Japan Tobacco Inc. will exit the drinks business that it has built over the past 26 years, as an "increasingly challenging" operating environment in Japan makes it difficult for the unit to turn a profit.

The company will quit the manufacturing and sale of JT beverage products by the end of September, it said in a statement on Wednesday. The company entered the business in 1988.

"The beverage market matured and the scale of the business has become more important for maintaining and strengthening the competitiveness," Japan Tobacco said in the statement, adding "it will be difficult to make a profitable contribution to the JT Group in the mid- to long-term."