Kremlin Places Russian Operations of Japan Tobacco International Under Temporary State Management

In brief

• Putin signed an order placing the Russian entities of Japan Tobacco International under temporary management by Industrial Assets.
• The order covers four JTI entities, including factories in Rostov-on-Don, Yelets and Saint Petersburg.
• The takeover follows a series of autumn seizures of Western companies in Russia, which Putin defends as a response to sanctions.

Tobacco group's Russian operations taken over

Putin signed the executive order on Thursday, 5 November, placing four JTI corporate entities in Russia under the temporary management of a company called Industrial Assets (Путин передал во временное управление российские активы Japan Tobacco International — производителя сигарет «Русский стиль» и «Петр I» – Meduza). Reports indicate that the order covers stakes in JTI's tobacco factories in Rostov-on-Don, Yelets and Saint Petersburg. The arrangement applies both to assets held through Dutch and Swiss JTI vehicles and to assets held by Russian structures.

Owner of the temporary manager

Independent media reported that several Russian companies use the name Industrial Assets, some of them involved in earlier asset seizures. The entity that took control of JTI was reportedly registered on 16 September and is owned by Sergei Dremov, a former officer of the FSB security service in the Kursk region.

Market position and brands

The Russian arm has been active since 1999 and, according to reports, holds up to 40 percent of the market. Its international portfolio includes Winston, Camel, LD, Sobranie and Glamour, while its Russian-market brands include Petr I, Russky Stil and Donskoy Tabak.

Part of a wider wave

The seizure of JTI follows a string of takeovers this autumn that hit large Western firms operating in Russia. Among them are the German wholesaler Metro, the French retailer Auchan, the Swiss food producer Nestlé and the logistics firm FM Logistic. Earlier, the Auchan, Nestlé and Metro Cash & Carry operations were also placed under temporary management, along with a building-materials chain formerly known as Leroy Merlin.

Kremlin's justification

He said control of the seized subsidiaries could be returned to their former owners on favourable terms.