Category: Heat-Not-Burn

  • Study: HTPs Increase Likelihood of Quitting

    Study: HTPs Increase Likelihood of Quitting

    Photo: Nikita

    Switching to heated tobacco products (HTPs) can significantly increase the likelihood of smokers quitting smoking entirely, reports the Inquirer, citing a study conducted by South Korean researchers.

    Conducted by experts at the Korea Institute for Industrial Economics and Trade, the study also found no evidence to support concerns that HTPs serve as a gateway to smoking.

    Using data from the Korea National Health and Nutrition Examination Survey, the researchers observed that 99.4 percent of HTP users either switched from traditional cigarettes or are dual users, with only 0.6 percent being new smokers.

    Anton Israel, president of the Nicotine Consumers Union of the Philippines, said the Korean study demonstrates how technology can mitigate the risks associated with nicotine consumption. “Nicotine isn’t the problem,” he was quoted as saying. “It’s the way it’s delivered through combustion. Smoke-free products like HTPs eliminate the harm from smoke.”

    The Korean study, which surveyed 4,514 adults, also concluded that adolescents are more likely to start smoking with traditional cigarettes rather than HTPs. Among the study’s participants, 2,356 were nonsmokers, 1,316 were traditional cigarette smokers, and 842 were HTP users. 

    Heated tobacco products accounted for 12 percent of South Korean tobacco sales in 2021, up from 2.2 percent in 2017.  

  • Testing the Waters

    Testing the Waters

    Philip Morris International is getting ready to reintroduce IQOS in the US.

    By Stefanie Rossel

    During its 2024 second-quarter financial results presentation on July 23, Philip Morris International at last confirmed the long-awaited reintroduction of its IQOS heated-tobacco product (HTP) in the U.S. In the fourth quarter of this year, the company will start test marketing its IQOS3 device in Austin, Texas, according to PMI Chief Financial Officer Emmanuel Babeau.

    A large-scale launch of IQOS, he stressed, will take place only after the Food and Drug Administration has authorized PMI’s most recent model, IQOS Iluma, which the company expects to happen in the second half of 2025.

    The company submitted premarket tobacco product applications (PMTAs) and modified-risk tobacco product (MRTP) applications for Iluma in October 2023. Until Iluma’s FDA marketing authorization, Babeau said, the company will sell its IQOS3 model in only a few U.S. cities, primarily to fine-tune its approach in anticipation of the nationwide introduction of IQOS Iluma.

    Once it has secured FDA approval for Iluma, the company will apply the IQOS marketing strategy that has been successful internationally, with some tweaks for the U.S. market. Among other things, this will involve engaging with consumers to explain the product, creating a dedicated sales force and setting up its own points of sale.

    The launch will be PMI’s second attempt to establish IQOS in the U.S. In April 2019, the company assigned the exclusive commercialization rights of the brand to Altria, which then launched IQOS in Atlanta and Richmond in the fourth quarter of 2019. One-and-a-half years later, IQOS was available in Georgia, Virginia, North Carolina and South Carolina. But plans for further commercialization were interrupted when the International Trade Commission (ITC) upheld a claim by BAT that IQOS products infringed two patents owned by British Tobacco America Group.

    In September 2021, the ITC ordered Philip Morris and Altria to stop importing and selling IQOS models 2.4, 3 and 3 Duo and their respective heat sticks. PMI then agreed to pay Altria $2.7 billion to take back the U.S. commercialization rights of IQOS as of April 30, 2024. In February 2024, PMI and BAT resolved all ongoing intellectual property disputes related to the former company’s HTP and vapor products.

    In 2020 and 2022, the FDA issued modified-risk granted orders for IQOS model 2.4 and model 3, respectively, as well as for three heat stick variants. These orders are valid for a fixed period. To continue marketing the MRTPs after the authorized term, the company in May 2024 applied to renew its IQOS3 exposure modification order.

    IQOS is the only HTP in the U.S. that has been granted not only a PMTA but also MRTP authorization.

    Pieter Vorster, managing director, Idwala Research

    Market With Potential

    PMI’s selection of Austin for its 2024 pilot may be a smart move, according to Pieter Vorster, managing director of Idwala Research. “Austin is known for having a vibrant tech industry, attracting young, tech-savvy people open to new technologies and innovation,” he says. “I suspect that the regulatory environment might also be somewhat less restrictive. Furthermore, PMI likely wanted to have a clean slate concerning product awareness.”

