Category: Heat-Not-Burn

  • KT&G Set to Release New HnB Products in Korea 

    KT&G Set to Release New HnB Products in Korea 

    Photo: Tobacco Reporter archive

    KT&G Corp. will launch new heat-not-burn products in South Korea to strengthen its electronic nicotine devices lineup, reports the Yonhap News Agency.

    The South Korean cigarette manufacturer will release Lil Able and its premium version, Lil Able Premium, on Nov. 16.

    KT&G’s third-quarter net profit jumped 29 percent from a year earlier on increased exports and a strong U.S. dollar. Currently, the company earns 90 percent of its sales from the cigarette business division and 10 percent from the heat-not-burn division. 

    The company has been stepping up efforts to increase sales in the noncigarette business division. 

    From January to September, net income climbed 21 percent to KRW1.06 trillion from KRW878.58 billion in the same period of last year. 

    On Nov. 4, the company announced a KRW350 billion share buyback to boost shareholder returns.

  • JTI Launches Ploom X Heated Tobacco Device in UK

    JTI Launches Ploom X Heated Tobacco Device in UK

    Ploom X (Courtesy: JTI)

    JTI announced that it has launched the Ploom X, a heated tobacco device, in the UK. The new device features upgraded technology to enhance the consumer experience and adds to JTI UK’s ever-evolving range of reduced-risk and alternative products. The technology is already available in Japan.

    “The launch of Ploom X marks a milestone in JTI’s story and also sets a new paradigm in the heated tobacco category,” Mark McGuinness, JTI’s director of Marketing, said. “Ploom X is a truly innovative product that will exceed consumer expectations, making their tobacco moments even more pleasurable and truly unique.”

    Ploom X is the latest heat-not-burn device on the market and represents the “cutting edge” of the next generation of heated tobacco products, according to a press release. The technological upgrades for the Ploom X device include:

    • A redesigned HeatFlow system and a higher heating temperature to ensure a more consistent nicotine delivery and a more enhanced flavor delivery from the first puff. 
    • One simple heating mode which makes the device easy for consumers to use.
    • Adjustments to the airflow system enabling a more consistent vapor delivery and increased vapor volume. 
    • Longer session times of up to 5 minutes and the ability to use more EVO tobacco sticks per charge, with up to 22 sessions with just one charge.
    • A smaller and more compact device. Ploom X users have the opportunity to express themselves by customizing the sleek aesthetic of the device with a colorful range of magnetic front panels that can be switched and swapped, in order to meet individual preferences and tastes.

    Ploom X also has, on average, a 90-95 percent reduction in the levels of 9 constituents recommended by the World Health Organization (WHO) for reduction in cigarette smoke. This does not mean that use of Ploom X is safe or eliminates health or addiction risks associated with tobacco use. No tobacco product is safe.

    Ploom devices are designed to be used exclusively with EVO tobacco sticks which contain ActivBlend, a tobacco blend made from microground and fine cut tobacco that delivers a truly authentic taste experience. With 20 sticks in a pack and a recommended retail price of £4.50, EVO costs less than half the price of a pack of cigarettes.

    EVO tobacco sticks are available in a range of flavors: classic tobacco, unique menthol flavors, fruit and menthol infusions and capsule variants for users who want to have the option to release an additional burst of flavor during a session. 

  • Altria, JT Partner to sell Heated Tobacco Products in U.S.

    Altria, JT Partner to sell Heated Tobacco Products in U.S.

    Photo: ASDF

    The JT Group and Altria Group, through their Japan Tobacco International and Philip Morris USA subsidiaries, have established a joint venture to market and commercialize heated tobacco sticks (HTS) products in the U.S. with Ploom-branded devices and Marlboro-branded consumables.

    The two groups also signed a long-term, non-binding global memorandum of understanding (MOU) to explore commercial opportunities for a wide range of potentially reduced-risk products (RRP).

    “As part of our strategic focus on HTS, we’re very enthusiastic to launch our Ploom brand in the U.S., the world’s largest RRP market in value, through our partnership with the market leader, Altria,” said  Masamichi Terabatake, president and CEO of the JT Group’s tobacco business, in a statement.  

