Japan Tobacco's Ploom Tech smokeless tobacco products and its Mevius tobacco capsules Photo: REUTERS file
business

Japan Tobacco forecasts strong sales amid tepid heat-not-burn products market

10 Comments
By Taiga Uranaka

Japan Tobacco expects the country’s heated tobacco market to post moderate growth this year but sees a nearly 80 percent rise in its own sales as it attempts to catch up with the sector leader Philip Morris International.

Japan, a major heated tobacco market globally, saw a sharp slowdown last year following an initial surge in sales after Philip Morris started selling its “heat not burn” products in 2014, as competition heightened and consumers turned more conservative in adopting the new products.

“What we learned last year is it is very difficult to forecast the domestic market” for HNB, said Masamichi Terabatake, CEO of Japan Tobacco, at an earnings briefing. “The growth in (HNB) market slowed down a lot in 2018,” he said, adding, however, the company still believes the category is a growth field in a longer term.

The former state-monopoly last month ratcheted up the smokeless war with the launch of two new products.

Despite commanding 62 percent of the local cigarette market, Japan Tobacco has been caught on the wrong side of the rising popularity of HNB alternatives and has lagged in the category in its own backyard versus the Marlboro maker.

Philip Morris in 2014 started selling its IQOS HNB device in Japan, which has emerged as a fertile test ground for vaping products since e-cigarettes using nicotine-laced liquid are not allowed under the country’s pharmaceutical regulation.

IQOS had a 71.8 percent share of Japan’s HNB market in 2018, while British American Tobacco’s glo had 20.1 percent and Japan Tobacco’s Ploom TECH 8.1 percent, Nomura estimates.

Japan Tobacco said it expects to sell HNB tobacco products equivalent of 5 billion cigarettes this year in Japan, up from 2.8 billion cigarette equivalent last year. Ploom TECH uses tobacco leaf-packed capsules and the company provides sales volume counts in the equivalent of conventional cigarettes.

HNB products, including rivals’, are expected to account for 22-23 percent of Japan’s overall tobacco market in 2019, versus 21 percent a year ago, Japan Tobacco said.

Japan Tobacco expects its domestic sales of conventional cigarettes to fall over 7.5 percent this year, after dropping 11.7 percent in 2018.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

10 Comments
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I read an article the other day in an international newspaper stating how vaping and E-cigarettes cause heart attacks and strokes. I guess Japan Tobacco missed that report.

1 ( +1 / -0 )

“heat-not-burn” = “maim-not-kill”

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 5 billion cigarettes this year in Japan, up from 2.8 billion cigarette equivalent last year.

Laughable why we try and clean city air while people literally breath in dirty air on purpose.

0 ( +2 / -2 )

Will Goode - Laughable why we try and clean city air while people literally breath in dirty air on purpose.

The largest percentage of carcinogens in cities comes from car tire dust.

-1 ( +1 / -2 )

@dothehustle

The largest percentage of carcinogens in cities comes from car tire dust.

I can well believe that.

-3 ( +1 / -4 )

Is this article aimed at Japan Tobacco shareholders?

0 ( +1 / -1 )

Ban all smoking inside anywhere...and on the streets. That would go a long way towards easing the health costs of end-of-life care for smokers and make everyday life super great here in Japan. It's my dream.

-1 ( +0 / -1 )

Hope, Caster and Peace are my favourite Japanese cigarette box names. JT was primarily run as a government company for over 100 years, and has done very little to encourage pepple to stop smoking due to health reasons, instead going along the lines of promoting smoking ettiquette, while maintaining it’s coffers.

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Big tobacco in America has said it before. Middle class and above are not where most of their profits come from. The poor is where most of their profits come from. So I can understand why Japan tobacco expects an increase in profit. With a cigarette people receive more bang for their buck so poor smokers are more likely to go the overall cheaper route. Vaping and e-cigarettes hit the pockets harder on people that chain smoke. So as more people fall into poverty and stress increases, it makes sense why tobacco companies continue to rise. I am from New York and I thought people would stop smoking once packs became $15 per pack and then e-cigarettes and other mediums came out. Tobacco companies had their profits slowed for a bit, but afterwards, it picked right back up and they gained more profits.

Stopping people from smoking is a very difficult thing.

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Ban the products that emit second-hand smoke. If you want to damage yourself with the others, knock yourselves out. Once it stops harming others, it ceases to be the government's business.

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