    Furthermore, Texas has a low cigarette tax rate, and IQOS will be taxed there as cigarettes, which will give PMI a clue how the product would perform when taxed similarly to cigarettes, according to TobaccoIntelligence. A progressive university town in an otherwise conservative state, the city also provides a unique variety of demographics. “This likely means that PMI will be able to assess IQOS’ attractiveness to an array of adult testers in a small area,” says Vorster.

    Expectations are high for IQOS’ nationwide rollout. Euromonitor expects the market for smokeless tobacco and smokeless alternatives to increase from $23.49 billion in 2022 to $32.05 billion in 2027, eating into the share of traditional cigarettes. The company predicts that the value of cigarettes, which currently account for most tobacco product sales, will drop by 30 percent from $97.80 billion to $68.37 billion during that period. Investors are waiting to see whether PMI can create a heated-tobacco market in a country where vapes dominate the sales of electronic nicotine-delivery systems.

    Vorster is optimistic, noting that the U.S. with its nearly 30 million smokers is significant for PMI’s transition strategy toward a smoke-free future. “The U.S. is one of the largest and most profitable markets for nicotine products globally,” he says. “Since PMI has no presence in cigarettes, it won’t be cannibalizing its own cigarette business. IQOS is the only HTP in the U.S. that has been granted not only a PMTA but also MRTP authorization by the FDA. Furthermore, very few vaping products have been given PMTAs, although this benefit is clouded by the rampant sales of illicit disposable vapes.”

    PMI aims to capture 10 percent of U.S. tobacco and HTP unit volume by 2030. While he does not consider the 10 percent target overly ambitious, Vorster lists a few caveats. “Vapers are unlikely to switch to an HTP as they would view it as a regressive step, closer to going back to smoking,” he says. “However, this could be influenced by the regulatory environment. If the current pace of PMTAs for vaping products is maintained and the sale of illicit, disposable vapes can be reduced significantly—which is unlikely in my view—then some vapers might be motivated to switch to IQOS. In the absence of what I described, new IQOS consumers will likely come from the smoking population, where the relatively high average nicotine content of cigarettes sold in the U.S. represents a significant hurdle for HTPs and, in particular, for the IQOS products that are currently authorized in the U.S.”

    If the U.S. bans menthol cigarettes, notes Vorster, the smokers of those products could represent a significant potential source of new IQOS consumers, provided IQOS’ menthol variants are allowed to stay on the market.

    Stepping Up Production

    In its second-quarter results, PMI estimated that more than 36 million people globally use the company’s smoke-free products. In the first half of 2024, PMI’s volume growth was driven by smoke-free products. The company shipped 68.7 billion HTP consumables units, an increase of 16.8 percent versus the previous year. This compares to 300.8 billion cigarettes, which grew by a mere 0.1 percent year-on-year. Shipments of oral smoke-free products increased 27.4 percent compared to 2023, up to 8.4 billion units. Zyn, PMI’s modern oral nicotine product, which became part of its portfolio through the company’s 2022 acquisition of Swedish Match, has grown exponentially and now dominates the U.S. nicotine pouch category. The product is so popular that PMI has been struggling to keep up with demand.

    However, Zyn has also attracted regulatory scrutiny. In response to a subpoena from the District of Columbia attorney, PMI in June suspended online sales of flavored Zyn variants on its U.S. website. In March, a law group in California filed a lawsuit against the company, claiming that PMI is targeting children and young adults with its flavored nicotine pouches.

    “Given the current trajectory and historical parallels with Juul, Zyn’s future will involve navigating through heightened regulatory scrutiny and social challenges,” says Vorster. “PMI’s ability to adapt its strategies, ensure regulatory compliance and address public concerns will be pivotal. If PMI can successfully manage these issues, Zyn could stabilize and continue to grow, albeit at a potentially slower pace. However, if the regulatory and legal pressures intensify, PMI might face significant hurdles that could hinder Zyn’s market expansion and profitability.”

    Swedish Match filed for a PMTA for Zyn in March 2020, but as of August 2024, the FDA had not decided on this application. “The delay in the FDA’s response to Zyn’s PMTA is likely due to a combination of high application volumes, resource constraints and the complexity of the review process,” says Vorster. “Current issues such as social backlash, regulatory scrutiny and legal challenges will significantly impact the FDA’s decision, potentially leading to more stringent regulations and conditions for approval. The FDA’s continued reliance on a scientific study that concluded that nicotine is harmful to developing brains means that products that are perceived to have youth appeal will find it hard to get approved as ‘for the protection of public health.’”

