Philip Morris CEO: IQOS Holds 80% of Japan's Heated Tobacco Market, Growth Expected for Next Decade

Key points:

1. Philip Morris International (PMI) CEO Jacek Olczak stated that "IQOS" holds an 80% market share in Japan, with nearly 50% of smokers using the product. He expects the market to continue growing in the next ten years.

2. Japan plans to raise the tax rate on heated tobacco products to be equal to traditional cigarettes by 2026, with further increases scheduled for 2027. Olczak suggests that this policy may have a negative impact on consumers who have already switched to heated tobacco products.

3. Olczak said that heating tobacco can reduce the risk of exposing harmful ingredients by 90% to 95%, and existing data is sufficient to prove its positive impact.

2Firsts, reporting from Shenzhen - According to a report by Sankei on March 17, Jacek Olczak, the CEO of Philip Morris International (PMI), stated in an interview with Sankei that PMI's heated tobacco product, "IQOS", first launched in Japan 12 years ago, currently holds a market share of approximately 80% in the country.

Olsak pointed out that the use of heated tobacco among smokers in Japan is close to 50%, and the trend of shifting from traditional cigarettes to heated tobacco remains very active. He believes that the heated tobacco market will continue to grow over the next decade.

In addition, the Japanese government is planning to increase the tax rate on heated tobacco products to the same level as traditional cigarettes by 2026, and to continue raising taxes in 2027. 

This policy has raised concerns from PMI. Olczak pointed out that heated tobacco products are considered to pose lower health risks than traditional cigarettes, and in some countries in Europe and the Americas, governments encourage smokers to switch from traditional cigarettes to heated tobacco products through tax incentives. 

He believes that the government's tax increase policy in Japan may have a negative impact on consumers who have already switched to heated tobacco products, even "punishing" them for making a healthier choice.

During the interview, Olczak also elaborated on the current situation and prospects of heated tobacco in the Japanese market. 

He pointed out that heated tobacco maintains a double-digit annual growth rate in many markets globally, and Japan is transitioning from traditional cigarettes to heated tobacco at a faster pace than other countries. 

Currently, in ten major cities such as Tokyo, Sendai, and Fukuoka, the market share of heated tobacco has exceeded that of traditional cigarettes.

Despite facing challenges such as a decreasing population and shrinking market size, Olczak remains confident in the market outlook for heated tobacco products in Japan. 

He pointed out that since the introduction of heated tobacco products, nearly half of smokers have switched from traditional cigarettes. It is expected that the remaining smokers will take at least another 10 years to complete this transition, indicating that there is still significant growth potential in the market.

Regarding the Japanese government's policy of raising the tobacco tax rate to enhance national defense capabilities, Olczak said that from a global perspective of "Harm Reduction," many countries are promoting a shift from traditional tobacco to heated tobacco through taxation and regulation policies. 

He believes that the Japanese government should support consumers who have already made better choices, rather than hindering this process by increasing tax rates.

Olczak also responded to concerns about the lack of long-term clinical data on the health risks of heated tobacco. 

He pointed out that PMI has conducted studies showing that heated tobacco can reduce smokers' exposure to harmful components found in traditional cigarettes by 90% to 95%. 

He believes that even without long-term epidemiological clinical results, the current data alone is sufficient to anticipate the positive impact of heated tobacco. He questioned whether it is reasonable to allow smokers to continue to bear the health risks associated with traditional cigarettes simply because of a lack of data.