• March 28, 2024

Hot market

 Hot market

IQOS

Heat-not-burn (HNB) products will represent an 82 billion-stick opportunity in Asia by 2021, up from 7 billion pieces in 2016, according to Goldman Sachs.

The investment bank believes HNB devices could be far more disruptive than conventional vapor products as they appeal to smokers by closely mimicking cigarette smoking.

Goldman Sachs said NGPs could be accretive to the broader Asian tobacco profit pool, helping offset the declines in combustible volumes in more mature Asian markets, although the impact could vary significantly by company.

The commitment to next-generation products (NGPs) shown by Philip Morris International (PMI) and British American Tobacco (BAT) could drive “superior” growth compared with their peers, according to Goldman Sachs.

IQOS is estimated to contribute $3 billion of incremental sales for PMI in 2017, although Japan Tobacco has been struggling to increase its NGP share amid capacity constraints.

In Japan, iQOS garnered a 13 percent share in just 18 months, driving a 12 percent fall in combustible cigarette volumes, according to Goldman Sachs.

The bank said the strength of NGP adoption in Asia so far, especially in Japan, has already proven how important NGPs will be to the development of Asia’s tobacco market, estimated to be the world’s largest at $330 billion in 2016.

Goldman Sachs identifies South Korea as the most promising Asian NGP market, with PMI’s iQOS launch in May and BAT’s launch of Glo in August.”