    While the regulatory approval process is outside its control, PMI has started tackling the product shortages by investing in production. On July 16, the company announced that it would invest $600 million to open a manufacturing facility in Aurora, Colorado, to produce Zyn pouches. The plant is expected to start preliminary operations in late 2025 and regular production in 2026. It will create 500 jobs. PMI is also increasing production of Zyn at its Owensboro, Kentucky site. Apart from meeting U.S. demand, the investments will help create capacity for export, the company said.

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • JT to Process HTP Components in Trier

    JT to Process HTP Components in Trier

    The products prepared in Trier will be finalized at a JTI factory in Poland (pictured) Photo: JTI

    Japan Tobacco International is investing about €30 million in its Trier, Germany, factory, reports Tagesschau.

    The company plans to build a new facility that will produce components for heated-tobacco sticks. According to JTI, these products will be prepared in Trier and then integrated into heated tobacco products at a JTI plant in Poland.

    JTI-Trier Plant Manager Peter Kilburg views the investment as a sign of trust in the factory and its workforce.

    According to the company, Trier is the only JTI plant worldwide to establish such a facility. It is expected to be operational in the first quarter of 2026.

    The Trier factory employs about 1,800 people.

  • Beyond Hot Air

    Beyond Hot Air

    Photo: Valerii Honcharuk

    Designing effective heated-tobacco products

    By Malcom Saxton

    Heated-tobacco products (HTPs) heat tobacco to a high temperature without combusting it. Intended as a tobacco harm reduction tool, good product design is a key aspect in encouraging HTP adoption among adult smokers looking to quit combustible cigarettes. Here, Malcolm Saxton, senior consultant for chemistry at Broughton, which operates a dedicated HTP testing and compliance facility, shares advice on designing an appealing HTP.

    Although a small number of brands currently dominate the HTP market, more businesses are working to bring competitive HTPs to adult smokers by investing in research, development and marketing. For example, in 2023, Japan Tobacco announced that it would invest ¥300 billion ($2.05 billion) in HTPs, with ¥200 billion allocated for marketing internationally.

    Manufacturers can create effective and competitive products by investing heavily in device design—carefully scrutinizing the product’s design requirements, its capabilities and understanding how it will achieve the desired results for target users. 

    Concept and Engineering

    One of the first steps in designing an HTP is creating a target product profile (TPP), which outlines the desired characteristics or “profile” of the product. According to the World Health Organization, TPPs “state intended use, target populations and other desired attributes of productions, including safety and efficacy-related characteristics.” Usually, manufacturers will have a vision of what they want their HTP to look like. While some may try to emulate market-leading products, others will opt for very different flavors, form factors and aesthetics.

    A growing trend in device design is personalization, with some brands launching limited edition products and providing colored panels to personalize their HTPs. Also, Bluetooth connectivity is now standard on many products, such as the latest Glo Hyper Pro, which also has an LED display and can provide real-time feedback. Another notable improvement has been reduced consumable warm-up time, which promises a more effective user experience by making the device faster to use.

    Due to the complexity, cost and time associated with designing HTPs, many manufacturers choose to work with third-party specialists. These expert partners can frame what an ideal finished product will look like and help manufacturers build a TPP that meets both user and market needs. Then, once the manufacturer and partner have agreed upon the TPP, these specialists help turn this vision into actionable targets and design parameters.

    When working toward the TPP, design considerations include the HTP’s thermal design and heating profile. During the heating process, the water in aerosol is distilled off, but unless the hot water is managed effectively, the first puff will be steam—a situation called “hot puff,” which can be dangerous for users. Consequently, manufacturers can design the device airflow to minimize the risk of hot puff by adding a preheating function to drive off the water before the user takes a puff. Another option is adding ventilation capabilities to the stick, which cools the water by drawing in air.

    Iterative Testing

    In these early stages of product realization, it’s important to capture as much data about the HTP’s design and its performance as possible. Regular, iterative tests are essential and so are short development cycles so that manufacturers can quickly capture the data, identify areas for design optimization and make the necessary changes.

