Competition in the international heat not burn market is heating up for Philip Morris International and other manufacturers. heat not burn has been a growing category within the tobacco industry and while it hasn’t caught on yet in the U.S., it has found success in international markets like Japan. Philip Morris International (PMI) has notably made headlines with its iQOS heat not burn device that heats the tobacco enough to where it vapes but does not actually burn. This is seen as a breakthrough for adult consumers who are looking to enjoy cigarettes without the harmful toxic chemicals associated with traditional smoking.
PMI’s iQOS was first introduced in Japan back in 2014, giving the company the advantage of being an early adopter and the ability to capture more of the marketplace due to a lack of similar products–until recently, that is. A recent earnings report showed signs of slowdown for PMI’s iQOS in Japan with shares down as much as 30 percent in the past year. The cause? Increased competition.
These big tobacco companies are now competing for users, from the early adopters who first flocked to to iQOS to older consumers who have yet to switch to heat not burns or these heat not burn devices. The increased competition is good for consumers in that they now have choices. For the manufacturers, however, increased competition is driving down prices and changing the profit margins.
While heat not burn and cigarettes are continuing to see success abroad, the U.S. is proving to be a harder marketplace to get into. PMI is still waiting for iQOS to get approval from the FDA to sell and market its device in the U.S. [read more here]. The U.S. Food and Drug Administration (FDA) has been going after heat not burn manufacturers for questionable marketing practices [read more here]. Still, with many U.S. adult consumers having turned to vaping and heat not burns as a way of ditching traditional combustible cigarettes, the U.S. remains a focus and desired market for heat not burn and non-traditional tobacco devices.