What to See in Big Tobaccos' Annual Reports?

BAT by 2FIRSTS, edited by Sophia
Feb.21.2024
What to See in Big Tobaccos' Annual Reports?
VUSE drives strong performance of British American Tobacco's "new category" in old and new markets; IQOS ships more Marlboro than Marlboro, will "test land" in the U.S. in 2024

In early February, British American Tobacco (BAT), Philip Morris International (PMI), and Japan Tobacco International (JTI) each announced their fourth-quarter and full-year financial reports for 2023. They reviewed and disclosed their performance for the year and partially revealed the Annual Operation Plan (AOP) for the upcoming fiscal year.

 

Based on the financial reports, 2FIRSTS conducted a review and analysis of the performance and future development strategies of these major players in the new tobacco sector in 2023.

 

IQOS Continues to Lead in New Tobacco

 

For their respective new tobacco businesses, the big three tobacco companies use different names. BAT refers to it as "New Categories" (NC), including vaporized, heat-not-burn, and oral products; PMI calls it Heated Tobacco Units (HTU); and JTI refers to it as Reduced-Risk Products (RRP).

 

Comparing horizontally, in 2023, PMI's HTU shipments were 125,263m, followed by BAT's NC at 29,741m, and JTI's RRP at 8,800m. PMI's new tobacco volume exceeds the sum of BAT and JTI by three times, demonstrating overwhelming dominance.

 

The shipments of the new tobacco sectors of the big three tobacco companies all recorded different degrees of increase in 2023. PMI recorded a 14.7% increase, JTI recorded an 11.8% increase, and BAT recorded the lowest increase of 3.8% among the three.

 

BAT's heated tobacco (HP) recorded a negative growth in reported growth, at -1.3%. This decline was primarily offset by a 7% increase in vaporized products and a 33.6% increase in oral/patch products. Despite the slow growth in shipments, the revenue growth far exceeded this, with NC's organic revenue increasing by 21.0%. The unit profitability is worth noting.

 

 

BAT: VUSE Drives Strong Performance in "New Categories"

 

 

BAT released its 2023 financial report on February 8, showing a 1.3% decrease in overall revenue for the BAT group, while organic revenue from "New Categories" grew against the wind by 21.0%. According to BAT, this strong momentum was driven by sales of Vuse and Velo.

 

The performance of new category products in different geographical markets has been remarkable. In BAT's traditional stronghold market of AME (Europe and America), new category reported profits reached £1.67 billion, while the performance in the emerging APMEA (Asia-Pacific and Middle East) market was equally strong, recording £610 million.

 

What to See in Big Tobaccos' Annual Reports?
BAT annual report

 

In 2023, revenue from non-combustible products accounted for 16.5% of BAT's total revenue. In the financial report, BAT stated that "vaporized e-cigarettes are the fastest-growing smoking alternative, with Vuse being the global market leader in vaporized e-cigarette products, while describing glo as the No.2 in the heated but not burned field; and Velo as the least toxic product in the new category."

 

In BAT's business, the new category has now become so strong that it subsidizes the weak performance of combustible products. The group expects to deepen its layout of new tobacco in the visible future, especially in its advantageous compliant markets. In the financial report, BAT specifically pointed out that the group "welcomes the U.S. Food and Drug Administration (FDA) and other federal and state government agencies to increase enforcement efforts, take more measures to prevent the illegal sale of flavored disposable e-cigarettes in the United States," urging the FDA and other agencies to expedite the compliance of the U.S. market to maximize its compliance advantages and consolidate market share.

 

PMI: IQOS to "Trial Launch" in U.S. in 2024

 

On the other hand, PMI, which also released its financial report on February 8, announced the impressive performance of its new tobacco products. In 2023, PMI's IQOS user base was estimated to be around 28.6 million, an increase of 3.7 million compared to December 2022. The market share of IQOS in the heated tobacco segment increased by 1.2% for the full year, reaching 9.1%. The company's CEO, Jacek Olczak, stated that IQOS's net revenue exceeded Marlboro's in that fiscal year.

 

However, despite surpassing revenue from traditional combustible tobacco brands, the growth rate of IQOS shipments has begun to slow down after years of rapid growth. For the full year of 2023, PMI's entire heated tobacco segment grew at a rate of 14.7%, compared to 14.9% in 2022, showing overall stability with a slight decline. PMI attributed the slowdown mainly to the EU's ban on flavored heated tobacco, and it anticipates further impact on shipments in 2024.

