2017 was another year of strong growth in heated tobacco as the category continued to welcome smokers migrating from cigarettes. Growing numbers of smokers are being attracted by perceptions that, being smoke-free, heated tobacco is less harmful than cigarettes, as well as the modern appeal of the gadgets involved.
In response to the boom in sales, the government started to plan a new unique tax scheme for heated tobacco. In December 2017, the government announced its plan to introduce a new unique tax system for heated tobacco from October 2018 as part of the reform of the overall tobacco tax scheme.
Philip Morris Japan KK maintained its leading position in heated tobacco in 2017, as it continued to benefit from its early mover advantage and the number of consumers who had started to use heated tobacco products from its IQOS brand, as well as its reputation. In 2017, the company upgraded its flagship brand, IQOS, to IQOS 2.
Although IQOS maintained its dominant status in 2017, the device-orientated heated tobacco category requires smokers to re-purchase their devices after a certain amount of usage. Heated tobacco smokers looking to purchase replacement devices could be encouraged to switch brand, as the emergent heated tobacco category has lower levels of brand loyalty than cigarettes.
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