    “We also look forward to entering into a long-term strategic collaboration with Altria to further explore global commercial opportunities in the RRP category. I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”

    “We are excited to begin a new partnership with JT Group, a leading international tobacco company,” said Altria CEO Billy Gifford in a statement. “We believe this relationship can accelerate harm reduction for adult smokers across the globe.”

    “We believe moving beyond smoking in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated tobacco products position us well to increase adoption of smoke-free products.”

    The joint venture establishes a new company, Horizon Innovations, for the U.S. commercialization of current and future HTS products owned and developed by either party. Horizon will commercialize HTS products in the U.S. under the Ploom and Marlboro trademarks.

    JTI will have a 25 percent economic interest in Horizon to reflect its HTS product contribution. PM USA will have a 75 percent economic interest, reflecting the company’s strong distribution network and infrastructure, as well as its initial capital contribution of $150 million to Horizon.

    Subsequent capital contributions made to Horizon will be split according to the parties’ respective economic interest. JTI and PM USA will both maintain independent ownership of their respective intellectual properties, including any IP acquired after the formation of the joint venture that supports the development of future HTS products.

    I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.

    Masamichi Terabatake, president and CEO, JT Group’s tobacco business

    As part of the joint venture, JTI and PM USA will combine their scientific and regulatory expertise to jointly prepare U.S. Food and Drug Administration filings, including a premarket tobacco product application (PMTA) for the latest version of Ploom HTS products. The parties currently expect to submit the PMTA for these products in the first half of 2025. Upon PMTA authorization, JTI will supply HTS devices and PM USA will manufacture HTS consumables for Horizon. In addition, JTI and PM USA have agreed to commercialization milestones for Horizon, which include distribution requirements and minimum levels of cumulative marketing investments.

    “By forming this JV, we are bringing together the marketing, innovation, R&D and science capabilities that JTI has developed over the years, with Altria’s science, U.S. regulatory experience and vast infrastructure, to create a very strong proposition for the U.S. adult smoker,” said JIT CEO Eddy Pirard, CEO.

    Separate to the JV, the JT Group and Altria also announced the mutual signing of a non-binding MOU. Under this MOU, the parties aim to structure a strategic partnership over time to market and commercialize a wide range of potentially reduced-risk products and strengthen their shared development capabilities and geographic reach. The companies believe this collaboration will accelerate global tobacco harm reduction solutions and bring significant value to their respective businesses.

    Altria’s pipeline of heated tobacco products includes tobacco-heating product formats and new-to-market technologies. “We believe HTC products can appeal to U.S. adult smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes,” the company wrote. “This audience includes the millions of U.S. adult smokers who tried, but ultimately rejected, e-vapor products.”

    Altria expects finalize the design of its HTC platform 1 technology (HTC1) by the end of this year and then begin regulatory preparations for a PMTA submission by the end of 2024.

    The company also expects to partner with JT to launch the HTC1 technology in an international test market in late 2024 or early 2025 using JT’s sales and distribution network.

    Prior to the recent agreement with the JT Group, Altria terminated its noncompete agreement with Juul Labs and sold its exclusive U.S. commercialization rights for the IQOS tobacco-heating system to Philip Morris International for about $2.9 billion.

  • Altria Reaches Deal With PMI for IQOS Transition

    Altria Reaches Deal With PMI for IQOS Transition

    Credit: Naka

    Philip Morris International will pay Altria Group approximately $2.7 billion for the exclusive U.S. commercialization rights to the IQOS tobacco heating system effective April 20, 2024.

    “We remain committed to creating long-term value through our Vision,” said Altria CEO Billy Gifford in a statement. “We believe that this agreement provides us with fair compensation and greater flexibility to allocate resources toward ‘moving beyond smoking.’”

