Falling sales of cigarettes could force Japan Tobacco to cut over 1,600 jobs and close down four factories, media reports revealed.
In a major overhaul, JT will cut about a fifth of its 8,900 workforce in its core tobacco business, public broadcaster NHK said.
In addition to the job cuts, which the company wants to make through voluntary retirement and other schemes, it will also close four out of nine factories in Japan and reduce the number of its branch offices from 25 to 15, the broadcaster said, citing unnamed sources.
JT, one of the world's biggest tobacco firms, whose international brands include Winston and Camel, has a brisk overseas business but has suffered lacklustre domestic sales, as Japan's once huge number of smokers shrinks.
Japan has traditionally been unusual among industrialised countries for the size of its smoking population, but there are signs it is catching up. Figures from Japan Tobacco show that 21 percent of adults smoke now, down from 25 percent in 2009.
An increased sales tax, set to be introduced in April, is also expected to take its toll on the domestic market, and observers say they expect the company to focus on overseas sales and other segments such as food and medical products.
JT told AFP that the company "has not made any decisions" about its domestic tobacco business.
"The company constantly considers various measures on strengthening its competitiveness," it said in a statement.