Japan Tobacco to Spend More Than $2 Billion Promoting Heated Tobacco Products Overseas

According to foreign media reports today, Japan Tobacco will spend 300 billion yen ($2.25 billion) over the next three years to promote its heated tobacco stick products, with 200 billion yen of that allocated to marketing these tobacco sticks outside Japan. “Last year, we were unable to invest because there was a shortage of heated tobacco devices due to the semiconductor shortage,” Japan Tobacco President Masamichi Terabatake told Nikkei in an interview. “By 2023, our procurement has returned to normal, and compared with last year, we are able to secure more than twice the supply volume outside Japan.”

Terabatake said that most of the 300 billion yen will go toward the initial costs of launching in new countries.

Japan Tobacco has not disclosed its investment in heated tobacco products from 2020 to 2022, but the company’s new spending appears likely to exceed its outlay over those three years.

Heated tobacco systems that produce vapor rather than smoke come in both low-temperature and high-temperature types. JT’s flagship Ploom X uses a high-temperature device, delivering an experience closer to cigarettes.

JT currently sells Ploom X only in Japan and the UK, but the product will launch in Italy this month. The company plans to introduce Ploom X in more than 10 countries this year and expand to at least 20 new countries by the end of 2024.

To build awareness, JT will invest in pop-up stores and digital sales channels. It will also develop flavors tailored to each market’s preferences.

In the United States, Japan Tobacco has formed a joint venture with cigarette giant Altria Group. The partners hope to apply for U.S. Food and Drug Administration approval for Ploom by early 2025.

Due to its forward-looking investment, the heated tobacco division is currently operating at a loss, but JT expects it to return to profitability in 2028 on the back of overseas growth.

JT will also invest in research and development, seeking to create second- and third-generation Ploom X devices.

However, “heated tobacco is still in its early stages,” Terabatake said. “Improvements may continue for several generations.”

Japan Tobacco said global cigarette sales fell 1.5% last year. But heated tobacco has made progress: according to Euromonitor International, a UK research firm, the global market grew 17% last year to reach $33.4 billion.