 

What to See in Big Tobaccos' Annual Reports?
PMI annual report

 

Nevertheless, Olczak remains optimistic about the future performance of the company's new tobacco products. In a statement, he expressed that the company is "entering 2024 with strong momentum." As of December 31, 2023, PMI's smoke-free products were sold in 84 markets; for the full year, PMI's intangible asset amortization was $0.42 per share, including an agreement reached with Altria regarding the commercialization rights of IQOS in the U.S., which will take effect on May 1, 2024. At that time, IQOS will officially "trial launch" in the United States, approximately ten years after its initial market debut.

 

How the U.S. market, which has been "educated" by vaporized e-cigarettes for many years, will receive HNB products may be the most closely watched trend in the industry for the coming year.

 

 

JT: Plans to Increase Investment in Ploom in the Coming Years 

 

Meanwhile, in a report released on February 13, JT reported that the performance of the JT Group in the past fiscal year reached record levels in all financial indicators. JT attributed its impressive performance to "increased market share in Japan" and "sales growth driven by marketing efforts."

 

According to the financial report, the growth in market share of Ploom X in Japan drove positive changes in transaction volume over the past year, especially with Ploom continuing to gain market share. The launch of Ploom X ADVANCED in November further enhanced consumer adoption and retention, leading to a continued increase in market share in Japan's increasingly competitive heated tobacco system (HTS) sector, reaching 11.4%.

 

What to See in Big Tobaccos' Annual Reports?
JT annual report

 

At the same time, JT expanded the geographic coverage of its HNB product, Ploom X, over the past year. By the end of 2023, Ploom X had entered 13 markets. In Japan, the JT Group's market share in the heated tobacco sector reached 11.4% in December 2023.

 

It is worth noting that among the three major tobacco giants, JTI is the only company to experience an increase in sales of combustible cigarettes. According to Bloomberg, the company manufactured and shipped over 531 billion combustible cigarettes last year. The total sales volume of JTI's Winston and Camel cigarettes increased by 2.3% in 2023. In contrast, PMI's cigarette shipments in 2023 decreased by 1.3% to 613 billion, while BAT's decreased by 8.2% to 555 billion compared to the previous year.

 

The difference in sales highlights the divergence in JTI's strategy and focus. As PMI and BAT shift more research and marketing resources to alternative products including e-cigarettes, heated tobacco and nicotine pouches, JTI appears more inclined to try to grow market share and sales in traditional cigarettes. But even so, the group teased in its earnings report that it would next increase its investment in "heated tobacco, including Ploom." According to the report, JT aims to cover about 80 percent of total global HTS demand by the end of 2025, and plans to bring Ploom X to more than 40 markets worldwide by the end of 2026.

 

In response, Bloomberg Intelligence analyst Duncan Fox noted that increased investment in Ploom "makes sense, but if it's to overcome established competition, it may be too late". He said it would take time for this investment to translate and predicted that "JT's operating profit will fall in 2024", while "Ploom will wait until 2028 to become profitable".

 

2FIRSTS will continue to monitor the latest developments from the major tobacco companies in the new year.

