Heating Up Heat-Not-Burn

Philip Morris International and other tobacco companies are making a big push into alternatives to combustible cigarettes. How will heat-not-burn fit into the harm-reduction landscape?

Millions of dollars and years—maybe even decades, depending on your perspective—in the making, heat-not-burn products from Big Tobacco companies are finally poised to hit the U.S. market. Philip Morris International (PMI), R.J. Reynolds (RJR) and British American Tobacco (BAT) have made huge bets on developing devices that heat tobacco until it’s just warm enough to emit an aerosol but not quite hot enough to cause combustion—the chemical process said to be responsible for creating the toxins that smokers of traditional cigarettes inhale. In fact, PMI CEO Andre Calantzopoulos recently told shareholders, “It is crucial to underscore the fact that, despite the occasional expected or potentially unexpected speed bump, reduced-risk products [RRPs] constitute our most promising growth opportunity, now and over the long term. Simply put, they are the future of PMI.”

The reduced-harm designation may prove pivotal to consumers embracing the product, notes Darren Collett president of Seymour, Indiana-based Collett Enterprises, owner of 28 retail tobacco stores.

“I’m concerned it may be considered a “me too” product if it is not aggressively introduced and does not receive the positive risk-reduction ruling,” he says, adding that how the product is priced and marketed will also factor into its success. “I believe there is potential … if it is introduced at an aggressive price point and receives a positive reduced-risk ruling.”

At present, PMI has a significant lead in the global heat-not-burn arena. Rival company BAT’s Glo heat-not-burn device is still only available in five countries, and an application for the product has yet to be filed with the FDA, although the company has pledged to do so by year-end. BAT, however, reportedly hopes to leapfrog PMI by filing a substantial equivalence claim that would streamline Glo’s path to market by arguing that it is substantially equivalent to RJR’s Revo, a tobacco-heating product already available in the U.S. (BAT purchased RJR in 2017.)

Japan Tobacco, meanwhile, has yet to launch a pure-play heat-not-burn product, although the company has said it will debut one in Japan this year. In the meantime, its Logic subsidiary is test marketing a hybrid e-cigarette/heat-not-burn device in several U.S. states.

That this flurry of activity raising awareness of a promising alternative to combustible cigarettes is welcome—if somewhat mystifying—news for companies like Fuma International, which already markets what company president Greg Conley describes as a heat-not-burn equivalent product in the U.S. “When you say ‘heat-not-burn,’ you’re referring to heating the oil that’s in a tobacco leaf—which is what consumers want—and exciting it to the point where it becomes vapor and the consumer can enjoy that flavor,” says Conley. “That’s the concept. And we all have our own version—secret sauce—of how to do that. Really heat-not-burn is just another form of vapor.”

In Fuma International’s case, that secret sauce involves a patented process of extracting oil from tobacco leaves to produce a liquid tobacco that can be used in virtually any vaporizer on the market—ultimately turning pure tobacco into vapor. “We make it cost-effective and inexpensive for consumers to get a pure tobacco product,” says Conley, a former smoker who has been in the vapor industry for more than a decade and seen Fuma through several iterations of product technology. “Consumers of combustible cigarettes enjoy the taste of tobacco, the way it’s made in nature. By taking the oil out of the leaf, our process allows them to do that.”

Conley sees heat-not-burn as a “tsunami” that will reshape the industry, but he says there will need to be a mass education for convincing jaded cigarette smokers to try yet another new alternative to combustibles. “There’s a lot of work to be done in that area,” he notes. “As people learn about heat-not-burn tobacco, it will greatly alter the landscape of the vapor category as a whole in a very good way.”

Retailers agree that heat-not-burn manufacturers will need to build awareness. “Our customers are not very aware of the heat-not-burn technology,” says Collett, who adds that he is personally eager to try the products. “I believe the key to success of the heat-not-burn technology and iQOS is receiving the reduced-risk ruling. The ability to market the product as a ‘safer’ alternative will be significant in sparking the interest of consumers to initially try the product. Consumer retention will depend on the quality of the experience and how similar it is to a traditional cigarette.”

Understanding the importance of helping consumers along the learning curve, Fuma International sends company representatives to retail shops interested in engaging consumers one on one about its products. “Consumers are understandably skeptical, so you can only do so much by marketing over the Internet,” says Conley. “It helps to have a living, breathing human being they can interact with to learn about the products. And tobacco outlets love it—it’s a great way for them to guard against having the vape shop down the road take their customers away forever.”

The FDA’s push to reduce nicotine levels in combustible products will also motivate consumers to seek out alternatives. “That wheel is in motion, and everyone knows it’s coming,” says Conley. “For consumers, it’s one of those things that will cause pain but open them up to a world of possibilities.

This story first appeared in the July/August 2018 issue of Tobacco Businessmagazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.

– Story Jennifer Gelfand, editor-in-chief of Tobacco Business Magazine