Q&A: Tomas Jaukovic is 'Creating Something Better' for Japan’s Smokers

By Thomas Schmid

Born and raised in Serbia’s capital city of Belgrade, Tomas Jaukovic finished his post-graduate studies in the UK before joining Imperial’s sales team there in 2010. Working out of London, he honed his skills in various roles, including key accounts management. In 2012, Jaukovic was dispatched to Italy, where he worked in consumer marketing, focusing on the launch of the Imperial tobacco brands Davidoff and JPS there. His next assignment took Jaukovic to the Far East, where he spent a year in Hong Kong in charge of trade marketing in Imperial’s local division, working with Russia and a number of Asian markets. As 2015 dawned, Jaukovic moved to Tokyo, where Imperial had just established a representation.

Following various sales and marketing roles that served to familiarize himself with the local business climate, in 2018 he began applying his by now considerable expertise on establishing Imperial’s NGP (new generation product) presence in the country, successfully launching the company’s myblu and Pulze devices. In recognition of his invaluable efforts, Imperial appointed Jaukovic general manager Japan in November of 2019. The congenial Serb is an avid sports fan, although his current sports activities are mainly limited to chasing his two small boys around Tokyo’s parks.

TA: When was Imperial Brands’ global purpose slogan “To Create Something Better for the World’s Smokers” launched and what are its goals?

Jaukovic: It reflects the choice and quality offered by our portfolio of next-generation and tobacco products. While we want smokers to transition to potentially less harmful NGPs, we have to acknowledge at the same time that a significant number [among them] still choose combustible tobacco products. Therefore, we also focus on responsibly providing them with the high-quality [tobacco] products they expect.

TA: What measures are implemented by Imperial Brands Japan to realize these goals in the country?

Jaukovic: Imperial Brands today is the only tobacco company in Japan offering products to consumers in all three major categories, and for all occasions: Traditional FMC [factory manufactured cigarette] with our global brand, West; heated tobacco through our Pulze device and iD consumables; and, on the vaping side, myblu, one of the leading vape brands globally. We certainly have invested heavily in the past three years in Japan to ensure to establish our brands there.

TA: Is Japan a particularly “fertile ground” for implementing the initiative?

Jaukovic: Japan is the third largest market globally for FMCs and also a global NGP hub. But, consumer behaviors are changing rapidly. For example, according to our own research, 73% of consumers are using FMCs and heated tobacco products simultaneously. Japanese consumers are open to trying new products, with many having bought three or more devices so far.

From that perspective, Japan is a great opportunity for Imperial Brands to grow organically. But given that fertile ground, competition is fierce. For instance, in the last 12 months 10 new devices have been launched [by various industry players] in the heated tobacco category, as well as over 35 different tobacco stick SKUs.

TA: Imperial’s NGP presence in Japan is characterized through the availability of myblu and Pulze. Why these two products in particular?

Jaukovic: We see vaping as a long-term strategy and an area where consumers will move to in the future. In Japan in particular, smokers enjoy cigarettes with a low tar content of less than 3 mg per stick, and they often do not inhale. Also, they are very conscious of their environment and the impact that their smoking habit has, particularly on families, friends, and colleagues.

In addition, an indoor smoking ban was introduced on April 1, banning all tobacco products apart from vaping devices and allowing heated tobacco products only under certain mandatory conditions such as using them in a separate room. This of course presents a huge opportunity for myblu, as we can offer it for those non-smoking occasions and places, allowing consumers to enjoy great flavors and engaging in a similar habit to [conventional] smoking without impacting their non-smoking friends. Through our city pilot of Pulze and iD in Fukuoka in May of 2019, we received some great insights from consumers.

Their sentiment was that while heated tobacco was a good choice over traditional cigarettes, they felt that they had to compromise on the richness of taste. With Pulze and our innovative triple air-flow filter technology we capture that richness; also with the recently launched SKU Intense iD.

TA: How do myblu and Pulze tie in with the “To Create Something Better for the World’s Smokers” campaign in Japan?

Jaukovic: Both products deliver on that statement. Heated tobacco emits fewer toxins [when compared to] traditional cigarettes. The same of course is true for myblu, which in Japan contains 0% nicotine.

TA: Broadly speaking, what are the peculiarities of the Japanese market when it comes to NGPs?

Jaukovic: Early on in Japan we realized that the primary driver for FMC consumers is not the nicotine hit but rather the “occasion” of smoking, when people can have some “alone time” for themselves. In addition to potentially reduced harm, another major driver for NGP growth in Japan is consumers’ desire for cleansing and cleanliness; and NGPs give consumers exactly that opportunity, without ash and no smell on hands or clothes.

TA: With the success of myblu and Pulze, are there any plans for Imperial Brands Japan to introduce other NGPs?

Jaukovic: We certainly are not sitting idle. In 2017, Imperial Brands acquired a great product innovation company in the UK, Nerudia, which is [now] our innovation hub. Nerudia is focusing on further improving all existing products in our NGP portfolio, as well as rapidly developing new ways of delivering nicotine.

TA: What legal restrictions do exist in Japan that would limit the type of NGP that can be launched there?

Jaukovic: Nicotine in liquid is not allowed in Japan and that is one of the main differences versus many European countries, where, for the most part, people use vapor products containing nicotine.

TA: How strong is competition in Japan from other companies’ NGPs?

Jaukovic: All companies see Japan as a great opportunity. In addition, it also is the home ground for Japan Tobacco. Competition is particularly fierce in the heated tobacco segment. It is no longer about consumable sticks but all about devices, innovation speed, flavors, and device pricing.

TA: And how has Imperial’s market share in the NGP sector developed over the past few years?

Jaukovic: In the vaping arena, we have been leading since 2018, representing 80% of the Japanese market and accounting for 90% of the category growth in the past 12 months.

TA: Is there anything else that you would like to share with our readers?

Jaukovic: Japan’s indoor smoking ban surely is going to have an impact on consumers and the industry alike. We have seen that in many other countries over the years. But we do believe that at Imperial Brands Japan we are well and ready to offer local smokers great choices with our three different products.