Recently, Huachuang securities analyzed the new tobacco market and tobacco system of Japan and South Korea in many aspects, and believed that the rising of the emerging e-cigarette market with continuous improvement of supervision will inject new vitality into the rapid development of the world e-cigarette industry.
Independent research and development of enterprises to achieve product innovation will also promote the market to bloom, product maturity and richness will continue to improve, and further improve consumer acceptance of new tobacco products. The global new tobacco market scale is expected to continue to expand, and related companies in the industrial chain are also expected to usher in development opportunities.
The scale of new tobacco has taken shape, and the Japanese and Korean markets are becoming more and more mature
Since 2004, the development of new tobacco has experienced from scratch, from single to diverse development process. Later, with the development of new tobacco market, HNB and other new tobacco products came into the market and soon got the favor of consumers. After a period of development, Japan and South Korea market has become increasingly mature, the two new tobacco markets have their own characteristics.
Japan’s HNB market has a high acceptance, and Japanese tobacco has performed well. Although under the background of tobacco control, Japan’s tobacco market scale has been significantly affected, HNB has sprung up abruptly, realizing the continuous increase of market scale.
Although the scale of Korean tobacco market has declined, e-cigarette has been popularized rapidly and its market share has increased year by year. In 2019, Japan’s e-cigarette market accounted for 24.08% and Korea’s 11.65% (with reservation on this data).
Japan: the government attaches equal importance to tobacco control and taxation, and Nippon tobacco relies on its local advantages to develop HNB
From the regulatory point of view, the Japanese government has been committed to domestic tobacco control. As early as 2003, the Japanese government has standardized the publicity and packaging of tobacco products through the advertising law and other bills, and updated the health promotion law in 2018 to further strengthen tobacco control in public places.
In terms of tax revenue, the Japanese government has continuously increased the specific volume tax rate of traditional cigarettes, and gradually transferred to the tax method of mixed quantity and price for new tobacco.
From the perspective of enterprises, as one of the four giants in the new tobacco industry, Japan Tobacco focuses on the local market, grasps the needs of local consumers, and introduces two products of low temperature and high temperature, so as to consolidate its position in the local market.
Korea: Tobacco marketization is high, KT & G aims to expand global HNB business
From the perspective of supervision, South Korea actively implements tobacco control policies, such as standardizing the content and size of warning pictures on cigarette box packaging. Unlike Japan, South Korea allows the sale of electronic atomized cigarettes and guides the market trend through strict supervision.
In terms of tax revenue, South Korea has also taken a series of measures to levy a higher tax on electronic atomized cigarettes, increasing the tax rate of HNB to 90% of that of traditional cigarettes, hoping to achieve the goal of tobacco control.
From the perspective of enterprises, KT & G realizes product differentiation through continuous independent R & D, and actively seeks cooperation with PMI on this basis. Through complementary products, it can better meet the needs of consumers, so as to speed up the overseas promotion of HNB and achieve better development together.
Supervision and taxation as the starting point of regulation, innovation and differentiation promote the development of the industry
From the perspective of the government, it is an important task to speed up the improvement of e-cigarette supervision and tax system. By adjusting the regulatory policy, we can not only attract young people, but also encourage tobacco substitution.
By setting a reasonable tax rate, we can reduce the overall tobacco consumption and stabilize the tobacco tax revenue.
From the perspective of enterprises, independent R & D innovation to achieve product differentiation and meet the different needs of consumers can not only help enterprises achieve a breakthrough in the local market under the environment of strong leading strength, but also improve the richness and maturity of new tobacco products in the market, accelerate the popularization speed, and finally realize the rapid development of the global new tobacco market.