Japan Tax Reform Threatens JTI Heated Tobacco Growth in 2026

Key Highlights

• Japan plans to align heated tobacco tax with traditional cigarettes
• Retail prices may rise by 70–100 yen per unit
• JTI already raised prices by 30 yen in January
• Ploom volumes grew over 38% in 2025, reaching 14.4% share
• CFO expects growth impact to be temporary

2Firsts, February 15, 2026 

 According to Reuters, Japan’s planned tax changes on heated tobacco products (HTPs) could curb growth in the world’s largest HTP market, Japan Tobacco International (JTI) warned.

JTI’s Chief Financial Officer Vassilis Vovos said in an interview that a Japanese government plan would remove the current tax advantage enjoyed by heated tobacco products, bringing their tax rate fully in line with traditional cigarettes.

Vovos said the increase is “significant,” estimating a retail price impact of 70 to 90 yen, potentially reaching 100 yen after sales tax.

Lower taxation has supported the appeal and growth of heated tobacco products in Japan. The proposed change could result in slower growth, though Vovos emphasized that any impact would likely be temporary.

To mitigate disruption, JTI raised the price of its heated tobacco products by 30 yen in January and plans to introduce smaller price increases throughout the year rather than implementing a single sharp hike.

Heated tobacco devices heat processed tobacco sticks to produce aerosol for inhalation, rather than burning them. Companies argue that this process may reduce exposure to harmful chemicals produced through combustion.

In 2025, JTI reported adjusted operating profit growth of 23.5% at constant currency, supported by pricing and sales of traditional tobacco products and expansion in newer categories such as heated tobacco and vaping.

Ploom, JTI’s flagship heated tobacco brand, recorded volume growth of more than 38% in 2025, reaching a 14.4% share of the heated tobacco category in Japan.

(Cover Image Source: REUTERS)