In Japan, growing health concerns have led the tobacco market to decrease.
In 2017, cigarette sales volume are expected to decrease by close to 10%.
A tougher anti-smoking regulation planned for the 2020 Summer Olympic Games in Tokyo will also bring the demand for traditional cigarettes down.
This environment has led to a surge in the demand of smokeless products. Such as Philip Morris’s IQOS, the heat stick with no tobacco combustion that we presented in one of our previous articles. Or Japan Tobacco’s Ploom, which is a battery-powered heat-not-burn device that generates vapor. According to Japan Tobacco’s President and CEO, Mitsuomi Koizumi, vaping products and tobacco heat sticks including Ploom and IQOS could get as much as 25% of Japan’s cigarette market by the end of 2018.
Japan Tobacco is quite unfortunately lagging behind with the launch of its Ploom product. “It’s embarrassing for a tobacco company top to say this, but I did not expect this,” the CEO Mitsuomi Koizumi even explained, referring to the popularity of IQOS. To catch up with Philip Morris’ heat stick, Japan Tobacco needs to speed up. The company plans to spend 500 million dollars.
Japan Tobacco needs to grow fast
The goal is to multiply by 4 its smokeless tobacco production capacity by the end of 2018. Japan Tobacco is today the world’s number 3 tobacco company. They intend to be the number 1 in the Japanese heat sticks market within the next 3 years. They are therefore developing Ploom but also other vaping products. All options are analyzed to achieve this growth. Organic growth, mergers and acquisitions in emerging markets, investment in start-ups specialized in alternative tobacco products, etc.
Ploom will be available for sale in Tokyo on June 29, 2017 in former state-owned monopoly shops.