco and Philip Morris hold around 65 and 24 per cent respectively. Japan is the world’s second-largest market for tobacco after China, with almost 20 per cent of the adult population classified as regular smokers, and recorded sales of 250 billion sticks for 2007.
In spite of a ban on TV and billboard tobacco advertising, the market allows print and point-of-sale promotion. An analyst at Nielsen Japan explained that while vending machines - a prominent feature of Japanese consumer culture - have traditionally played a significant role in driving the popularity and distribution of cigarette brands, the introduction in July of designated Taspo ID cards to enable purchase from these machines has led to a decline in sales and a shift in marketing focus to convenience store activation.
A tobacco expert at TNS Japan added that treatments such as Nicorette, which have recently been made available without a prescription, are set to present an increasingly stiff challenge to the industry. Having shrunk by 20 per cent since 2000, the market continues to decline at an annual rate of up to five per cent.
