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Heat Not Burn(HNB) industry will develop faster

Recently, the global tobacco giant Philip Morris International (Marlboro Company) 2020 financial report showed that its Heat Not Burn(HNB) product: IQOS Heatsticks shipped 76.111 billion sticks, has accounted for the annual total shipments of Philip Morris International (including traditional cigarettes) 10.8%.In terms of revenue, its IQOS harm-reduction products have accounted for nearly a quarter (23.8%) of the company’s total revenue.The total number of users of IQOS heat not burn (HNB) products worldwide reached 17.6 million.

Meanwhile, the company said that by 2025, smokeless products (new types of tobacco) would account for more than half of its total revenue.

It can be seen that the dependence of Philip Morris International on tobacco heatsitcks is growing rapidly.

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Similarly, British American Tobacco, which also know as an international Tobacco (known for 555, Kent), has released data shows that its annual income was decreased by 0.4%, but net profit has increased 4.8%. The tobacco heatsticks business has growth against trend by 15% and reached 1.5 billion pounds.

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However, there’s also an opposite example. Japan Tobacco, world’s third largest international tobacco group, known for Mevius. Due to strategic misjudgment, company doesn’t take action when Philp Morris launch their HNB product IQOS and dominate Japan market in 2014.  After three years, Japan Tobacco finally launched their HNB product Ploom to compete with IQOS, but Ploom was not a real HNB product by definition. Its working principle is similar to heat the oil smoke perfusion in the shape of appearance without burning smoke shot “capsule” to heat and atomization, prefer to smoke in essence oil atomization type E cigarettes.

Due to a lack of widespread market acceptance and declining sales in its traditional tobacco business, JTI reported a decline in profits in its 2020 annual report and was forced to plan to close two factories in Japan and cut 1,000 jobs.JTI says it will launch a new electronic hot rod this year (presumably a true heat-and-burn product, rather than the Ploom’s vape).

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It is easy to see the changes that are taking place in the international tobacco market through the examples of several international tobacco companies:

  1. Traditional tobacco sales are declining
  2. The sales volume and revenue of the heated tobacco are gradually increasing, and the future tobacco market will gradually be occupied by the new type of tobacco. Philp Morris even proposed the development slogan “Smoke-free Future”
  3. HNB products benefit from its taste and smoking experience closer to traditional cigarettes, as well as the advantages of more than 90% harm reduction compared with traditional cigarettes, which is the top priority of international tobacco giants in developing heated tobacco products.

 

In contrast in the China market,  the development trend is also broadly consistent with the international market in recent years, the traditional cigarette production decline year by year, the heated tobacco are rising steadily, and there are signs that the explosive growth is coming, this from the past couple years, type electronic cigarette smoke oil in domestic is visible on the sudden rapid performance.

For the changes in the international and domestic tobacco market, the core reasons are as follows:

Health demands:

First, the trend of prohibit smoking around the world. Second, changes in the age structure of the population make health demands more and more prominent. A growing group of young people aged 18 with > have been exposed to heated tobacco products from the very beginning and continue to consume them. They also have a certain aversion to traditional cigarettes (such as acrid smoke and second-hand smoke). People who have smoked for some years are also moving to new, less harmful tobacco products.

In the same time, the environment of consumption upgrading also promotes consumers’ demand for health more and more obvious.

HNB products, such as IQOS, were approved by the US Food and Drug Administration (FDA) in 2020 for sale as harm reduction products, which has helped to boost the development of heated tobacco worldwide.

Taste demands:

The fundamental purpose of smoking is to obtain nicotine, and the driving force for consumers to switch to the heated tobacco is that the taste and smoking experience of the original traditional cigarette are not very different from that of the original traditional cigarette while the nicotine can be obtained. Without the taste and the pumping experience, there is not enough momentum for the steering.

CCOBATO committed to development and production of less harmful, even harmless HNB herbal tobacco, its smoking experience is more similar to traditional cigarettes.

Our technical team has a deep technical accumulation of tobacco research. Its HNB product has gone through a long and arduous process from initial research and development to the official market, achieving the perfect combination of low hazard and good taste. Ccobato’s products are fully independently developed and have  our own “patent pool”, which is different from IQOS’s patent system.

Products on the market in the past two years has been subjected to more adequate international market testing. Consumer acceptance and recognition are very high, has build our reputation in the market.

 


Post time: Mar-19-2021


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