IQOS Impacts Japan's Tobacco Market
Philip Morris said its heated tobacco products have quickly captured 3% of Japan’s tobacco sales, marking a major push into the Japanese market.
“Marlboro” cigarette manufacturer Philip Morris recently announced that its electronic cigarette products have quickly captured 3% of Japan's total tobacco sales, making a significant entry into the Japanese tobacco market.<\/span><\/div>
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Electronic cigarette market share rises.<\/span><\/div>
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A spokesperson for Philip Morris stated that the company's electronic cigarette strategy has been successful. As of the second quarter of this year, the iQOS brand has captured 2.2% of the Japanese tobacco market. By the end of April, with the launch of the electronic cigarette priced at 9,980 yen (approximately 650 RMB) and the accompanying special cigarettes “HeatSticks” (460 yen per pack, about 30 RMB, priced almost the same as regular cigarettes), iQOS's market share has risen to 2.7%.<\/span><\/div>
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“These figures show that iQOS is making inroads in the sluggish Japanese tobacco market,” said Masashi Mori, an analyst at Credit Suisse Group in Tokyo.<\/span><\/div>
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In recent years, Japan has strictly enforced smoking bans in public places, with the scope of the ban continuously expanding. Smoking while walking has become a thing of the past, and Japanese smokers can only smoke in designated smoking areas, which are often overcrowded near train stations. Various smoking bans have significantly reduced tobacco consumption in Japan, with overall tobacco sales shrinking by 5.2% in June this year. On the 12th, Japan Tobacco announced that tobacco sales in July fell by 3.4% to 53.4 billion yen.<\/span><\/div>
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Sold out.<\/span><\/div>
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Since its launch in September last year, iQOS has quickly gained popularity in Japan, with stores frequently running out of stock. The Japanese variety show Ame Talk even produced an episode about it.<\/span><\/div>
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Unlike traditional electronic cigarettes, iQOS does not use liquid e-liquid. It is about the size of a regular power bank and consists of two parts: the main body that charges the mouthpiece and the mouthpiece itself, which heats the special cigarettes without the need for ignition, producing no ash or smoke, and the exhaled vapor has a lighter scent. These features meet the needs of Japanese smokers while minimizing inconvenience to those around them, which may explain the product's popularity.<\/span><\/div>
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However, the downside of iQOS is that the mouthpiece is relatively heavy, and there is a waiting time of about 40 seconds before each use, which can be torturous for impatient smokers. Additionally, after finishing a cigarette, the mouthpiece needs to be recharged in the main body for 6 minutes, leading some to believe that this design may reduce the number of cigarettes smoked at one time, while others use multiple electronic cigarettes in rotation. The main body can charge the mouthpiece 20 times when fully charged, and the limited number of charges may also encourage smokers to be more conservative in their usage. Another selling point of this electronic cigarette is that it contains only nicotine and no carcinogenic tar.<\/span><\/div>
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10 years of 20-fold growth.<\/span><\/div>
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Currently, the product is sold in seven countries worldwide, including Sweden and Italy, in addition to Japan. In Japan, strict regulations limit the sale and import of e-liquids, which has allowed iQOS to quickly surpass traditional e-cigarettes. Japan has also become the only country where iQOS is sold nationwide. Philip Morris has stated that it plans to expand iQOS to 20 countries by the end of this year.<\/span><\/div>
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The production of iQOS is based in Malaysia, and the unexpected demand in Japan has caught Philip Morris off guard, preventing it from capturing the market as quickly as it would have liked. On Japanese e-commerce platforms, limited edition colors of the device have even been listed at high prices of 80,000 yen.<\/span><\/div>
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In the current sluggish traditional tobacco market, the electronic cigarette market is rapidly developing, and major tobacco companies are eyeing this market. According to a report by Euromonitor International, electronic cigarette sales reached $8 billion in 2014, about five times that of 2010, and it is expected that by 2020, the market size of electronic cigarettes will reach 20 times that of 2010. Currently, the total sales of tobacco worldwide are approximately $750 billion, and as the market shifts, electronic cigarettes will occupy an increasingly significant share of the overall tobacco market.<\/span><\/div>
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Previously, Japan Tobacco, which dominated the Japanese tobacco market with a 60% share, also launched its own similar product, Ploom TECH, vowing to compete with iQOS. However, due to iQOS's widespread presence across Japan, Japan Tobacco, despite its envy, cannot compete, and it is currently uncertain whether Ploom TECH's production capacity is sufficient to be rolled out nationwide in Japan.<\/span><\/div>
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