Imperial Brands Jumps Into Japan's Crowded Heated-Tobacco Market

(Bloomberg) -- Imperial Brands Plc is the latest to roll out its heat-not-burn product in Japan, as it plays catch-up with rival cigarette makers in the world’s most developed market for alternative smoking devices.

The British cigarette maker will start selling its Pulze device from May 6 in Fukuoka in western Japan, according to a company statement, making it the fourth player in the crowded Japanese market. Imperial, which is entering nearly five years after Philip Morris International Inc. first launched its IQOS device in the island nation, is looking to lure customers dissatisfied with current offerings.

Imperial is testing waters in a segment it believes can add as much as $2 billion in revenue by the 2020 fiscal year. Japan’s heated-tobacco market, in which British American Tobacco Plc and Japan Tobacco Inc also sell their variants, is a test case for the devices’ prospects elsewhere in the world.

Read: Japan Tobacco Sees Portfolio of High-Tech Smokes as Winning Hand

Big Tobacco has been increasingly pressured by tighter restrictions on smoking around the globe and consumers’ shift toward relatively healthier options. One promising category has been the heat-not-burn devices, which are so named because they heat tobacco without combustion.

Although the segment saw initial rapid growth in Japan, the momentum has slowed. Newer devices may change that with Euromonitor predicting that the share of heated-tobacco segment in Japan will rise from 17 percent in 2018 to 26 percent by 2022.

Imperial, for instance, is relying on a high and low temperature mode in Pulze. It also allows users to smoke as many as 20 tobacco sticks in one charge, the company said.

To contact the reporters on this story: Lisa Du in Tokyo at ldu31@bloomberg.net;Grace Huang in Tokyo at xhuang66@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Bhuma Shrivastava, Jeff Sutherland

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