JT Group seeks to future-proof tobacco business
TOKYO, Japan—There is nowhere else in the world with a larger community of nicotine aficionados who have shunned the traditional way of smoking than in Japan. Many of them are now using heating devices that replicate the sensory experience while eliminating the ash and smell of tobacco.
And Japan Tobacco Inc. (JT Group)—the company behind combustible brands like Winston and Camel, and one of the most valuable enterprises listed on the Tokyo Stock Exchange—is making an 800-billion-yen (around $5.1 billion) bet that this is a structural trend that the rest of the world will eventually follow.
Japan, indeed, stands as the global capital of heated tobacco products. This modern, affluent and polite society is home to people who dislike sitting next to noisy commuters on trains, much less inhaling secondhand cigarette smoke. They also tend to live longer than other people on this planet.
If there’s a way to indulge in nicotine while reducing the risk of shortening one’s lifespan, why not? It’s not entirely risk-free, but for JT Group, this is the way to sustain its business, especially in a world where more and more people are embracing healthier lifestyles.
Here in the Land of the Rising Sun, heated tobacco products have already seized 48 percent of the smoking market, compared with an average of 13 percent in the rest of the countries where such options are available. By 2035, the share of heated tobacco is expected to rise to 22 percent.
“Based on this outlook, while we will continue to invest in combustibles as it remains our largest category, we will prioritize heated products as a strategic growth area and allocate management resources aggressively,” Takayuki Shimomura, vice president for investor and media relations at JT Group, says in a press briefing.
While it’s not the first mover in this segment, JT Group has now cornered a market share of 18.1 percent in heated tobacco products in Japan and 11.5 percent globally.
Beyond tobacco, JT Group—which has grown through a series of mergers and acquisitions around the world—has also ventured into food processing and pharmaceutical businesses to diversify its future earnings stream.
New flagship: Ploom
JT Group’s flagship product within its burgeoning reduced risk products (RRP) portfolio is Ploom. This line of heated tobacco products is now available in 30 markets globally, including the Philippines.
JT’s heated tobacco sticks, offered in various flavors through the EVO brand, are specifically formulated and manufactured to pair with the Ploom heating device.
Ploom Aura features a slim and narrow rectangular body, designed to slide easily into inner jacket pockets, slim purses or tight spaces. In Japan alone, JT Group has sold at least 6 million Ploom Aura devices as of August.
More recently, JT Group launched Ploom Cube, which has a short, boxy, rounded-cube design. It is aimed at users who prefer a traditional, palm-held block shape.
Ploom is expected to receive the lion’s share of the large capital outlays that JTI has planned for its RRP portfolio—which also includes nicotine pouches, e-vapor and other tobacco-infused products—from 2026 to 2028.
“Over the next three years, we are planning to invest 800 billion yen into the RRP category. Specifically, we plan to invest in marketing activities and to strengthen our product innovation to drive growth. Our priority will be the heated product segment under the Ploom brand,” Shimomura says.
‘Smart heatflow’ technology
“In recent years, we have made major breakthroughs in our innovations,” Charlie Chen, vice president of JT Group‘s RRP Development Center, says in an interview.
“With our Smart Heatflow technology, we carefully design the heating cup geometry and materials to balance heating speed, heating stability and energy efficiency. This delivers a consistent flavor profile and taste experience for our consumers,” Chen says.
A mechanical engineer who has made a career out of product development and launches, Chen explains that different device shapes, such as the Ploom Cube, are developed to cater to varying lifestyle preferences and aesthetics. The company views design as a way to provide value beyond just taste—including personal style.
A single full charge of a Ploom device typically provides 15 to 20 puffing sessions, covering one full day of usage. Each device is engineered to last for two years, based on thousands of simulated usage cycles.
Consumer preferences in Asia vary significantly by country regarding tobacco volume and taste intensity, Chen reckons. Because demand is difficult to generalize across the continent, JT Group plans to offer a wide variety of tailored options.
“By studying consumer insights, we realized that consumer needs in the market are highly diversified and continuing to evolve. Innovation is never going to stop,” Chen says.
For instance, JT Group has also developed LYO, a new line of tobacco-free, nicotine-containing heated sticks that are compatible with Ploom devices. Instead of tobacco leaves, JT Group uses star anise as the primary substrate.
Asked whether other materials could be introduced into the blend, Chen says his team is internally testing various ingredients to meet evolving consumer preferences.
Future technological upgrades are also expected to incorporate data science and artificial intelligence to personalize user experience.
Addressing affordability
Outside its turf in Japan, the rest of Asia represents a vital growth market for Ploom. One key hurdle, however, is reaching markets that are less affluent.
Heated tobacco products, after all, are seen as premium devices, with the upfront cost for the device higher than the minimum daily wage in some markets like the Philippines.
In Manila, a combustible cigarette stick costs about P8 to P10. If consumers buy a standalone Ploom device at a convenience store like 7-Eleven, any of the popular online marketplaces or the physical Ploom store at One Bonifacio High Street, it costs around P2,990.
With the Philippine economy recently hitting the higher middle-income status, however, the market for premium smoking products like Ploom is also growing. Despite regulatory constraints on tobacco product advertising, JT Group is hoping that risk-reduction technology could convince more consumers to invest in the device.
To introduce EVO to the market, JT Group is offering a starter bundle consisting of a Ploom device and four EVO packs (20 sticks per pack) at a promotional price of P1,490.
“Across different regions, countries, cultures and usage occasions, expectations vary widely. We are actively developing a lineup of products, including hardware, to meet these regional preferences,” Chen says.
“The consumer experience with heated tobacco spans several dimensions: taste, social enjoyment, ease of use, style and affordability … We are focused on making these products accessible across different regions while continuing to deliver value to our consumers,” he adds.
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