Takehiko Tsutsui, JTI: By 2027, we plan to invest approximately 650 billion yen in reduced-risk products

Heated tobacco products (HTPs) have indeed gained significant traction in recent years, marking a clear shift in tobacco consumption trends. Approximately 53 million adult consumers are now using these products globally, illustrating their widespread adoption. Heated tobacco is the fastest-expanding segment within the reduced-risks products category, and we expect it to reach a 16% share in the total tobacco industry volume by 2035.

At the same time traditional combustible cigarettes still dominate the market of global tobacco consumption with a total share of 85% in 2025.

Why have companies decided to focus on these devices and prioritize them over traditional cigarettes?

At JTI we champion consumer choice. We do not make decisions for our consumers. JTI is committed to developing, testing, and bringing to market new products with adult consumers in mind. We trust our consumers to make informed decisions based on their own needs, wants, and preferences.

JTI is expanding a portfolio of products with the potential to reduce the risks associated with smoking (reduced-risk products, RRP). This forms a core pillar of our strategy for business growth and sustainable value creation. To succeed in a highly competitive environment, we have made a clear decision to prioritize investment in Heated Tobacco Sticks (HTS), which we expect to be the main driver of growth within the RRP category.

While cigarettes remain of strategic importance to our business, we are confident that our heated tobacco brand Ploom will strongly contribute to our long-term sustainable growth.

Competition in the RRP category is intensifying globally, however JTI is well-positioned to attract new and existing HTS consumers through a tailored approach and a robust innovation pipeline driven by consumer insights and experiences.

JTI continues to achieve double-digit RRP volume growth and significantly increased RRP-related revenue. From 2022 to 2024, volume rose by 38% and revenue by 31.2%, driven primarily by Ploom.

Our journey with heated tobacco is just beginning and these results give us confidence in our ability to achieve a mid-teens share of the HTS segment in key markets by the end of 2028.

What is it that consumers have recognized in heated tobacco devices? Was convenience their primary concern, reduced-risk potential, or something else?

Various factors influence adult consumers’ behavior worldwide. This include concerns about the risks associated with smoking, increasing cigarette regulations, social pressure, and the need to be mindful of people around them.

Most consumers prefer these alternatives to mimic the familiar smoking experience, which explains the rising popularity of heated tobacco products. In addition, smokers are drawn to products that are convenient to use and significantly reduce smell, smoke, and ash compared to cigarettes.

However, consumers’ preferences for heated tobacco products vary from country to country.

How would you simply explain to someone why they should give up a relatively practical way of consumption, where all you need is a pack of cigarettes and a lighter (which you can even borrow if you forget it), and switch to a method that requires a pack, a device, and even a charger?

We offer heated tobacco products to adult consumers as a satisfying alternative to cigarettes with the potential to reduce the risks associated with smoking. We believe that tobacco harm reduction depends on making RRP available, affordable, and widely accepted. That is why we design our products to meet adult consumers’ expectations, delivering a unique tobacco experience.

One could argue that cigarettes are more convenient to use than heated-tobacco products because of their simplicity and hassle-free nature. However, our heating device is a credible alternative to cigarettes with its rich tobacco taste, ease of use and a combination of refined heating technology, personalization, and connectivity.

From a product perspective, we are committed to further innovation, developing products based on consumer insights and leveraging collective insights from our markets.

When did technology, through tobacco heating devices, become integrated into the tobacco industry? What were the initial predictions about the future of these devices, and what kind of technology are we talking about?

The first notable attempts to introduce a technology that heats tobacco below combustion levels emerged nearly 40 years ago. However, it was not until the mid-2010s that this technology began to expand, spurred by innovations and advances in electronics.

Today heated tobacco devices use precise systems to heat processed tobacco sticks, avoiding combustion and reducing toxicants compared to cigarette smoke.

For example, our heating device has a maximum heating temperature of 320°C. In contrast, a cigarette burns tobacco, reaching 800-900 °C.

By heating and not burning tobacco, as our laboratory studies have shown, the device produces an aerosol that is chemically less complex compared to cigarette smoke with on average a more than 90% reduction in the levels of select harmful substances.

What are JTI's plans regarding the global market placement of the product, as well as its presence in Serbia and the Southeast European region? How is Serbia and the region accepting this product?

