With Ploom Tech, Japan Tobacco is ready to face increasing competition in the heated-tobacco products category.
By Stefanie Rossel
Much has been said about Big Tobacco’s late entry into the vapor segment, that once-little, revolutionary grass-roots movement, but it can’t be denied that the traditional cigarette industry’s financial muscle has also sparked innovation in the sector.
Four years after U.S.-based Lorillard, now part of Reynolds American Inc., became the first tobacco manufacturer to acquire an e-cigarette company, consumers have access to a vast and growing range of alternatives to combustible cigarettes. Not only are these products believed to be less hazardous, but they also cater to consumers’ diverse tastes.
Among the reduced-risk products (RRP), the heated-tobacco category in particular has seen many new developments recently and appears to promise commercial success. While heated-tobacco products, as studies suggest, present lower health risks than do combustible smokes, they deliver a flavor similar to that of conventional cigarettes and therefore have the potential to appeal to smokers who remain unimpressed by e-cigarettes. Despite all their innovations, vapor companies have found it challenging to convincingly mimic tobacco flavor in e-liquid.
Japan Tobacco Group (JT) was the last of the big international cigarette manufacturers to enter the e-cigarette category through acquisition—but it has caught up quickly. In short succession, the company purchased U.K-based Zandera, maker of the popular E-Lites brand, and Logic Technology Development in the U.S. The deals provided JT with a global footprint in the e-cigarette market. The takeover of Logic made it the No. 3 U.S. vapor company overnight.
Complementing these acquisitions, JT in February 2015 purchased the Ploom trademark, including the modelTwo vaporizer and pods product line, from the U.S. startup company Ploom Inc. The Ploom products had been on sale in JT’s domestic market, Japan, since 2013.
Since then, JT has been investing to extend its product pipeline. The effort is being led by JT’s international division, Japan Tobacco International (JTI), which, when it comes to emerging products, is also responsible for the Japanese market.
January 2016 saw the launch of Ploom Tech, a hybrid system that, JTI claims, merges the best of e-cigarettes and tobacco. Containing both tobacco and a non-nicotine e-liquid, the device comprises a battery and cartridge, into which a tailor-made tobacco capsule filled with granulated tobacco is placed. Vapor is generated from the liquid in the cartridge and passes through the tobacco capsule, thus creating a clear tobacco taste without ash or smoke. Unlike the original Ploom, the Ploom Tech can be used instantly; it is activated merely by inhaling. JT says that due to its light weight and compact stick shape, the device is easy to hold and carry.
In for competition
Ploom Tech was launched in March in nearly 900 stores in Fukuoka, Japan, as well as in online shops nationwide. Known for its novelty-seeking consumers, Japan was a logical choice to test the revolutionary product. Ploom TECH will be competing with Philip Morris International’s (PMI) iQOS, which has been available nationwide since April. Both companies have tied their new products to their best-selling cigarette trademarks: Ploom Tech is available with three varieties of tobacco capsules under the Mevius brand name, while iQOS is sold with Marlboro-branded “HeatSticks.”
While it is still early days, initial sales of Ploom Tech have exceeded expectations, according to Xavier Lubino, JTI’s emerging products business vice president. “Demand continues to remain high,” he says. “Our competitors launched their product a few months prior to us, therefore like-for-like comparisons would be challenging, but our results are very encouraging.”
Price may play a role: While the iQOS device retails at ¥9,980 ($93.39), the Ploom Tech is priced at ¥4,000, according to a Reuters report; a pack of 20 HeatSticks and a pack of five Ploom Tech capsules are available at ¥460 each.
Without giving a specific time frame, Lubino says that JTI plans to roll out Ploom Tech globally. “Based on our findings and positive outcome in Fukuoka, we are obviously extremely excited about the prospects for expanding the availability of Ploom Tech,” he says. “Globally, we see great potential for the device and [we] envisage entering several markets.”
He declines to comment, however, on whether JTI intends to submit a modified-risk tobacco products application to the U.S. Food and Drug Administration for Ploom Tech, as PMI intends to do for iQOS toward the end of the year. “It is too early to say, as we are currently in the process of collecting additional scientific data on the device,” Lubino explains. “Once this data is in and has been reviewed, we will determine our next steps.”
What can and cannot be claimed about the product will play a decisive role in the marketing of Ploom Tech. “Clearly, recent regulations in the EU and the U.S. have had an impact on the heated-tobacco category,” says Lubino. “However, we put in place a strong strategy in anticipation of increased regulations. For us, Ploom Tech redefines the enjoyment of tobacco by blending nature and technology to give consumers an entirely new experience, rather than just a smoking alternative. We believe early adopters will see Ploom Tech as groundbreaking and share this experience with others. The smoking experience is evolving daily, and the best way to keep up is by consistently developing new products and technologies. For example, Ploom Tech removes the smell of smoke but not the flavor of tobacco, and consumers will appreciate such innovations.”
Competition in the heated-tobacco products category is likely to, well, heat up. With their innovative technologies, tobacco companies appear to be inching toward what analysts have long described as the industry’s “holy grail”—a commercially viable yet “safe” cigarette.
The new devices are said to have the potential to change “the trajectory of smoking” and replace a significant part of combustible cigarette sales in the midterm. In addition to iQOS and Ploom Tech, there is also Glo iFuse, a tobacco-heating device developed by British American Tobacco, which is currently being test-marketed in Romania.
As manufacturers of reduced-risk products increasingly compete for market share, there certainly is no harm for consumers in having a larger choice of alternatives to combustible cigarettes.