The “This Changes Everything” claim has certainly rung true in Japan, where iQOS had already generated a 10% market share as of August 2017. But Nik Modi, tobacco analyst for RBC Capital Markets, New York, has cautioned against getting too excited over that piece of data.
Modi pointed to the difference between the Japanese cigarette consumer and the U.S. cigarette consumer. In Japan, smokers tend to be high-income, white-collar and tech-savvy, compared with the lower-income, blue-collar and less exploratory smokers in the United States. It could pose a problem given iQOS’ high starter-kit price point (which has not yet been defined for the United States, but will certainly cost more than the average c-store e-cig or pack of cigarettes).
“I’m going to take a more cautious approach on this, and I’d suggest retailers do the same,” Modi said. “We’re going to have a lot more updates as the quarters progress.”
That said, Modi is excited about what a heat-not-burn PMTA approval means more broadly for the e-vapor category. The science suggests this could be the next big innovation to satisfy the needs of adult smokers.
“People smoke for the nicotine hit, which they don’t get as effectively with e-cigs,” he said. “Not true with heat-not-burn.”