CIGARETTE SALES PLUMMET IN KOREA THANKS TO HEAT-NOT-BURN PRODUCTS

It is quite rare to see double digit decline in cigarette sales ,however this is exactly what is taking place in Korea. Korean Tobacco has released 3rd quarter results, showing a decline in the domestic cigarette market of 12.0%.This is yet another great example of disruptive technology.

It’s important to note that in its first year on the market, the heat-not-burn cigarette IQOS sold 1.9 million devices and became one of the top five cigarette brands in the country . Since the introduction of heated tobacco products a year ago into the Korean market, quarterly cigarette sales have shown a consistent sharp decline compared to a year earlier: 14.4% in Q4 of last year and declines of 10.7%, 11.1% and now 12.0% in the first three quarters of 2018. This is in sharp contrast to pre-HTP sales trends. In Q4 of 2016 sales increased by 1.1% and in the first three quarters of 2017 sales fell by 4.8%, 2.6% and 2.4%.

Korea continues to be an example of the potential for product substitution in speeding the decline in cigarette sales. IQOS was the first among three heat-not-burn cigarettes to launch in the country. British American Tobacco’s glo and KT&G’s lil entered the market later last year.

Korea is the second largest market for IQOS behind Japan, where sales started in 2015. It will also be the home to the first Asian facility to make IQOS’ Heets refills, which are currently imported from Italy. The facility is under construction and will start mass production this year.

Researchers worldwide have agreed that heat-not-burn cigarettes are less harmful than conventional cigarettes.