We are confident in our device’s ability to continue gaining market share. In Japan, the largest heated tobacco market globally, Ploom share of segment in HTS shows uninterrupted growth from 3.5% in Q1 2021 to 12.7% in Q1 2025. Interestingly, according to a blind tasting survey conducted last July in Japan, exactly this brand was ranked #1 for sensorial taste, capturing 54% of the votes.

Outside of Japan, the strong positive consumer response is also very visible. We have seen sizable results across many markets, specifically in the Czech Republic, Romania, Poland, Kazakhstan, Lithuania, Portugal and the UK where our share of segment grew between 1.5 to 2.0 times year-on-year, despite established competition.

In Serbia, Montenegro, Hungary, Slovenia and Greece, the heated tobacco segment is also experiencing impressive double-digit year-over-year growth, driven by exceptional consumer acceptance and growing interest. We are highly confident about our continued success and its strong potential in these markets.

With our competitive proposition, we aim to attract adult smokers and existing heated tobacco consumers and increase our market share in the HTS segment worldwide. Promising results reinforce our confidence in achieving a mid-teens share of this segment in key markets by 2028.

We are committed to leveraging insights from our launches, adopting a tailored, consumer-centric approach, and advancing our innovation pipeline. These efforts are critical to succeeding in our strategy and narrowing the gap with competitors.

We plan to invest approximately 650 billion Yen in RRP (nearly 4 billion EUR) mainly in HTS, between 2025 and 2027, to support our commercialization efforts, R&D and capital expenditures. Today we offer our products in 26 markets. By the end of 2025, we expect our devices to be present in markets collectively representing 80% of the global HTS segment.

It has been nearly 20 years since you acquired the factory in Senta. How do you see this investment today, and what is the significance of this factory in JTI’s supply chain?

Since the acquisition 20 years ago, JTI has achieved remarkable growth, investing over 220 million euros and quadrupling our workforce. These efforts have significantly increased our market share, establishing JTI as the leader in Serbia’s cigarette market.

The Senta factory has evolved beyond serving the local market—it is now a key pillar of our regional operations, producing cigarettes for export and supplying processed tobacco leaf to the EU. Recognizing its strategic importance, we launched a five-year investment cycle in 2022, focused on modernizing production capabilities.

As part of this effort, we introduced new production lines and built two new warehouses. Our factory also supports the development of new technologies by serving as a testing ground, where we collaborate with suppliers to develop innovative machines designed to enhance production efficiency and adaptability.

By 2027, total investment in the factory will reach around 70 million euros as part of our overall investment program, further advancing our modernization efforts and expanding production capacity. These continuous investments reaffirm Senta’s important role within JTI’s manufacturing footprint, securing its future as a vital production hub.

Your factory in Serbia purchases tobacco from local producers. Why do you persist in this business model, and can local farmers meet your needs?

For nearly two decades, JTI has been committed to working with Serbian growers. This strategic partnership benefits our company, increases the resilience of local farming communities and enhances the country’s competitiveness in the global tobacco market.

By sourcing tobacco locally, we maintain strict quality control while increasing our resilience to global market fluctuations. It also enables us to lower logistics costs through shorter transport distances and minimize environmental impact, aligning with our sustainability targets.

As the largest employer in Serbia’s tobacco industry, employing around 3,000 people across our operations, we proactively support local growers. Through the guidance of our agronomy teams, financial support, and modernization initiatives, we contribute to improving their efficiency and yield. Our farmers consistently achieve yields 40% higher than the national average. In addition, by providing interest-free advances for equipment, we make modernization more accessible, ensuring the thelong-term viability of Serbian tobacco farming.

What are JTI's future business plans in Serbia and the region? Given that you have been involved in M&A activities, do you see opportunities for new investments in this cluster?

JTI's unwavering commitment to Serbia is reflected in our continuous investments to enhance and modernize our operations. Our strategic focus remains on expanding our capabilities, particularly through the ongoing five-year investment cycle, which underscores JTI’s long-term vision for growth in the country and the Adriatica region.

While we are always exploring opportunities for growth, our priority is to further strengthen our operations and build upon our success in Serbia and the region. Prioritizing investments in HTS we focus on supporting commercialization efforts to grow our share in this segment.

Strategically we remain committed to consistently investing in innovation and efficiency to reinforce our market leadership and ensure long-term growth both for our business and the wider community.