Japan Tobacco International has said it’s looking to spend $500 million to quadruple the output of its smokeless tobacco products by 2018, and become market leader in Japan in three years.
Potentially Lucrative Japanese Market
Eliquid is currently banned in Japan, so the country is considered as a great testing ground for heat-not-burn products. And rivals Phillip Morris already have a 10% share in this new market, thanks to their successful IQOS product, launched last year.
Meanwhile the launch of Japan Tobacco’s Ploom Tech smokeless product has been delayed, although is now expected to be available in Japan at the end of June.
Heat Not Burn
Both IQOS and Ploom Tech use heat rather than burning to mimic the action of smoking. IQOS heats tobacco-packed cigarette shaped sticks, while Ploom Tech generates vapour that passes through a capsule packed with tobacco leaves. British American Tobacco launched Glo into the market last December.
Japan Tobacco’s CEO Mitsuomi Koizumi said he plans to increase the annual output capacity of tobacco capsules used for Ploom Tech to the equivalent of 20 billion cigarette sticks in 2018, a four-fold increase on the 5 billion output capacity planned for the end of this year. He also said the company was developing other tobacco vaping products.
With more people shifting to smokeless products over health concerns, Japan Tobacco Inc is predicting a 9.6% fall in domestic cigarette sales this year.
And with the prospect of tougher regulations, as Japan tries to introduce an anti-smoking law ahead of the 2020 Summer Olympic Games in Tokyo, demand for traditional cigarettes may come under further pressure.
Back in March Philip Morris said it had sold more than 3 million IQOS devices in Japan and that demand was outstripping supply. Koizumi has said he wants his company to have the biggest market share in three years.
Japan Tobacco Inc was once a government monopoly and a third of it is still government owned. Its top brands include Camel, Winston and Mevius.