Japan Tobacco is to sell its beverage unit because of increasing competition.

The Tokyo-based firm, which owns the Roots canned coffee and Momono Tennen-sui flavored water brands, said yesterday it will offload beverage unit JT Beverage by the end of September. No details were disclosed on whether a potential buyer has been lined up. 

Japan Tobacco entered the beverage market in 1998 but said the operating environment in Japan had become “increasingly challenging”.

“The company has concluded that it will be difficult (for beverages) to make a profitable contribution to the JT group in the mid- to long-term,” it added.

Japan Tobacco launched Roots in 2000 as it looked to off-set declining cigarette sales. In full-year results released today, the company said it will continue to invest in its tobacco business as well as pharmaceutical and food units.

Beverage sales, which account for about a quarter of Japan Tobacco's overall revenues, were down 1% in today's results.

Japanese companies have been forced to look abroad for growth as domestic demand becomes saturated. In 2013, Asahi Group partnered with Tirta Bahagia Group and PT Indofood CBP Sukses Makmur in Indonesia to take control of Tirta Bahagia's bottled water operations in the country.