Japan Tobacco Inc. said on Tuesday that it planned to launch a new heat-not-burn (HNB) product in Japan ‘as early as the end of this year,’ according to a story by Taiga Uranaka for Reuters.
The company said it would spend more than ¥100 billion (US$917.43 million) during the next three years on the development and production of reduced-risk products (RRP), products that do not rely on combustion to deliver nicotine.
“For Japan Tobacco’s continuous growth, we must win in the RRP category,” CEO Masamichi Terabatake said at an earnings briefing.
Reuters quoted Mizuho Securities analyst Hiroshi Saji as saying that HNB products would account for an estimated 29 percent of Japan’s tobacco market this year, up from 16 percent in 2017.
The Reuters story is at: https://www.reuters.com/article/us-japan-tobacco-results/japan-tobacco-to-launch-new-smokeless-product-this-year-idUSKBN1FQ13Z.
Tag: Japan
JT aims to catch up
JTI volumes down in 2017
Japan Tobacco Inc. reported today that its domestic cigarette sales volume during the year to the end of December, at 92.9 billion, was down by 12.5 percent on that of the year to the end of December 2016, 106.2 billion.
JT said that the fall in volume had been due mainly to the contraction in industry-wide volumes caused by the expansion of the reduced-risk products category, and the continuing long-term market decline.
The industry-wide volume during the year to the end of December was given as 151.4 billion, down 12.9 percent from the volume recorded during 2016, 173.8 billion.
JT’s cigarette market share increased by 0.3 of a percentage point to 61.3 percent, year to year.
JT’s revenue during the year to the end of December, at ¥626.8 billion, was down 8.4 percent on that of the year to the end of December 2016, ¥684.3 billion, while core revenue fell by 9.1 percent to ¥590.6 billion as the cigarette sales volume decline offset the benefit of a Mevius-brand retail price rise last year, and increased sales of Ploom TECH, which rose above ¥10 billion. Core revenue excludes the revenue from distribution of imported tobacco on the domestic market, revenue from domestic duty-free sales, revenue from JT’s China business, and revenue from the sale of reduced-risk products such as Ploom TECH devices and capsules.
Adjusted operating profit during the year to the end of December fell by 10.7 percent to ¥232.3 billion, from ¥260.2 billion during the year to the end of December 2016. The fall in adjusted operating profit came about because of the lower core revenue and despite cost decreases having been made.
Meanwhile, Japan Tobacco International’s total tobacco (including cigarettes, fine-cut, cigars, pipe tobacco and snus, but excluding water-pipe tobacco, reduced risk products and contract manufactured goods) shipment volume during the year to the end of December, at 398.5 billion, was down by 0.1 percent on that of the year to the end of December 2015, 398.7 billion.
But JTI’s global flagship brand shipment volume was increased by 0.8 percent from 283.7 billion to 285.9 billion.
JT reported that JTI’s shipment was stable as industry volume contraction was almost offset by volume increases primarily in Iran and emerging markets, market share gains and acquisitions in Indonesia and the Philippines. Excluding acquisitions, JTI’s volume declined 2.1 percent.
JTI’s revenue during the year to the end of December, at ¥1,237.6 billion, was increased by 3.2 percent on that of the year to the end of December 2016, ¥1,199.2 billion, while core revenue rose by 3.4 percent to ¥1,177.0 billion.
Adjusted operating profit was up by 4.5 percent to ¥351.3 billion.
JT’s consolidated revenue for the year to the end of December, at ¥2,139.7 billion, was down by 0.2 percent on that of the year to the end of December 2016, ¥2,143.3.
Operating profit was down by 5.4 percent to ¥561.1 billion, while adjusted operating profit was down by 0.3 percent to ¥585.3 billion.
Masamichi Terabatake, president and CEO of the JT group said that the 2017 results demonstrated the group’s ability to deliver solid profit in an ever-challenging business environment.
“In my first year as CEO, I will focus on ensuring success in the domestic tobacco business, an essential driver for our future growth,” he said. “We will also continue to actively invest in both traditional tobacco and reduced-risk products with the ambition to hold the No.1 market share position in reduced-risk products in Japan by the end of 2020.
“I believe our management principle is well suited to achieve this sustainable profit growth in the mid- to long-term. We need to enhance our organization’s ability to face the competition by being faster and bolder across all our operations.
“We are confident that we can deliver mid to high single-digit annual average growth rate in adjusted operating profit at constant FX in the mid to long-term with our planned investments. Moreover, we are committed to growing the dividend per share year-on-year in line with mid-term profit guidance.”Japan inches toward ban
The Japanese government said yesterday that it planned to restrict tobacco smoking in indoor public places but that it would not impose a ban, according to a story in The Japan Times.