    While it’s important to test multiple parameters, manufacturers must be selective with these to avoid costly delays. Some of the key parameters include total particulate matter, the amount of nicotine that the HTP delivers and the presence of a visible cloud upon inhale and exhale. This iterative stage is also a good opportunity to assess toxicological touchpoints, such as combustion markers, and whether the product meets regulatory requirements. Consequently, iterative testing allows manufacturers to understand their product’s suitability from a consumer and regulatory standpoint.

    Toxicological Considerations

    Although HTPs aim to offer smokers a less harmful alternative to combustible cigarettes, these products still carry a toxicological risk, which manufacturers must manage during the design process.

    Data from the Philip Morris International Scientific Update reports that, on average, there were 90 percent to 95 percent lower levels of harmful and potentially harmful constituents (HPHCs) in the aerosol of IQOS compared with combustible 3R4F cigarettes. However, manufacturers should treat toxicology with caution, with a WHO report noting that “some HTPs may emit unique harmful chemicals because of their distinctive characteristics and how they are used.”

    The choice of tobacco and blend is an important toxicological influence. Tobacco-specific nitrosamine—a carcinogen found on tobacco leaves—can form during the curing phase and, depending on the nitrate levels, when the device stick is heated. Therefore, it’s important to control the blend as early as possible in the development cycle, and working with an analytical testing partner can help manufacturers understand the toxicological impact of different blends.

    For a detailed understanding of toxicological risk, manufacturers can evaluate aerosol chemistry. Priority toxicant lists for cigarettes have been developed by a number of organizations, including the U.S. Food and Drug Administration, Health Canada and the WHO Study Group on Tobacco Product Regulation (TobReg). The most widely accepted list of HPHCs to test in the aerosol of HTPs, both for regulatory submission and for producing evidence of potential harm reduction, is the PMI58, a list developed specifically by Philip Morris International to focus on analytes most relevant to IQOS and, more generally, HTPs.

    Preparing for Market

    Building a strong picture of the target market can help manufacturers understand the regulatory requirements and ensure that these are built into their HTPs. Aerosol testing requirements will vary according to the regulatory framework being followed. At the most basic, the European Union and U.K. require a minimum of tar (nicotine-free dry particulate matter), nicotine and carbon monoxide to be measured. While with the far more rigorous requirements of a premarket tobacco product application, required for launch into the U.S., where a full understanding of aerosol chemistry and, more generally, the understanding of the product’s appropriateness for the protection of public health is required.

    Whichever regulatory pathway the manufacturer follows, experts, including analytical chemists, toxicologists and clinical scientists, must design testing protocols that include all the relevant parameters for regulatory approval.

    As investment in HTPs grows, manufacturers will continue to innovate and develop new designs to meet user needs. This means developing products that are both effective and comfortable to use so that smokers adopt them as smoking cessation tools. Working with an experienced partner can make the design process easier by creating an achievable TPP and helping them get the product to market.

    Malcolm Saxton is senior consultant at Broughton.
  • Activists Slam Cellulose Heat Sticks

    Activists Slam Cellulose Heat Sticks

    Photo: Kuznyechova Yevgenia

    Anti-tobacco activists contend that Philip Morris International is trying to circumvent the Dutch ban on flavored tobacco and vape products with its Levia heat sticks, reports Dutch News.

    Made with cellulose rather than tobacco, Levia heat sticks are considered an herbal product and are thus not covered by the country’s tobacco legislation. The sticks retail online for €6.60 ($7.21) per pack of 20 and are sold in two flavors—“island beat,” which is menthol, and berry-flavored “electro-rouge.”

    The Netherlands banned menthol in cigarettes in May 2020 and outlawed flavored vape products in early 2024.

    Campaign group Rookvrije Generatie says Levia is “a trick” to keep on selling smoking products with flavor. “They might not contain tobacco, but they are packed with addictive nicotine,” spokesman Dave Krajenbrink was quoted as saying.

    Legislators are reportedly considering an amendment that would extend the flavor ban to tobacco-free nicotine products.

  • New Zealand Reserves Funds for HTP Tax Cut

    New Zealand Reserves Funds for HTP Tax Cut

    Photo: Rochu_2008

    The government of New Zealand will set aside NZD216 million ($127.39 million) to pay for tax cuts on heated tobacco products (HTPs), reports Radio New Zealand.

    Earlier this month, Associate Health Minister Casey Costello announced a 50 percent cut to HTP excise taxes, arguing that doing so would encourage cigarette smokers to migrate to less unhealthy nicotine products.

