“Japan Tobacco International (JTI) is the tobacco company that has grown the most in Spain during the last decade”
Last July, Tom Osborne was appointed the General Manager for the Iberia region. Now, in his new position, the objective has been set that the business "remains profitable and sustainable in the long term."
After managing the company in the Canary Islands until 2015, Tom Osborne returns to Spain as CEO of JTI Iberia. Throughout his career, Osborne ( 37 y/o), has held positions in different JTI headquarters around the world, like the United Kingdom, Spain, Taiwan and Malaysia.
JTI is one of the most important tobacco companies in the world. It has operations in more than 130 countries, can you tell us about the origin of the company?
Japan Tobacco International (JTI) is the international division of the Japan Tobacco Group (JT). Its history goes back to 1898 when the Japanese government created a state´s monopoly to sell tobacco leaf that was applicable until 1985. In 1999, the Japan Tobacco group became a multinational company until acquired the international operations of the US tobacco R.J. Reynolds. At that moment, the Japanese government retained 33 percent of the JT group's shares. The result is an organization that combines the entrepreneurial spirit of the Western culture with the oriental philosophy of excellence, precision, and long-term vision. Today, our Head Office is not only present in the Japanese tobacco market, but also in the markets of condiments, processed foods and pharmaceutical. Nowadays, the company has around 60,000 employees worldwide, including JTI, the Group's international tobacco division, and its prime source of growth: JTI generates 60 percent of the group's profits. JTI Headquarters are in Geneva, from where it manages all its international operations, in more than 130 countries. Regarding JTI Iberia, of which Spain is part with Portugal, Andorra, and Gibraltar, we have a workforce of almost 800 people, including office staff, business divisions, the Global Information Technology hub and our Tenerife factory, the only large-scale industrial tobacco production center in Spain.
What are the current challenges that the tobacco industry and your company are facing?
I am optimistic, and although our sector is changing in all areas, our market share has not stopped growing in recent years. This is the result of hard work, commitment and, sustainability of the industry in Spain. This commitment has to be the goal into the entire industry in order to face the fight against smuggling and a balanced regulatory framework. In Spain, we have achieved something unique in the world: join in a single voice the interests of all value chain members of our industry through the "Table of Tobacco". From this entity, farmers, manufacturers, distributors, and tobacconists work together to achieve an adequate framework that will balance the protection of health and stability of a sector whose contribution is strategic to the national economy. It has been noted that the tobacco industry contributes 9,000 million euros in taxes, it is the fifth source of State financing and employs more than 50,000 people in sectors such as agriculture and SMEs.
Can you describe, how has JTI evolved in Spain?
JTI is the tobacco company that has grown the most in Spain during the last decade. Our market share has tripled in the last 18 years reaching a record of 25 percent in 2017. These are remarkable results, especially considering that in mature markets as the Spanish one, market share movements are very small and growing by one percentage means an enormous effort. Our goal for this year and, for the next few years is to maintain this growth path. We have great strengths to achieve our goals: a highly qualified team, a broad portfolio of products and a board of managers that are highly committed to Spain, as evidence, we have the investment program in strategic sectors of the national economy such as agriculture, industry, and technology.
JTI is one of the main Extremadura tobacco leaf buyers this contributes to the development of a strategic sector of the Spanish economy as the agriculture. What does this agreement consist?
Our leadership position has allowed us to generate employment and wealth in the strategic sectors of the Spanish economy, as agriculture. In 2013, JTI signed an agreement with the Ministry of Agriculture in which we committed to acquire 12,000 tons of Extremadura tobacco for 2013, 2014 and 2015. We renewed the agreement in 2015 (for three more years) and we hope to review it before the end of 2018. With these efforts, we are showing JTI commitment to contribute to the stability of the sector and also recognizing the importance of tobacco cultivation in Extremadura, whereof 20,000 families live.
In addition, JTI has the largest cigarette factory in Spain, based on Santa Cruz de Tenerife. What relationship do you have with the Canary Islands?
Our relationship with the Canary Islands has a long history and, our factory is the largest center for large-scale industrial production of tobacco, in Spain. This fact has been a constant for half a century. This year, our factory celebrates its 60th anniversary and, it does with the satisfaction of being one of the most advanced and modern worldwide. As manufacturers, we are aware of constant modernization and continuous improvement. For this reason, in the last decade, JTI invested more than 45 million euros in the updating and refurbishment of our factory, equipping it with the latest technology in order to deal with new projects and expanding its production.In addition, human resource is essential to maintain our leadership position. For instance, JTI has a highly qualified team in the Canary Islands that represents the future of our company.
Which are the expansion plans of the company?
Our future vision combines organic growth in the traditional tobacco segment looking for the development of emerging products with the potential to reduce the risks associated with smoking (Reduced Risk Products). In this category, we have Logic the leading brand of electronic cigarettes, and Ploom Tech, a tobacco device without combustion. Although the high potential of RRP, its future in Spain is uncertain and will depend on consumer demand and the regulatory framework. The business model of JTI is costumer-focused. We believe in the freedom of choice and, if the consumer chooses to smoke or vape, we expect them to come to us because our priority is to satisfy their needs by offering the best products on the market.
JTI trusted in the extensive opportunities that the Canary Islands have. Your company can be the next success case and enjoy all the benefits that the tax system offers. If you want further information, our consultants will be glad to help you.
Translation of the interview by Esther García for inversión & Finanzas (December 3rd, 2018) Available at: http://www.finanzas.com/noticias/economia/20181203/osborne-JTI-tabaquera-tom-3955555.html
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