Hardly surprising, then, Japan has one of the highest smoking rates in the industrialised world, yet virtually no history of litigation. Monitoring cigarette advertising and promotion is the Tobacco Institute of Japan, and all its guidelines are voluntary. Self-imposed restraints on advertising for TV, radio and online began in 1998. More recently, the Government issued a ban on OOH in 2004 and on public transport in 2005.
Print advertising is still allowed, though rarely seen, and cannot target young readers. Today, the marketing battle has migrated to point-of-sale, and this has seen some major changes recently. The Taspo, or ‘tobacco access passport’, debuted on 1 July to prevent underage consumers purchasing cigarettes from Japan’s ubiquitous vending machines.
Instead, the electronic ID system has led to a shift in the way cigarettes are purchased: smokers unwilling to go through the process of applying for a card now feed their habit in convenience stores. “Before Taspo, the channel share was 50 per cent vending machines to 30 per cent convenience stores,” said Masaru Yoshimoto, project manager at Synovate. “Now convenience stores have 50 per cent and vending machines 20 per cent.”
That is the background to BAT’s account shift. According to Daniel Sevcik, client service executive at The Nielsen Company Japan, marketing activity is growing in this environment. “You see a huge amount of point-of-sale,” he says. “At the counter, there are promotions with, say, a limited-edition box with a unique lighter. They are trying to drive sales from the convenience stores.”
Nevertheless, overall consumption is falling. The Japanese puffed 260 billion cigarettes last year, a 17.1 per cent decrease compared to 2002, according to Euromonitor International, which forecasts an additional 16.3 percent decline to 218.2 billion sticks by 2012.
The smoking population is also heavily male: in 2006, 48 per cent of males aged 15-plus and 18 per cent of women smoked. However, according to Euromonitor International head of global tobacco research Zora Milenkovic, there has been a rise in female smokers in recent years, possibly due to rising female employment.
Dominating this contracting market is Japan Tobacco. Last year, it had a 66.2 per cent market share, followed by Philip Morris with 24.3 per cent and BAT with 8.4 percent.
Today the premium category, defined as cigarettes priced above 320 yen ($3), makes up around one quarter of the market. “Premium smokers skew to younger adults, both male and female,” says Takeshi Tomizawa, account service manager at TNS-Infoplan.
Japan is often called the lightest cigarette market in the world, and full-flavour cigarettes command only a 15 per cent share, with light taking 30 per cent, superlight 35 per cent and one mg tar 20 per cent. Across the market, menthol variants account for 20 per cent, while ‘smokeless’ variants - introduced by Japan Tobacco in 2003 - command six per cent. Menthol and ultra-low tar cigarettes are both expanding their market share.
In this crowded environment, innovation is seen as the key to success, with all three major players launching countless national and regional brand variants each year. “They keep coming out with new products to keep it fresh,” says Nielsen’s Sevcik. “They know that consumers loyal to a brand will try new variants in that brand family.”