    A paper released on the health ministry’s website shows the Cabinet agreed in May to set aside NZD216 million to cover the estimated lost revenue.

    Philip Morris International, which owns the bestselling HTP product in New Zealand, has long argued that tax levels should reflect the relative risk levels of tobacco products.

    However, the Cabinet paper noted it was unclear whether the tax break would be passed on to consumers due to the monopolistic nature of the market.

    Costello said that she expected the industry to reduce the cost of its heating products. “I’m expecting the excise reduction to pass to consumers; this is what we were advised would happen by officials and it is something we will also be monitoring,” she was quoted as saying.

    New Zealand tax authorities collected NZD3.62 million in 2022 and NZD5.97 million in 2023 from HTPs.

    Earlier this year Costello scrapped laws that would have slashed the number of tobacco retailers, removed 95 percent of the nicotine from cigarettes and aimed to create a smoke-free generation by banning sales to those born after 2009.

    Critics have expressed concern about links between the tobacco industry and Costello’s New Zealand First party. Two senior corporate communication positions at PMI are held by people who previously held senior roles in the New Zealand First.

  • PMI and KT&G to Partner on Submissions

    PMI and KT&G to Partner on Submissions

    Photo: KT&G

    Philip Morris International and KT&G will collaborate on regulatory submissions for KT&G heat-not-burn products in the United States. The companies have signed a memorandum of understanding.

    On Jan. 30, 2023, PMI obtained exclusive rights to commercialize KT&G’s smoke-free products outside South Korea.

    KT&G’s new platform products are expected to be launched first outside the U.S. Thereafter, the partners plan to work on a premarket tobacco product application submission for review by the U.S. Food and Drug Administration.

    “We want every adult smoker who does not quit smoking to switch to a science-backed, better alternative for the benefit of their own and public health,” said PMI CEO Jacek Olczak in a statement.

    “The heat-not-burn category, with different tiers of FDA-authorized products, has a pivotal role to play in making cigarettes obsolete in the U.S.”

    KT&G “is currently pursuing global expansion and structural transformation centered on its three core businesses—next-generation products, overseas cigarettes, and health supplements,” said KT&G President Bang Kyung-man in a statement.

    “We will do our utmost to achieve our future vision of becoming global top-tier by leveraging innovative NGP products and scientific R&D capabilities that will be introduced to overseas markets.”

  • IQOS’ U.S. Launch Postponed

    IQOS’ U.S. Launch Postponed

    Photo: A Stockphoto

    Philip Morris International has postponed the test launch of its IQOS heated-tobacco device in the U.S. to the fourth quarter, reports Reuters. The company declined to say why.

    The pilot was earlier scheduled to run in Austin, Texas, in the second quarter, for which the company reported results on the day.

    Anti-tobacco activists have been seeking to derail the U.S. introduction of IQOS, arguing among other things that PMI exaggerates the number of people who have quit smoking regular cigarettes using IQOS.

    In a joint letter to the U.S. Food and Drug Administration dated June 27, six health groups cited yet-to-be published independent studies contradicting PMI’s findings about how many IQOS users completely switch to the device from cigarettes.

    Meanwhile, PMI said the impact of the EU ban on flavored heated tobacco in the European Union has had a “slightly greater” impact on IQOS sales than previously assumed.

    This led the company to temper its expectations for volume growth in the heated-tobacco category to around 13 percent for the full year, down from between 14 percent and 16 percent expected earlier.

  • Health Groups Contest IQOS Quit Rates

    Health Groups Contest IQOS Quit Rates

    Photo: Arkadiusz Fajer

    Anti-tobacco activists are questioning Philip Morris International’s figures on the number of people who have quit smoking using the company’s bestselling heat-not-burn device, IQOS, reports Reuters.

    The move comes as the U.S. Food and Drug Administration is considering PMI’s application for renewal of its IQOS3 exposure modification order, along with the company’s premarket tobacco product applications for IQOS Iluma and request for permission to make reduced exposure claims for that product.

    In a joint letter to the U.S. Food and Drug Administration, dated June 27, six health groups, including the Campaign for Tobacco-Free Kids, the American Academy of Pediatrics and the American Lung Association, cited yet-to-be published independent studies contradicting PMI’s findings about how many IQOS users completely switch to the device from cigarettes.

    According to letter writers, the International Tobacco Control Project (ITC) at Canada’s University of Waterloo found a far lower rate of IQOS users had quit smoking in Japan and Korea than estimates from PMI.

