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BAT’s glo Hyper Pro was launched in Japan only in December 2023. Photo credit: BAT Japan
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BAT Japan’s Mariel Markram. Photo credit: BAT Japan
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Ploom X is the latest, most advanced model in JT-JTI’s Ploom range. Photo credit: JTI
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Sleek and stylish: JT-JTI’s Ploom X. Photo credit: JTI
The phenomenal rise of HTP in Japan is the result of locals love for new gadgets – and great marketing, of course.
Japanese consumers have always embraced new tobacco product technologies. Arguably, it was Japan where the first charcoal filters were commercialized. It was Japan where flavor capsules became a tremendous hit, and where whitestick formats like slim, superslim, and nano quickly gained mainstream following. And last but not least, it is Japan where heated tobacco products (HTP) caught on spectacularly almost immediately after their first appearance.
IQOS: Celebrating 10th anniversary in Japan
It is not without reason why PMI chose the Land of the Rising Sun to launch its IQOS device, which in 2024 also celebrates its 10th anniversary there – and is going as strong as ever. In fact, it was only in March 2024 that PMI launched the latest-generation IQOS Iluma in Japan. Over the course of the past few years, the global company also has been introducing consumables (“heat sticks”) at different price ranges in an effort to capture consumers from all socio-economic strata.
Japan today is the world’s largest HTP market by far, frequently serving as the launch pad of choice for the latest HTP models as soon as they become market-ready. And amazingly, this consumer-driven meteoric rise of HTP has almost halved conventional cigarette consumption over the past years – a development other countries only can dream about.
Revealing facts and figures
Global business research firm Tamarind Intelligence estimates that the heated tobacco sector in Japan now represents around 42% of the total tobacco product market, a mindboggling figure unheard of elsewhere. According to Tamarind Intelligence market analyst Julian Bobadilla, the market value for 2024 by stick volume (i.e. not considering sales of the actual hardware, i.e. the devices themselves) is estimated at US$10.3 billion, a 6% increase YoY. Tamarind Intelligence data suggest the country has more than 15 million adult users of HTP in 2024, representing an astonishing 14% of the country’s population aged 18+.
Bobadilla said that currently there are four main brands represented in the market: IQOS (PMI); glo (BAT); lil (KT&G); and Ploom (JT-JTI). “The leading brand in the country is IQOS, with approximately two thirds of total market volume in 2024, followed by glo with almost 20%, while Ploom, the designated brand from local company JT enjoys around 10%,” he elaborated. Lastly, KT&G’s lil has a share of around 6%, according to Tamarind Intelligence research data. However, in Bobadilla’s opinion, the Japanese market-place has been such an extraordinary success for HTP manufacturers because of its traditionally high smoking rates as well as high average income levels, along with cultural traits. “All of these factors have facilitated the introduction of innovative technologies and smoking alternatives,” he said.
Ploom X ADVANCED: driving growth for JT-JTI
Although Japan Tobacco (JT) enjoys a certain “home advantage”, playing the HTP marketing game isn’t exactly a “home run” for the company, as competition is extraordinarily intense. But, JT has secured itself a quite comfortable ranking nevertheless, thanks to its highly innovative Ploom brand. It was only in November 2023 that the company launched the Ploom X ADVANCED, its newest and most evolved device in the range thus far. The company claimed that Ploom X demonstrated solid market share gains in Q1/2024 both at home and internationally. Domestically, “Ploom’s sales volume grew by 34.7%, reaching a heated tobacco sticks segment share of 11.0%, up by 1.6ppt year-to-date,” the company told Tobacco Asia, almost exactly matching the figure earlier provided by Tamarind Intelligence.
JT expects that consumables, i.e. heated tobacco sticks, will offer the strongest growth profile among existing segments in the reduced risk products (RRP) category. Given this, the JT Group is prioritizing investments towards heated tobacco sticks (HTS) and intensifying efforts to increase its market share in this segment. “The RRP market share in [Japan’s] total tobacco market has increased by 3-5% each year for the past 3 years,” the company said, citing annual growth figures for its consumables of 25.9% (in 2020), 30.0% (2021), and 34.0% (2022).
Combustible market decline accelerating since HTP introduction
Although JT stopped conducting smoking prevalence surveys as of 2019, the company claimed that the cigarette market in Japan started decreasing even before the introduction of HTP. “We expect this trend to continue due to a range of factors including a growing demand for smokeless alternatives,” the company said. Other factors that play into the phenomenal rise of HTP in the country include affordability, consumer demand for low-tar, low-nicotine products, as well as Japan’s smoking environment. “For instance, while smoking in restaurants is legally prohibited, smoking rooms that meet certain technical requirements are allowed. However, eating and drinking in these rooms is not allowed,” the company elaborated. On the other hand, the use of HTP is actually permitted in dining areas that meet specific technical requirements, such as adequate air ventilation.
glo HYPER Pro: BAT’s latest ace up its sleeve
According to Tamarind Intelligence, early bird IQOS enjoys a comfortable market lead with a share of “approximately two thirds” by volume; a tough nut to crack even for runner-up BAT and its glo brand, which has “almost 20%” of the market. Nevertheless, “Japan is a very important market for [our] flagship HTP brand, glo,” confirmed Mariel Markram, marketing director for BAT Japan as well as BAT’s area marketing director for Asia-Pacific, the Middle East, and Africa. “In line with our group’s ambition to become a predominantly smokeless business by 2035, the majority of BAT Japan’s revenue now comes from our smokeless alternatives, including glo,” Markram added.
And to drive that ambition, BAT has quite an ace up its sleeve in the form of the glo Hyper Pro, the latest flagship model of the glo series. Launched in Japan in December 2023, it convinces with a number of cutting-edge innovations, including the newly developed “Heat-Boost” heating technology, which helps the device reach optimal heating temperatures with faster heating time, and the surprising “EasyView” Amoled screen, which comes with several very helpful features. “EasyView allows the user to view all device data at a glance, like when the battery needs recharging; when the device is ready for use; and there also is a “TasteSelect” dial to switch between standard and boost modes [in order to] change the user experience,” explained Markram.
A rapid transition from combustibles towards HTP
Since 2016, the company has witnessed accelerated growth for the brand. “Almost half of BAT Japan’s product revenue is now coming from the smokeless alternative products, mainly the HTP segment,” said Markram. And recent Tobacco Institute of Japan (TIOJ) reports indeed indicate that HTP presently make up almost half of the country’s tobacco market, which of course also corroborates Tamarind Intelligence’s data. By the end of 2025 it is expected to exceed 50%.
In line with this, BAT Japan has seen “a rapid transition of adult smokers from cigarettes to HTPs over the last 8-9 years, with the trend expected to continue. “We have witnessed a significant transformation of Japan’s tobacco industry, from a single-category tobacco market to a now very different, thriving tobacco and nicotine product market filled with a wide range of innovative alternatives to choose from,” Markram said.
Not just a fondness for new technology; it’s also “shikohin”
“There is also a strong tendency [among Japanese consumers] to seek out cutting-edge technology and innovation. The advanced technology embedded in HTP allows [them] to enjoy tobacco without burning [it], which we believe enabled the shift to these alternative products,” explained Markram. But she also remarked that this penchant for embracing new technologies and products was an expression of shikohin (嗜好品), a concept loosely defined as “love for things treasured and the small gestures and habits that give pleasure in everyday life.” And if that doesn’t perfectly describe what enjoying tobacco (in whichever form) has always been about, what is?