Japan Tobacco (JT) (TSE: 2914) has announced today that it has formed a joint venture with Altria Group (Altria) through its subsidiary, Nippon Tobacco International. The joint venture will market and commercialize heating tobacco stick (HTS) products using Ploom brand devices and Marlboro tobacco consumables in the United States through its subsidiary, PM USA. The two companies have also signed a long-term, non-binding global memorandum of understanding to explore various opportunities to reduce potential risks for their products.
As part of our strategy to reduce the risks associated with heated tobacco products, we are excited to partner with market leader Altria to introduce our Ploom brand in the largest reduced-risk product market in the world, the United States. We also look forward to a long-term strategic partnership with Altria to explore global business opportunities in the reduced-harm product category. I believe this collaboration will increase the possibility of adult consumers reducing harm worldwide, and bring incremental value to both Japan Tobacco Group and Altria," said Masamichi Terabatake, CEO and President of Japan Tobacco Group's tobacco business.
Japan Tobacco believes that this newly established partnership will support its strategic ambition of establishing global influence through a strong focus on reduced-risk products such as heated tobacco sticks, while driving sustainable growth for all stakeholders in the 4S model. Teaming up with leading US tobacco company Altria to enter the emerging market of heated tobacco in the US will provide growth opportunities for both companies and strengthen their goal of providing a wide range of reduced-risk products to adult consumers worldwide.
This joint venture will exist for the long term and establish Horizon Innovations LLC (Horizon) as the exclusive joint venture responsible for commercializing any current and future heated tobacco products developed by either party in the United States. Horizon will commercialize heated tobacco products in the United States under the Ploom and Marlboro trademarks.
Japanese tobacco firm, 日烟国际, will acquire a 25% stake in Horizon to reflect its contribution to the profits of the heated tobacco products. PM USA will have 75% economic interest in Horizon to reflect its strong distribution network and infrastructure, and $150m initial capital contribution. Future investments in Horizon will be allocated based on their respective economic interests. Both 日烟国际 and PM USA will maintain independent ownership of their respective intellectual property, including any IP developed to support future heated tobacco product development by the joint venture.
As part of their joint venture, Japan Tobacco International and PM USA will combine their scientific and regulatory expertise to prepare documents for the US Food and Drug Administration, including the latest version of a pre-market tobacco product application (PMTA) for the Ploom heated tobacco product. The two companies currently anticipate submitting the PMTA for these products in the first half of 2025. Upon authorization of the pre-market application, Japan Tobacco International will provide the heated tobacco devices while PM USA will produce the Horizon heated tobacco consumables. Additionally, Japan Tobacco International and PM USA have agreed on commercial milestones for Horizon, including minimum distribution requirements and cumulative marketing investments.
By establishing this joint venture, we will combine the marketing, innovation, research and scientific capabilities that Japan Tobacco International has developed over the years, with Altria's scientific, U.S. regulatory experience and vast infrastructure, to create a very strong proposition for adult smokers in the United States," said Japan Tobacco International CEO Eddy Pirard.
Apart from their joint venture, Japan Tobacco Group and Altria have announced the signing of a non-binding memorandum of understanding. According to this memorandum, their goal is to establish a strategic partnership to reduce potential market and commercialization risks and enhance their joint development capabilities and geographical coverage. The two companies believe that this cooperation will accelerate global initiatives to reduce the harms of tobacco and bring significant value to their respective businesses.
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