    PMI estimates more than seven out of 10 of its registered IQOS customers globally have quit cigarettes. A 2023 PMI application to the FDA emphasized that the majority of IQOS users were using IQOS exclusively.

    However, the ITC’s researchers put the percentage of all IQOS users that had quit smoking at just 15 percent in Japan and 30 percent in Korea in 2021.

    Users most commonly used IQOS and cigarettes simultaneously, often leading to an overall increase in tobacco consumption, the ITC researchers found.

    PMI pointed to a 2019 Japanese government health survey, where 75 percent of respondents who reported using heated tobacco said they did not smoke.

    However, a paper published this year, led by researchers from Georgetown University, highlighted flaws in the government’s survey, including changes to the question format that can lead to under-reporting of smoking.

    Other surveys have also found higher rates of dual use than the government, it said.

    In addition to questioning the smoking cessation rates quoted by PMI, the health groups accused the multinational of making deceptive statements wrongly suggesting that the FDA has found IQOS reduced the risk of disease, citing examples of such statements in the U.S., Kazakhstan, the Philippines and Mexico.

    A PMI spokesperson told Reuters the language flagged by campaigners was, in the company’s view, compatible with the FDA’s orders.

    “Wherever we discuss our science and our products, we do so in accordance with all applicable laws,” the spokesperson was quoted as saying.

  • Losing Steam

    Losing Steam

    Photo: Ned Snowman

    Heated-tobacco products continue to eat into the sales of combustible cigarettes in Japan, albeit at a slower pace than before.

    By Stefanie Rossel

    This year marks the 10th anniversary of IQOS’ debut in Japan. Within a decade, Philip Morris International’s heated-tobacco product (HTP) has changed the country’s tobacco market beyond recognition. HTPs accounted for 37.9 percent of all tobacco sales in Japan last year. In January 2023, HTP sales for the first time overtook cigarette sales in Tokyo, accounting for 50.4 percent of consumer takeoff, according to PMI figures presented at the CAGNY conference in February 2024.

    Perhaps the only tobacco market to have experienced a similarly seismic shift among product categories is Sweden, where the popularity of snus has altered consumption patterns to such an extent that its smoking rate will likely fall below 5 percent at some point this year. In both countries, smoking rates declined not as a result of anti-tobacco policies but due to consumers spontaneously opting for safer alternatives when presented with such options.

    Until the advent of the new category, Japan was long considered a smokers’ paradise, and it still is one of the world’s largest tobacco markets, with more than 17 million Japanese smoking regularly. Japan’s ministry of finance still owns 30 percent of Japan Tobacco, the successor to the country’s tobacco monopoly, thus benefiting from high tax revenues.

    For decades, the industry was able to flourish in a relatively unrestricted market. Low prices and moderate regulations facilitated consumption, with smoking incidence peaking at close to 50 percent of the population in the 1960s. Smoking, mostly a male habit in Japan, started declining slowly after the introduction of a series of anti-smoking regulations. More measures took effect when Japan hosted the 2020 Olympic Games and faced external pressure to crack down on the habit. Extensive public smoking bans contributed to a drop in smoking prevalence from 28 percent in 2002 to 16.2 percent in 2022, according to the Foundation for a Smoke-Free World. But while cigarette sales decreased at a leisurely annual rate of 1.8 percent between 2011 and 2015, they started dropping much faster after the arrival of HTPs.

    Japan is an ideal place to study the impact of HTPs. The country prohibits the sale of nicotine-containing e-cigarettes, which are classified as pharmaceutical products and can be purchased only with a prescription in medically licensed shops whereas non-nicotine vape products are freely available. In addition, Japanese consumers are health-conscious, tech-savvy and receptive to new gadgets. Values such as discretion and politeness are deeply rooted in Japanese culture, meaning that smokers in the densely populated country are keen to avoid bothering others, for example, through secondhand smoke.

    Heated-tobacco products continue to enjoy a tax advantage over combyustible cigarettes in Japan, but this may change in the future. (Photo: Taco Tuinstra)

    A Mature Market

    Ten years into the introduction of the category, however, fascination appears to have worn off a little, with HTP sales plateauing during the past few years. According to Euromonitor International, the retail value generated by HTPs in Japan fell from $11.14 billion in 2022 to an estimated $11.13 billion in 2023 and will reach $11.23 billion this year. Japan nevertheless remains by far the leading market of the category, representing almost a third of the expected global retail volume of $40.59 billion this year, well ahead of Italy, which now ranks second with an estimated HTP market value of $6.511 billion in 2024.

