$2bn Invested in THPS Overseas , Japan Tabacco Holds an Optimistic View about Future Growth

Photo : Maccabee,Pixabay

Japan Tabacco is about to promote heated tobacco stick products in the following three years at cost of 300 billion yen ($2.25 billion) , two thirds of which will be distributed for transmarine marketing.

Heated tobacco systems generate vapors rather than smoke at varieties of temperatures , low and high . JT’s flagship Ploom X approaches a cigarette in experience , using a high temperature device .

According to Japan Tabacco , global sales volume for cigarettes declined by 1.5% last year . However , heated tobacco got ahead . U.K. research group Euromonitor International reports that the global market for heated products last year grew 17% to $33.4 billion .

“Last year, we couldn’t make the investment because there were not enough [heated tobacco] devices due to the semiconductor shortage,”Japan Tobacco President Masamichi Terabatake said in an interview by Nikkei Asia . “For 2023, we are back on track for procurements, and we are able to secure more than twice Japan’s supply volume compared to last year.”

Terabatake said “most of the 300 billion yen will be the initial costs of rollout into new countries.”

Japan Tabacco hasn’t disclosed the investment in tobacco-heating products (THPs)  for 2020 through 2022 , but it is speculated that JT’s new spending will surpass the outlays over those three years.

While currently Ploom X is only available in Japan and the UK , JT will expand sales of the product to Italy this month and is set to debut the product into more than 10 countries this year , reaching at least 20 new countries by the end of 2024 , in the form of pop-up shops and digital sales with flavors matched to tastes of each market .

In the US , Japan Tobacco formed a joint venture with cigarette giant Altria Group . The partners will apply for permission of Ploom to the Food and Drug Administration by early 2025 .

JT expects to get out of current red resulting from forward investments in the heated tobacco segment and turn a profit in 2028 on overseas growth .

However, “heated tobacco is still in its infancy,” Terabatake said. “Improvements will probably continue for several more generations.”

JT is expected to spend on research and development , looking to develop the second and third generation of Ploom X devices .

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