    In 2013, Altria entered into a series of agreements with PMI related to innovative tobacco products, which included exclusive U.S. commercialization rights of Altria subsidiary Philip Morris USA to the IQOS system. PM USA’s commercialization rights were subject to an initial five-year term, which began when the system received authorization from the U.S. Food and Drug Administration in April 2019 and continued through April 2024.

    As part of the 2013 agreement, PM USA had the right to maintain exclusive U.S. commercialization rights upon achieving an initial milestone by April 2022. Upon achieving additional milestones, PM USA had the option to renew for an additional five-year term through April 2029.

    While Altria believed it has achieved the required milestones, PMI disagreed. The parties were unable to reach a long-term agreement and decided to enter into the agreement to transition and ultimately conclude their relationship.

    Altria received a $1 billion from PMI upon entry into the agreement. Under the terms of the deal, PMI is obligated to make an additional payment of $1.7 billion (plus interest) by July 2023 for a total cash payment of approximately $2.7 billion (pre-tax). Altria expects to use the cash proceeds for several items, which may include investments in pursuit of its vision, debt repayment, share repurchases and general corporate purposes. Share repurchases, Altria said, depend on marketplace conditions and other factors and remain subject to the discretion of its board of directors.

    Altria expects to record the $2.7 billion pre-tax transaction amount as a deferred gain on its consolidated balance sheet in the fourth quarter of 2022. This gain will be recognized in earnings when the company assigns its rights to the IQOS system.

    IQOS and Marlboro HeatSticks are currently unavailable for sale in the U.S. due to orders imposed by the U.S. International Trade Commission that prohibit importation of IQOS and Marlboro HeatSticks into the U.S. relating to a patent dispute. PMI remains responsible for manufacturing the IQOS system and Marlboro HeatSticks and targets resumption of product supply in the first half of 2023.

    If supply of FDA-authorized product is available to Altria before May 2024, PM USA has the option to reintroduce the IQOS system and Marlboro HeatSticks for sale in the U.S. On April 30, 2024, U.S. commercialization rights to the IQOS system will transition to PMI. PMI will not have access to the Marlboro brand name or other brand assets, as PM USA owns the Marlboro trademark in the U.S.

    In a press note announcing the IQOS transition, Altria said it remains committed to its vision to responsibly lead the transition of adult smokers to a smoke-free future. “We believe in a portfolio approach to tobacco harm reduction and expect to compete in the major smoke-free categories. We have reinvested into our internal product development system and we expect to finalize designs for two smoke-free products, including a heated tobacco product, by the end of 2022,” the company wrote.

  • BAT’s Glo Brand Doubles its Market Share in Korea

    BAT’s Glo Brand Doubles its Market Share in Korea

    Credit: Radub85

    Non-combustible products are rising in popularity in South Korea, especially the heated tobacco market. According to the latest government data, 210 million packs of heat-not-burn devices were sold in the first half of 2021, up 16.2 percent from the same period a year earlier.

    The category’s share in Korea’s entire tobacco market has also increased to 12.4 percent in 2021 from 2.2 percent in 2017, according to Korea Biz Wire.

    The country is a key market for the BAT’s glo device, with its market share growing twofold in the past two years. “Our local share has grown greatly since the launch of our heat-not-burn glo pro in 2019. Glo’s share in the non-combustible tobacco market has doubled from two years ago,” BAT’s Country Manager Kim Eun-ji said at the news conference.

    BAT’s share in Korea’s non-combustible tobacco market has grown from 6.04 percent in 2017 to around 12 percent in June 2022, said Kim.

    In line with such a trend, BAT, the maker of Dunhill and Lucky Strike cigarettes, has invested over $488 million in Korea, which includes a factory in Sacheon, 440 kilometers south of Seoul, which has served as a core export base of BAT since 2002.

    “We are aware that the industry’s position is different from that of the health ministry. If we continue to push with more ‘data-driven’ (ways of) communication, we think it will create momentum (that can push) the government to take a step forward, but it will take time,” Kim said.

    BAT is the third-largest player in the Korean market for non-combustible tobacco products. The front-runner is KT&G, which accounts for 47 percent of the local market as of June.