    IQOS continues to dominate the Japanese HTP market with a share of 70.5 percent in 2023, according to PMI. A survey commissioned by Statista revealed that IQOS Iluma was the most popular HTP in Japan between July 2023 and August 2023, with more than 21.1 percent of respondents using the product. IQOS Iluma One was the second most popular heating product, with a share of 20.7 percent of respondents. It was followed by JT’s Ploom X with 19.4 percent and British American Tobacco’s Glo Hyper+ with 12.9 percent.

    The maturity of Japan’s HTP market has sparked a fierce battle for market share among the leading manufacturers. Price competition is increasing, and consumers are experimenting with other brands and devices while manufacturers are subsidizing products and launching new models.

    In October, BAT lowered the prices of six Lucky Strike consumable variants for its Glo Hyper device after it had already cut the prices of 19 of its Glo Hyper products by ¥40 ($0.25) to ¥50 on Aug. 1, 2023, in an attempt to boost its market share. A pack of 20 Lucky Strike heat sticks now retails at ¥400.

    Tax Differential in Danger

    Japan also saw a series of new HTP launches in the past year, all focusing on improved performance and enhanced flavor delivery. In July 2023, JT introduced With 2, an infused tobacco vapor device under its respective new brand With. The product features JT’s infused technology, which generates vapor while an atomized liquid passes through a capsule containing granulated tobacco, and has been available at convenience stores and tobacco stores in Japan since September.

    According to the company, there is no delay in nicotine delivery, as tobacco vapor is generated the moment it’s inhaled, and there is almost no tobacco smoke with the product since tobacco leaves are not directly heated. Following the launch, JT discontinued its Ploom Tech, Ploom Tech+ and Ploom Tech+ With devices for infused tobacco capsules. The recommended retail price for the With 2 device is ¥1,980, including tax, while a pack of the respective tobacco capsules under the Mevius brand retails at ¥580.

    In November 2023, JT started selling Ploom X Advanced in Japan. The device, which replaces the Ploom X model, comes with an upgraded heating system. Named “Power Heatflow,” this technology increases the maximum heating temperature from 295 degrees Celsius to 320 degrees Celsius to provide a richer flavor experience. Charging time is reduced from 110 minutes for the previous model to around 90 minutes. The device is sold at a suggested tax-included retail price of ¥1,980.

    In January, BAT presented the most recent version of its Glo heating device, Glo Hyper Pro, in Japan. Charging takes about 90 minutes, allowing for use for 20 sessions. This compares to 210 minutes for Hyper X2, 120 minutes for Hyper Air and 135 minutes for IQOS Iluma, according to BAT. The Glo Hyper Pro also features a new screen displaying performance settings and information as well as a new “HeatBoost” technology for better taste. At ¥3,980, the device sells in the same price category as IQOS Iluma, which retails at ¥3,980 to ¥9,980, depending on the discount, but is more expensive than the now discontinued Ploom X, which could be purchased for as little as ¥980 after discount.

    To mark the 10th anniversary of IQOS’ introduction in Nagoya, PMI in March 2024 chose Japan for the launch of its Iluma i-series, the next generation of Iluma devices, which comes with a series of new features, such as a touch-screen that allows users to view the relevant information easily, and a pause mode that enables users to stop and resume their use and thus reduce waste. The device is adaptive to use patterns, and the holder’s battery has a longer life span, according to PMI. Retail prices range between ¥3,980 for Iluma One i and ¥9,980 for the premium model, Iluma Prime i.

    Intensive competition has caused IQOS devices to be significantly less expensive in Japan than in other markets.

    As manufacturers fight for market share, they may lose another advantage. One factor that helped HTPs gain ground in Japan was their favorable taxation. When the products debuted in this market, they were taxed at between 10 percent and 70 percent of the combustible cigarette rates due to their small amount of tobacco.

    Takes hikes between 2018 and 2022 raised those levels to between 70 percent and 90 percent. Seeking to boost its defense spending, the Japanese government in late 2022 proposed to gradually raise HTP taxes until they reach the level of cigarettes in 2027. According to The Mainichi newspaper, the government had not made a decision on the tax hikes by early 2024. If it decides to move forward, however, the measure will likely further decelerate the growth of Japan’s HTP market.

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.