No PMI Cigarettes in Japan Within 10 Years
Philip Morris International (PMI) plans to stop selling cigarettes in Japan within 10 years.
In an interview with Nikkei, Jacek Olczak, who took over as the company’s CEO on May 5, predicted that Japan will become a smoke-free society within 10 years. PMI expects to gradually pull out of combustible tobacco products elsewhere over the next 10 to 15 years, and Olczak said he wants the transition to happen first in Japan.
According to Olczak, the company will be focusing on its heat-not-burn (HnB) products instead. In 2016, PMI began selling its IQOS HnB device nationwide in Japan. The company held a 70 percent share of Japan’s market for such products in 2019, according to Euromonitor International—far ahead of its rivals Japan Tobacco, with 10 percent, and British American Tobacco, with 20 percent.
Smokeless tobacco, which includes HnB and e-cigarettes, made up 11 percent of Philip Morris’ total shipments of 704.6 billion cigarettes in 2020, up 3 percentage points from 2019. The global market for combustible cigarettes has shrunk by just under 10 percent over the past four years.
Smokeless tobacco products are currently sold in 66 countries and regions, and Olczak said he wants to increase that to 100 percent by 2025.
Nearly 30 percent of all Japanese tobacco sales are now heated products. Part of their success is due to the country’s ban on e-cigarettes sales and its comparatively accommodative regulatory framework.
When Japan last year prohibited smoking in restaurants, it made an exception for HnB products, which can be consumed while eating or drinking if certain conditions are met, such as having ventilation equipment in place.
In 2019, tobacco companies sold 118.1 billion cigarettes in Japan, around one-third of the peak in 1996.
Olczak said Philip Morris would introduce devices that use new technologies and consider expanding the functionality of heated devices. In addition to providing an age verification function to prevent minors from smoking, the company will also begin developing an application to help smokers manage their health.
Philip Morris’ sales for the fiscal year ended December 2020 totaled $28.6 billion, down 4 percent from the previous year, while its net profit reached $8 billion, up 12 percent.