    BAT Rothmans, the Korean arm of BAT, also reported Tuesday its tobacco heating device glo can reduce health risks of traditional cigarettes, according to a recent study published in the medical journal “Internal and Emergency Medicine.”

    The study compared the health effects of glo against traditional cigarettes among 500 British adults aged between 23 and 55 over a one-year period. Researchers found that aerosol produced from glo had 90 to 95 percent less toxicant compared with smoke from traditional cigarettes.

    Toxic compounds produced by burning tobacco were either not detected or significantly reduced through the glo device, the company added. “This real-world study allows us to assess the changes that adult smokers switching exclusively to glo experience. It reinforces glo’s potential as a reduced-risk product,” Sharon Goodall, BAT’s head of regulatory science, said at the news conference.

    The study results come amid growing calls from the Korean government to increase regulations on e-cigarettes. In September, the health ministry pointed out that e-cigarette devices should go under tighter regulations, citing a growing number of teenage users of such products in the country.

    E-cigarette heating devices, like glo, are categorized as ‘industrial products’ in Korea and are subject to looser regulations compared with cigarettes. “It’s hard to entirely trust a clinical study result unilaterally conducted by the tobacco industry. The World Health Organization has concluded that there’s insufficient evidence to support that e-cigarettes are less harmful than traditional cigarettes,” a health ministry official said. He asked not to be identified, citing the issue’s sensitivity.

  • Retailers: HTPs Require Commitment to Training

    Retailers: HTPs Require Commitment to Training

    Photo: VPZ

    While offering various benefits, heated-tobacco products (HTPs) require lots of dedication from tobacco retailers to be successful, according to an article in the U.K. publication Better Retailing.  

    Although vaping has rapidly taken off since its introduction in the U.K. two decades ago, HTP is a younger technology that has taken some time to build momentum. Philip Morris Limited (PML) entered the market in 2016 with IQOS, and Japan Tobacco International debuted its Ploom device in the U.K. in 2020.

    In 2021, HTPs represented 18.6 percent of the total reduced-risk product market in the U.K., up 86 percent compared to 2020, suggesting considerable gains for retailers who can invest the time, energy and research that this category demands.

    The retailers interviewed by Better Retailing reported hit-or-miss success with heat-not-burn products, with one shop owner keeping IQOS Heets in store for a single customer and another bringing in more than £1,000 ($1,183) per week with the product.

    JTI advises retailers to maintain good stock levels and to have devices available for in-store demonstrations and for using platforms, such as JTI’s trade website jtiadvance.co.uk, to generate repeat sales.

    Kate O’Dowd, head of commercial planning for U.K. and Ireland at PML, urges retailers to not limit themselves by a “stock-and-sell” mentality. “Build connections with customers to understand their preferences so you can offer a smoke-free alternative that meets their needs,” she says.

  • Philip Morris Opens Flagship IQOS Store in South Africa

    Philip Morris Opens Flagship IQOS Store in South Africa

    Credit: Arkadiusz Fajer

    Philip Morris South Africa (PMSA) announced the opening of its new flagship boutique IQOS store in Canal Walk, Cape Town, South Africa, five years after the smoke-free brand was introduced to the local market.

    “Our significant continued investment into stores like the Canal Walk site, reinforces our commitment to achieving a smoke-free South Africa, with a product that is a much better choice for adults than continued smoking,” said Branislav Bibic, managing director of PMSA. “It’s a commitment like this that is in line with PMI’s full-scale global effort to offer adult smokers better alternatives that can ultimately replace cigarettes.”

    The company has openly committed to a move away from the cigarette business and continues to expand its IQOS portfolio of electronic tobacco devices designed to heat rather than burn tobacco, and the brand’s retail footprint, according to Biz Community.

    IQOS heats specially-created tobacco sticks, called Heets, at a controlled temperature, avoiding combustion and “producing an aerosol that emits on average 95 percent lower levels of harmful chemicals than an ordinary cigarette”, according to the company.

