Japan Tobacco Inc. said Wednesday it will cease its vegetable distribution business by the end of June because its quality-added farm products have failed to win consumer support due to their high prices.
Along with the withdrawal, JT’s wholly owned subsidiary, JT Agris Corp., set up in May 1987 to run JT’s agricultural materials business, will be liquidated in July or thereafter, JT said.
“The vegetable distribution business has hardly generated a profit because of such reasons as consumers’ tendency to buy low-priced products,” Takashi Kumashiro, head of JT’s agricultural business section, said at a news conference.
JT has been distributing value-added vegetables produced by contracted growers to major retailers, but sales have been sluggish because they cost more and could not compete with regular and low-priced vegetables imported from abroad, including from China.
JT started its original vegetable distribution business in 1986 as one of its main operations, following its food and pharmaceuticals businesses, amid declining demand for tobacco.
It has developed high-value-added vegetables, including tomatoes that contain a large amount of vitamin C.
JT said the effects of the withdrawal on its consolidated earnings will be small and it will continue its research and development into plant biotechnology.
JT’s vegetable distribution department and JT Agris chalked up combined sales of about 8 billion yen in the last business year, which ended in March.