Japan Tobacco Has High Hopes for Low-Priced Cigarettes

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Japan Tobacco Has High Hopes for Low-Priced Cigarettes

07/19/2016

GREENSBORO, N.C. — One year after the shuffling of the Big Three transformed the U.S. tobacco industry, Japan Tobacco is making some noise.

The Tokyo-based company is now marketing its low-priced LD cigarette brand at retail stores in North Carolina and South Carolina, according to The Wall Street Journal. The market area puts it squarely in the backyards of the No. 2 and No. 3 players. Reynolds America Inc. (RAI) is based in Winston-Salem and ITG Brands LLC calls Greensboro home.

A pack of LD cigarettes sells for $2.81 a pack, compared to $4.92 a pack for Marlboro. Marlboro is the leading brand of Philip Morris USA (PM USA), an operating company of No. 1 The Altria Group Inc. The lower price point also puts it in competition with discount brands L&M ($3.69), which is part of PM USA's portfolio, and Pall Mall ($3.49), which is part of RAI's family, the news outlet reported.

Currently, Japan Tobacco is the world's second-largest tobacco company and almost all of its $22 billion in sales come from outside of the United States. This new brand can change that, giving it a toehold in to the market, according to WSJ.

In March, LD became the first global brand introduced by Japan Tobacco in the U.S. According to the company, it is testing the cigarette’s appeal in North Carolina and South Carolina and will launch the brand nationwide depending on its performance as early as next year with 10 style variations, the outlet added.