Heated cigarettes are an emerging product in the international tobacco market in recent years. Heated cigarettes contain tobacco ingredients and produce smoke by heating rather than burning tobacco.
In 1988, Reynolds Tobacco Company of the United States launched its first heated cigarette product Premier, but it was discontinued in 1989 due to poor market response.
In 1996, Reynolds Tobacco Company launched its second heated cigarette product Eclipse.
In 1998, Philip Morris International launched the heated cigarette Accord, which was discontinued in 2006 due to poor sales.
2014 is considered to be the beginning of a new stage in the development of heated cigarettes. Reynolds Tobacco Company launched Revo, an improved product of Eclipse, Philip Morris International launched IQOS, an improved product of Accord, and British American Tobacco launched iFuse, a heated cigarette.
Currently, the four major multinational tobacco companies have included heated cigarettes in their product portfolios.
Philip Morris International launched IQOS in Italy in the second half of 2014. The heated cigarettes used in this product are HEETS, which were later sold under various brand names with more and more flavors. In December 2016, Philip Morris International applied to the U.S. Food and Drug Administration to classify IQOS as a modified risk tobacco product.
British American Tobacco launched its heated cigarette brand glo in 2016. Like IQOS, glo uses a battery-powered device to heat cigarettes. glo is mainly sold in the Japanese and Korean markets and has been gradually promoted to other countries.
Japan Tobacco acquired a 27% stake in San Francisco-based Ploom in 2010. In 2015, Japan Tobacco acquired the intellectual property rights of Ploom heated cigarettes and launched Ploom Tech a year later. In 2019 and 2021, Japan Tobacco added Ploom S and Ploom X to its product portfolio, respectively.
As of the end of 2017, Imperial Brands was the only multinational tobacco company that did not sell heated cigarettes, and its product focus was mainly on e-cigarettes. In early 2018, perhaps under pressure from shareholders, Imperial Brands announced the development of heated cigarette products. In May 2019, Imperial Brands' heated cigarette product Pulze was launched in Fukuoka, Japan. In 2023, Imperial Brands' heated cigarette products were tested in the Greek and Czech markets.
Since 2014, the international heated cigarette market has grown rapidly. According to Euromonitor International, a total of approximately 30 million heated cigarette devices and 125 billion heated cigarettes were sold worldwide in 2021, and the heated cigarette market size was close to US$30 billion. In 2014, heated cigarette device sales accounted for approximately two-thirds of the total sales of the heated cigarette market, and heated cigarette sales accounted for one-third of the total sales. By 2021, heated cigarette sales accounted for 90% of the total market sales.
In 2016, Philip Morris International occupied three-quarters of the heated cigarette device market and most of the heated cigarette market share. In the following years, British American Tobacco and Japan Tobacco began to challenge its market position.
Southeast Asia is an important market for heated cigarettes. In 2020, the region's heated cigarette product sales accounted for more than half of the world's sales. Japan is by far the largest single-country market for heated cigarettes.
The market strategy of multinational tobacco companies is to target key markets and focus market expansion on regions with high smoking rates, preference for low-tar products, and high acceptance of innovative products. In recent years, the heated cigarette market in Japan and South Korea has developed rapidly. Multinational tobacco companies such as Philip Morris International, British American Tobacco and Japan Tobacco have used Japan and South Korea as testing grounds for their heated cigarettes.
In some countries and regions, the tax policy for heated cigarettes is more favorable than that for traditional cigarettes. Some tobacco companies take full advantage of this and choose to focus on promoting heated cigarettes in these regions. Lower taxes not only bring greater profit margins to these companies, but also give heated cigarettes a certain competitive advantage in price, thereby attracting price-sensitive consumers.
According to the survey, in 2020, 6.5% of people in 28 European countries and regions had used heated cigarettes, and the Czech Republic had the highest rate of heated cigarette use in Europe, close to 15%. A 2023 survey found that the use of heated cigarettes in Europe increased significantly from 2015 to 2022, while there was no significant change in the use of heated cigarettes in the Americas.
