Japan Tobacco Inc., the company which produces 60 percent of Japan’s cigarettes is recording its sharpest decline in sales ever. The Japanese market is moving towards a “heat-not-burn” philosophy which has contributed to the 13.4 percent drop in projected sales from one year ago.
Many Japanese smokers are quitting cigarettes after the introduction of new heat-not-burn technology to the marketplace. This includes Philip Morris International’s IQOS and British American Tobacco’s “glo” device. This July, Japan Tobacco released its own smokeless tobacco product, called Ploom Tech.
Hideki Miyazaki, Executive Vice President of Japan Tobacco thinks people are moving to these products due to recent reports that the Japanese government was weighing a raise in the tobacco tax. He said, “When there are media reports of tax, some people think it’s time to quit.”
Whatever the reason Japanese people are quitting smoking – be it health or taxes – Japan Tobacco has been slow to recognize the trend. Philip Morris started selling the IQOS in 2014. Even now, the Ploom Tech is only available in central Tokyo.
Japan Tobacco still has a commanding lead when it comes to cigarette market share. But as the Japanese turn to lower risk products, Japan Tobacco may eventually see its business go up in smoke.