Shortage of Heat-Not-Burn has no Quick Fix, says Japan Tobacco

In the world’s most advanced market for next-generation tobacco products – Japan, a further boost to Philip Morris International Inc. has been handed over as the capacity constraints that have dogged the domestic launch of Japan Tobacco Inc.’s heated tobacco device will take a while yet to resolve, says a company executive.

Yasuhiro Nakajima, vice president of emerging products, said in an interview that since releasing the product in March in its home market, Japan Tobacco has underestimated the level of demand for its Ploom Tech device. In order to relieve the capacity constraints that are preventing it from selling Ploom Tech nationwide, the cigarette maker is spending tens of billions of yen.

“We are improving the Ploom Tech supply situation but to be honest it is taking some time,” Nakajima said. “I cannot tell you that we can resolve the issue very quickly.”

In the cigarette market in Japan, a smoking alternative called iQOS was released by Philip Morris in April throughout the country and the company has scooped up 5.5 percent of the country’s cigarette market since releasing the iQOS. On the other hand, the misstep by Japan Tobacco in making proper estimation of the demand for its Ploom Tech device and failure to resolve capacity constraints has left the company a frustrated bystander as Philip Morris has gained market share.

Furthermore, also set to provide fresh competition is British American Tobacco Plc’s device Glo.

The health ministry data of the country says that with only a fifth of the adult population regularly lighting up a cigarette, the number of Japanese smokers is on path of a steady decline. Compared to the number of regular smokers in the country, that number is a 26 percent drop. And Japan has been transformed into the foremost global battleground for heated tobacco products because the sale of e-cigarettes and alternative vapor devices is heavily regulated in the country.

In order to replace cigarette and to deliver the taste of granulated tobacco leaves in a capsule, vapor from heated liquid is used by Ploom Tech which is essentially a pen-shaped device that is battery-powered. In addition to an online, store, Japan Tobacco began selling the device in about 900 convenience stores and retail outlets in Fukuoka Prefecture in March. Nakajima said that the e-commerce sales are doing “pretty well.” Nakajima said.

Hideki Miyazaki, the executive deputy president of Japan Tobacco said in October that in the next three to five years, the domestic vapor market is aimed to be led by the

On Feb 6, its full-year results are expected to be released by the company.

In the leading convenience-store chain, Glo has grabbed 3.3 percent of the cigarette market since its December launch in the city of Sendai.

(Adapted from Bloomberg)

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