Tax changes in Japan that will eliminate preferential tax treatment for heated tobacco products are expected to weigh on growth this year, according to Japan Tobacco International CFO Vassilis Vovos. The policy shift would tax heated tobacco at the same rate as traditional cigarettes, potentially raising retail prices by 70 to 100 yen ($0.46 to $0.65) per pack after sales tax. Vovos said the company plans to introduce incremental price increases throughout 2026 to offset the impact and avoid a single steep price hike.
The tax change poses a challenge to JTI’s expansion of its Ploom heated tobacco device in Japan, the world’s largest heated tobacco market, which is currently led by rival Philip Morris International, according to Reuters. Parent company Japan Tobacco has relied on newer product categories to drive growth, with Ploom volumes rising more than 38% last year and reaching a 14.4% share of the heated tobacco segment. While executives warned the tax change could temporarily slow category growth, they said heated tobacco remains a key long-term revenue driver.