    While the device provides a nicotine fix and tobacco-taste satisfaction for smokers, Iqos does not produce smoke, ash or a cigarette smell.

    Since 2008, the Marlboro and Chesterfield maker has invested over $9 billion in scientific research, product- and commercial development, and in production capacity to drive the continuous innovation of smoke-free products.

  • Poda Completes Asset Sale to Altria Client Services

    Poda Completes Asset Sale to Altria Client Services

    Photo: Poda Holdings

    Poda Holdings has completed the sale of substantially all of the assets and properties used in the company’s business to Altria Client Services for a total purchase price of $100.5 million, subject to certain adjustments and holdbacks, pursuant to a definitive agreement dated May 13, 2022.

    Pursuant to the Asset Purchase Agreement, Poda will change its name to Idle Lifestyle and its trading symbol to IDLE.X. The company expects to trade as an inactive issuer under the policies of the Canadian Stock Exchange.

    “The completion of this sale represents the culmination of a tremendous amount of effort from the entire Poda team, and I am extremely proud of what we have accomplished,” said Poda Director, CEO and Chairman Ryan Selby in a statement.

    I believe this transaction provides maximum value for the company and its shareholders, and I know our innovative technology is now in good hands with Altria.”

  • Altria Buys Poda Holdings’ Assets and Properties

    Altria Buys Poda Holdings’ Assets and Properties

    Photo: Poda Holdings

    Altria Client Services will pay $100.5 million for assets and properties used in Poda Holdings’ business of developing, manufacturing and marketing multisubstrate heated capsule technology, according to a Poda press release. The deal includes the owners’ associated patents and the company’s license of certain of those patents pursuant to an amended and restated royalties agreement dated April 12, 2019.

    “This agreement represents a significant milestone for Poda and its employees,” said Ryan Selby, Poda’s CEO, director and chairman of the company’s board of directors. “Our teams have worked diligently on this technology since the company’s inception, and we believe these agreements maximize its value for the company and its shareholders.”

    Poda’s multisubstrate heated capsule technology uses proprietary biodegradable single-use capsules. The design of the technology prevents cross-contamination between the heating devices and the capsules, which eliminates cleaning requirements and provides users with a convenient and enjoyable experience, according to Poda Holdings.

    This agreement represents a significant milestone for Poda and its employees.

    Ryan Selby, CEO, director and chairman, Poda Holdings

    Poda’s technology is fully patented in Canada and is patent pending in over 60 additional countries, covering almost 70 percent of the global population.

    Altria Client Services’ parent company, Altria Group, currently holds a license to distribute Philip Morris International’s IQOS HnB product in the United States. That product, however, has been subject to an import ban in the wake of an intellectual property dispute with BAT.

    Analysts have also speculated on the likelihood of the IQOS distribution deal being renewed when it expires in 2024. PMI and Altria currently disagree about whether Altria has thus far met the milestones to earn the renewal option for an additional five-year deal.

  • Poda Moving All Pod Production to North America

    Poda Moving All Pod Production to North America

    Photo: Poda Holdings

    Poda Holdings has signed a purchase agreement with its Chinese manufacturing partner to acquire Poda Pod manufacturing equipment, 15 patent applications related to Poda Pod technology and three Chinese trademarks for approximately CDN3.45 million ($2.7 million).

    The manufacturing equipment is comprised of all proprietary custom-built equipment for Poda Pods production capable of producing an estimated 5 million Poda Pods per year. All manufacturing equipment will be shipped to Vancouver, British Columbia. The 15 patent applications were filed in China and represent unique product design and manufacturing methods applicable to the development and large-scale production of Poda Pods.

    “Given the general unrest of the geopolitical situation around the globe, the company has determined it will manufacture Poda Pods in North America,” said Poda Holdings CEO Ryan Selby in a statement.

    “This will reduce the amount of lag time from manufacturing to customer delivery and will provide a significant reduction in tariffs, allowing the company to be more competitive. The acquisition of the manufacturing equipment and patent applications is an important step in the growth and value of Poda, which the company believes outweighs the resulting delays in production.”