Under the plan drawn up by the health ministry, restrictions on the use of heat-not-burn products would be less stringent than those on combustible cigarettes.
Smoking would be banned in hospitals, schools, universities and government offices, and minors would be prohibited from entering smoking areas.
Smoking would be permitted in restaurants and bars only within special rooms set aside for the exclusive use of smokers. The serving of food or drink would not be allowed within these rooms.
However, discussions are taking place about whether some restaurants and bars might be exempted from the requirement to establish separate smoking areas.
The use of heat-not-burn products too will be restricted to specially-designated rooms within restaurants, though in this case it will be permissible for customers to eat and drink.
Currently, facility operators are required only to ‘make efforts’ to prevent passive smoking.
The ministry plans to submit its tobacco-control bill to the Diet in March, and implement the legislation in stages in advance of the 2020 Tokyo Olympic and Paralympic Games.
The ministry originally planned to introduce a tougher ban, but was said by the Times to have backed down in the face of opposition from the Liberal Democratic Party (LDP) and ‘industries’.
A senior ministry official was quoted as saying that it would be difficult to introduce restrictions that disregarded smokers. “We need to take a first step,” the official said.Mevius blossoms in Japan
Japan Tobacco Inc. has said it intends to launch nationwide in late March 15 further limited-edition packs of its Mevius cigarette brand.
Soft packs, boxes, and 100s boxes of Mevius, Mevius Lights, Mevius Super Lights, Mevius Extra Lights, and Mevius One will be available in selected retail stores in a limited quantity.
The formulation of the cigarettes will be unchanged.
The design of the latest limited-edition packaging is said to be reminiscent of the beauty of Japanese cherry blossom (Sakura).
‘We have supplemented the current colors with those that portray the changing nature of the sky and the cherry blossom throughout the night and into the morning,’ JT said in a note posted on its website.
‘The latest edition of the Mevius branding is designed to be uplifting and enlightening, encouraging consumers to embrace new horizons.’
The first of the limited-edition packs, which were launched in May 2017, portrayed the changing face of the Sky from morning to evening.
The second, launched in October, expressed the grandeur and beauty of the Sky and Mt. Fuji.JT's domestic volume down
Japan Tobacco Inc.’s domestic cigarette sales volume during December, at 8.0 billion, was down by 16.5 percent on that of December 2016, 9.6 billion, according to preliminary figures issued by the company today. The December 2016 figure was down by 3.6 percent on that of December 2015.
Volume during January-December, at 92.9 billion, was down by 12.5 percent on that of January-December 2016, 106.2 billion. The January-December 2016 volume was down by 2.8 percent on that of January-December 2015.
JT’s market share stood at 63.4 percent during December, at 61.3 percent during January-December, and at 61.1 percent during January-December 2016.
JT’s domestic cigarette revenue during December, at ¥47.7 billion, was down by 16.3 percent on its December 2016 revenue, ¥57.0 billion, which was increased by 1.8 percent on its revenue of December 2015.
Revenue during January-December, at ¥552.9 billion, was down by 11.4 percent on that of January-December 2016, ¥623.8 billion, which was increased by 0.9 percent on its revenue of January-December 2015.Ploom sales expanding
Japan Tobacco Inc. said today that it would expand the sales area of its Ploom TECH starter kit and tobacco capsules in the cities of Sapporo, Sendai, Yokohama, Nagoya, Osaka and Hiroshima from February 5.
The company said there had been ‘excellent feedback’ on the product from customers since its launch at certain stores in Fukuoka, and via a specialized Ploom online shop in March, 2016. JT launched the product also in the Tokyo metropolitan area from June, 2017, and expanded the sales area in Tokyo from the end of October, 2017.
The important aspect of the announcement about the expansion of sales, however, has more to do with manufacturing capacity issues, which have been a problem and allowed other companies to move ahead in the rapidly-growing, heat-not-burn segment of the Japanese market.
Ploom TECH was a tobacco vapor device providing a new way to enjoy tobacco by using an indirect, low-temperature tobacco-heating technology, JT said as part of its announcement. The granulated tobacco in the capsule was heated, but there was no combustion or ‘direct tobacco heating at high temperatures’.
‘Ploom TECH allows consumers to enjoy a clear tobacco taste while at the same time significantly decreasing the smoke smell compared to traditional cigarettes,’ the company said.
Both the starter kit and tobacco capsules are due to be on sale in nearly 150 tobacco stores in six cities – Sapporo, Sendai, Yokohama, Nagoya, Osaka and Hiroshima – from February 5.Interesting times
The new head of Japan Tobacco Inc has indicated that he wants to focus on taking more market share in developed countries, entering new emerging markets and further developing the company’s next-generation tobacco products, according to a story by Lisa Du for Bloomberg News.
Masamichi Terabatake took over as JT’s CEO on January 1.