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Italy Proposes Earlier Vape and HTP Tax Hikes, New Rules for E-Liquid Pricing, Exclusive Deals and Distribution
Italy Proposes Earlier Vape and HTP Tax Hikes, New Rules for E-Liquid Pricing, Exclusive Deals and Distribution
Italy's proposed 2027–2029 budget would bring forward scheduled tax increases for e-cigarette liquids and heated tobacco products from January 1, 2028, to July 1, 2027. The consumption tax coefficient for nicotine-containing e-liquids would rise from 20% to 22%, that for nicotine-free liquids and applicable flavorings from 15% to 17%, and the heated-tobacco coefficient from 41% to 42%. The bill would also introduce official retail price schedules for e-liquids, restrict exclusive agreements between retailers and suppliers, and limit single-brand-dominated displays, sales incentives and bundled offers. Importing, authorized warehousing and retailer sourcing arrangements would also change. The proposals remain subject to parliamentary approval and subsequent implementing regulations.
Regulations
Nov.04
Product | JTI Introduces Fully Dissolvable PERLZ Nicotine Pearls in UK, Expands Range From 30-Pearl Dispensers to 10-Pearl Sachets
Product | JTI Introduces Fully Dissolvable PERLZ Nicotine Pearls in UK, Expands Range From 30-Pearl Dispensers to 10-Pearl Sachets
Japan Tobacco International (JTI) has introduced PERLZ nicotine pearls in the UK, expanding its oral nicotine portfolio beyond conventional nicotine pouches. The fully dissolvable, multi-layer pearls are placed under the tongue and come in Mint and Berry flavors at concentrations of 1mg/g and 2mg/g, equivalent to approximately 0.3mg and 0.5mg of nicotine per pearl. UK retailer Haypp published four 30-pearl dispenser listings on July 31, 2026, followed by three 10-pearl sachet products on August 17. The dispensers retail for £6.50, while the sachets cost £2.50.
product
Oct.12
Product | PIXL Adds 6ml PIXL 5K in UK Alongside 12ml PIXL 8000 as Vape Duty Takes Effect
Product | PIXL Adds 6ml PIXL 5K in UK Alongside 12ml PIXL 8000 as Vape Duty Takes Effect
Vaping brand PIXL has introduced the PIXL 5K reusable prefilled pod device in the UK, featuring a 2ml prefilled pod and a 4ml refill container with a combined e-liquid capacity of 6ml. The device uses 20mg/ml nicotine salt e-liquid and is advertised to deliver up to approximately 5,000 puffs. Available through UK retailers by August 2026, the PIXL 5K sits alongside the existing 12ml PIXL 8000. The UK's Vaping Products Duty took effect on October 1 at £0.22 per millilitre, producing theoretical duty amounts of £1.32 and £2.64 for the two products' respective full refill sets.
product
Oct.10
EU Vape, Heated Tobacco and Nicotine Pouch Tax Reform Reaches Ministerial Talks: Sweden Opposes Proposed 2032 Minimum of 50% of Retail Price or €50/kg for Nicotine Pouches
EU Vape, Heated Tobacco and Nicotine Pouch Tax Reform Reaches Ministerial Talks: Sweden Opposes Proposed 2032 Minimum of 50% of Retail Price or €50/kg for Nicotine Pouches
EU finance ministers are scheduled to discuss tobacco excise reform on November 9, 2026, seeking agreement on higher minimum duties for conventional tobacco and a common EU minimum tax framework covering e-cigarettes, heated tobacco and nicotine pouches. A November 5 Council document identifies nicotine pouch taxation as the main outstanding issue. The Irish Council presidency proposes phased increases, reaching 50% of retail selling price or €50 per kilogram in 2032. Sweden has formally said it cannot support the current compromise, objecting to both the proposed nicotine pouch tax burden and the adjustment of minimum rates based on national purchasing power. The package also addresses cross-border personal-use reference quantities, raw tobacco controls and the continued exclusion of traditional tobacco snus.
Regulations
Nov.10
Latest UK ONS Data: Vaping Rate Edges Down to 9.9% in 2025, a Year After Overtaking Cigarette Smoking
Latest UK ONS Data: Vaping Rate Edges Down to 9.9% in 2025, a Year After Overtaking Cigarette Smoking
Vaping prevalence in Great Britain edged down to 9.9% in 2025 from 10.0% in 2024, with the number of adult users holding at approximately 5.4 million for a second consecutive year, according to the Office for National Statistics (ONS). E-cigarette use had risen from 6.4% in 2020 to 10.0% in 2024, when it exceeded cigarette smoking prevalence for the first time. Cigarette smoking continued to decline to 8.7% in 2025, widening the gap to 1.2 percentage points. Daily vaping declined slightly, while usage among adults aged 25–34 increased despite falling rates in other age groups.
DATA
Oct.14
JAMA Study: U.S. Vape Directories Fail to Sustainably Curb Unlisted Sales as Product Shifts May Redistribute Brand Share 2Firsts Recommended
JAMA Study: U.S. Vape Directories Fail to Sustainably Curb Unlisted Sales as Product Shifts May Redistribute Brand Share 2Firsts Recommended
A study by CDC Foundation researchers found no sustained decline in e-cigarette sales across Alabama, Oklahoma and Louisiana, the first three U.S. states to implement e-cigarette directory laws. Louisiana initially saw a significant sales decline, followed by a rebound and a persistent reduction in product availability. Sales also shifted from nontobacco-flavored disposables toward prefilled cartridges, with Vuse Alto driving much of the increase in menthol cartridges. By April 2025, unlisted products still accounted for more than half of e-cigarette nicotine sales in all three states.
Sep.18