JAPAN
Mitsuomi Koizumi, president and c.e.o. of Japan Tobacco Inc. (JT), has announced that the company plans to spend US$500 million to quadruple its smokeless tobacco production capacity by the end of 2018,
Philip Morris International’s iQOS device is already enjoying a lion’s share of the market in Japan, while JT’s Ploom Tech product had to deal with production delays and loss of market share.
“It’s embarrassing for a tobacco company top to say this, but I did not expect this,” said Koizumi, referring to the popularity of iQOS, which had about a 10% share in April, from 7.6% in January. Koizumi expects vaping products, including Ploom Tech and IQOS, to grab as much as 25% of Japan’s cigarette market by the end of 2018.
JT plans to increase annual output capacity of tobacco capsules used for Ploom Tech to the equivalent of 20 billion cigarette sticks in 2018, from 5 billion planned at the end of this year. The company is also developing other tobacco vaping products. JT is looking for mergers and acquisitions in emerging markets such as Southeast Asia, Africa, and Latin America, as well as opportunities to invest in startups that have patents and technology for alternative tobacco products.
JT’s domestic cigarette sales volume is expected to fall 9.6% this year as more consumers shift to smokeless products. “It’s shocking. I am doing this business for more than 35 years but I have never experienced losing 10% in volume in one year,” said Koizumi.