Previously the deputy CEO of Geneva-based Japan Tobacco International SA, Terabatake took over from Mitsuomi Koizumi to become the fifth head of JT since it was privatized in 1985.
Du said the challenges facing Terabatake and JT included tighter global regulations, slowing cigarette demand and competition to offer ‘high-tech smoking devices’.
In a report in November that correctly predicted the promotion of Terabatake, The Japan Times said the leadership change was being made as JT, which accounted for about 60 percent of the domestic cigarette market, sought to expand its global reach amid falling demand at home caused by a health boom and the growing popularity of heat-not-burn tobacco products.
Du’s piece is at: https://www.bloomberg.com/news/articles/2018-01-04/as-japanese-smoke-less-tobacco-giant-s-new-ceo-looks-abroad.Drugs key to quitting
Electronic cigarettes are not an effective means to quit smoking, according to a story in The Asahi Shimbun citing an online study by Japan’s National Cancer Center.
“Some e-cigarette products are touted as being useful for smoking cessation, but we do not recommend that they be used for that purpose,” an official at the center was quoted as saying.
But this recommendation was made in spite of the fact that it was conceded that e-cigarettes could help smokers quit their habit.
“E-cigarettes could help smokers kick the habit,” said Itsuro Yoshimi, a senior official at the center. “But they could also have a negative impact: deceiving smokers so they will not select more effective smoking cessation means.”
The situation in Japan is further complicated because nicotine-containing e-cigarettes are effectively banned there by restrictions on the sale of nicotine, though the story pointed out that while producing and selling nicotine were restricted by law, individuals ‘can’ import liquid containing nicotine by themselves.
The study covered 798 people ranging in age from 20 to 69 who said they had attempted to quit smoking during the past five years.
The success rate for people who used e-cigarettes was said to be 40 percent lower than the rate for people who did not use these products, the study found.
People who received drug therapy at hospitals were more likely to quit smoking than those who did not see physicians, the study showed.Japan’s vaping dilemma
Japan’s national government and the Tokyo metropolitan government are at odds about how to treat heat-not-burn (HNB) products as they consider, ahead of the 2020 Tokyo Olympics and Paralympics, regulations on public-places smoking and vaping, according to a Mainichi Daily News story.
HNB products are placed in the same category as combustible cigarettes under the Tobacco Business Act; so both were included in the original draft revision of the Health Promotion Act that the Ministry of Health, Labor and Welfare (MHLW) released in March.
The health ministry has said that it would consider excluding HNB products from legal regulation, but only if their vapor was proven scientifically to be harmless.
Given this, it is likely that HNB products will be treated in the same way as combustible cigarettes in the draft revision of the Health Promotion Act set to be submitted to the regular session of the Diet next year.
Meanwhile, Tokyo is aiming to establish its own ordinance on tobacco-related products, and its draft ordinance released in September explicitly stated that HNB products would be subject to regulation.
However, of the approximately 17,000 comments received from the public about the ordinance, about 2,000 called for HNB products to be excluded from the regulation, and a Tokyo government official has since expressed a more conciliatory stand than in September. “We are still undecided whether to rule out” HNB products from the restrictions, the official said.
Philip Morris Japan says that, compared with combustible cigarettes, its IQOS HNB device reduces, on average, about 90 percent of the toxic substances generated.
And Japan Tobacco says that HNB-device vapor does not affect the indoor environment, and that its risk should not be discussed in the same breath as that of combustible cigarettes.
But the Japanese Respiratory Society released a comment in October saying that as long as there was a possibility that HNB products had a negative impact on health, the use of such products was not recommended.
And Hiroshi Yamato, a professor at the University of Occupational and Environmental Health, Japan, said, “It is a rule of public health to regulate something when in doubt, and unless there is proof that it is harmless”.
JT’s domestic sales tumble
Japan Tobacco Inc.’s domestic cigarette sales volume during November, at 7.0 billion, was down by 15.0 percent on that of November 2016, 8.3 billion, according to preliminary figures issued by the company today. The November 2016 figure was down by 3.5 percent on that of November 2015.
Volume during January-November, at 84.9 billion, was down by 12.1 percent on that of January-November 2016, 96.6 billion. The January-November 2016 volume was down by 2.7 percent on that of January-November 2015.
JT’s market share stood at 61.7 percent during November, at 61.2 percent during January-November, and at 61.1 percent during January-December 2016.
JT’s domestic cigarette revenue during November, at ¥42.0 billion, was down by 14.7 percent on its November 2016 revenue, ¥49.2 billion, which was down by 1.4 percent on its revenue of November 2015.
Revenue during January-November, at ¥505.2 billion, was down by 10.9 percent on that of January-November 2016, ¥566.8 billion, which was increased by 0.8 percent on its revenue of January-November 2015.
