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Russian President Vladimir Putin has brought Japan Tobacco International's (JTI) Russian business under state-appointed management, handing control of four local subsidiaries, in which the Japanese tobacco giant has invested $4.6 billion over more than two decades, to a domestic entity.
Under a decree signed by Putin on Thursday, Promyshlennye Aktivy, or Industrial Assets, took over management rights to JTI's stakes in JTI Donskoy Tabak, Petro, JTI Yelets and Kres Neva.
Japan Tobacco Inc., JTI's parent company, confirmed on Friday that the four manufacturing subsidiaries are covered by the measure.
"We are currently reviewing detailed information about this matter, possible responses, and its impact on our group," the company said in a statement, adding that it would promptly disclose any further developments requiring public disclosure.
Japan Tobacco's shares on the Tokyo Stock Exchange were down 19.3% on Friday, as heavy sell orders followed news of the Russian takeover, with no shares changing hands.
JTI has operated in Russia since 1999, following Japan Tobacco Inc.'s acquisition of the international business of R.J. Reynolds.
The company became the country's leading tobacco producer by sales volume in 2007 and strengthened its position in 2018 by acquiring Donskoy Tabak.
Its Russian portfolio includes major international cigarette brands such as Winston, Camel, LD, Sobranie and Mevius, alongside domestic brands including Russian Style and Donskoy Tabak.
Despite the war in Ukraine beginning in February 2022 and the subsequent wave of Western sanctions, JTI chose to maintain its Russian operations.
The company suspended new investments and marketing activities in Russia following the invasion but continued production and sales while complying with international sanctions and regulations.
Japan Tobacco's Russian subsidiary, LLC JTI Russia, generated 392.4 billion yen ($2.5 billion) in revenue and 90 billion yen in net profit in 2025, according to the Japanese group's latest annual securities filing.
Petro operates a cigarette factory in St. Petersburg, while JTI Donskoy Tabak manufactures tobacco products in Rostov-on-Don. JTI Yelets, based in the Lipetsk Region, and Kres Neva, in the Leningrad Region, process raw materials.
The measure transfers management authority rather than formal ownership of the assets, leaving Japan Tobacco with its ownership stakes while stripping it of effective control over the businesses.
The four manufacturing companies placed under temporary management, meanwhile, generated a combined 93.3 billion rubles($1.1 billion) in revenue and 15.9 billion rubles in net profit in 2023.
Petro accounted for the bulk of the total, reporting 73.2 billion rubles in revenue and 13.2 billion rubles in net profit.
The temporary management mechanism had not previously been applied to tobacco companies, making JTI the first global tobacco giant to have its Russian assets placed under the arrangement.
Russia introduced the mechanism in April 2023 through a presidential decree allowing Moscow to take temporary control of assets belonging to companies from countries it considers unfriendly. The measure has since been extended to businesses across several industries, including energy, food, retail and brewing.
Among the early targets were Finnish energy company Fortum, German utility Uniper, French food group Danone and Danish brewer Carlsberg, whose Russian operations came under temporary management in 2023.
Türkiye's Anadolu Efes also lost control of its Russian beer operations in December 2024, when Putin signed a decree placing the Russian business of AB InBev Efes B.V. under temporary management.
The joint venture between Anadolu Efes and Belgian brewer AB InBev was transferred to the management of Moscow-based Vmeste. The move followed Russian authorities' rejection of a proposed deal for Anadolu Efes to acquire AB InBev's stake in the venture.
In September 2026, Moscow extended the measure to the Russian operations of Swiss food giant Nestle, German wholesaler Metro and French retailer Auchan, among other foreign businesses.
Other international tobacco groups took a different approach to their Russian operations, opting to sell their businesses rather than remain exposed to the market.
British Imperial Brands, whose portfolio includes Imperial Tobacco, transferred its Russian business to local investors in 2022. British American Tobacco followed in 2023, selling its Russian assets to local management.
Philip Morris International also previously discussed restructuring its Russian business, including a possible transfer of assets, but no subsequent announcement on such a move has emerged.
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