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Cigarettes in Japan

Euromonitor International

July 2019

C I G A R E T T E S I N J A P A N P a s s p o r t i

LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1 Prospects ..................................................................................................................................... 1

New Legislation Set To Dampen Demand ................................................................................ 1 Manufacturers Seek Ways To Keep Prices Down .................................................................... 1 Increasing Competition From Heated Tobacco ........................................................................ 2

Competitive Landscape ................................................................................................................ 2

Japanese Government Plays An Important Role With A Significant Stake in Jti ...................... 2 Philip Morris Preparing for Withdrawal From Cigarettes ........................................................... 2 Innovation Targets Demand for Flavoured Products ................................................................ 2

Taxation and Pricing ..................................................................................................................... 2

Taxation Rates.......................................................................................................................... 2

Summary 1 Taxation and Duty Levies 2013-2018 ........................................................... 3

Average Cigarette Pack Price Breakdown ................................................................................ 4

Summary 2 Average Cigarette Pack Price Breakdown: Brand Examples ....................... 4

Category Data .............................................................................................................................. 4

Table 1 Sales of Cigarettes: Volume 2013-2018 ....................................................... 4 Table 2 Sales of Cigarettes by Category: Value 2013-2018 ..................................... 5 Table 3 Sales of Cigarettes: % Volume Growth 2013-2018 ...................................... 5 Table 4 Sales of Cigarettes by Category: % Value Growth 2013-2018 ..................... 5 Table 5 Sales of Cigarettes by Blend: % Volume 2013-2018 .................................... 5 Table 6 Sales of Cigarettes by Standard/Menthol/Capsule: % Volume 2013-

2018 ............................................................................................................. 5 Table 7 Sales of Cigarettes by Regular/Slim/Superslim/Microslim: % Volume

2013-2018 .................................................................................................... 6 Table 8 Sales of Cigarettes by Pack Size: % Volume 2013-2018 ............................. 6 Table 9 Sales of Cigarettes by Price Band: % Volume 2013-2018 ........................... 6 Table 10 NBO Company Shares of Cigarettes: % Volume 2014-2018 ....................... 6 Table 11 LBN Brand Shares of Cigarettes: % Volume 2015-2018 .............................. 7 Table 12 Sales of Cigarettes by Distribution Format: % Volume 2013-2018 ............... 8 Table 13 Illicit Trade Estimate of Cigarettes: Volume 2013-2018................................ 8 Table 14 Forecast Sales of Cigarettes: Volume 2018-2023 ........................................ 9 Table 15 Forecast Sales of Cigarettes by Category: Value 2018-2023 ....................... 9 Table 16 Forecast Sales of Cigarettes: % Volume Growth 2018-2023 ....................... 9 Table 17 Forecast Sales of Cigarettes by Category: % Value Growth 2018-

2023 ............................................................................................................. 9 Table 18 Forecast Sales of Cigarettes by Blend: % Volume 2018-2023 ..................... 9 Table 19 Forecast Sales of Cigarettes by Standard/Menthol/Capsule: %

Volume 2018-2023 ..................................................................................... 10 Table 20 Forecast Sales of Cigarettes by Regular/Slim/Superslim/Microslim: %

Volume 2018-2023 ..................................................................................... 10 Table 21 Forecast Sales of Cigarettes by Pack Size: % Volume 2018-2023 ............ 10 Table 22 Forecast Sales of Cigarettes by Price Band: % Volume 2018-2023 .......... 10

C I G A R E T T E S I N J A P A N P a s s p o r t 1

CIGARETTES IN JAPAN

HEADLINES ▪ Cigarettes sees current value decline of 12% in 2018 to reach JPY2,945 billion, while volumes

also fall by 12%, to 132.7 billion sticks

▪ Tax rise leads to significant price increase

▪ Japan Tobacco Inc dominates with a 62% volume share

▪ Cigarettes is expected to see a -6% volume CAGR over the forecast period, reaching 95.1

billion sticks, driven down by increasingly restrictive legislation, including the staged

imposition of the indoor smoking ban by April 2020

PROSPECTS

New Legislation Set To Dampen Demand

In July 2018, Japan approved its first national legislation banning smoking inside public

places, such as schools, hospitals, retail stores and restaurants. The ban will be introduced in

stages up to April 2020, as Japan aims to lower the risk of passive smoking ahead of the Tokyo

Olympics. The legislation is not as comprehensive as originally proposed and excludes many

restaurants and bars. However, in June 2018, Tokyo Metropolitan Assembly passed stricter

legislation, which was estimated to cover 84% of restaurants and bars in the capital, compared

with the national law’s coverage of 45%. Even in Tokyo, though, institutions such as universities,

hospitals and government offices will be subject to more relaxed rules, with smoking allowed in

designated areas outside buildings. Nonetheless, the environment is undoubtedly becoming

more challenging for smokers, and the new legislation is also likely to have a negative impact in

the social image of smoking. Consequently, legislation at both a national and local level is

expected to drive down demand for cigarettes during the forecast period.

Manufacturers Seek Ways To Keep Prices Down

Cigarettes is set to see an ongoing increase in taxation in the early part of the forecast period,

with JPY1 set to be added per stick in 2018, 2020 and 2021. In October 2018, the price per

pack rose significantly for many brands, with Japan Tobacco’s Mevius seeing the price increase

from JPY440 to JPY480 per 20 sticks, while Marlboro’s price rose from JPY470 for 20 sticks to

JPY520. The price increase had a negative impact on demand for cigarettes, particularly in the

premium segment.

Cigarette manufacturers looked to retain smokers by reducing the number of sticks in packs

from 20 to 19 sticks in order to keep the price down. Manufacturers also launched less

expensive new line-ups with lower tar and nicotine levels in response to the impact of rising

taxation on consumer demand. Launched in April 2018, Lark Smart Plus offers 19 sticks in a

pack retailing at JPY390. In addition, Winston Compact Menthol Purple was launched with 19

sticks in November 2018 to make it more affordable, at JPY410, while the existing Winston

Compact Blue 6 Box, 3 Box and One Box products were also reduced to 19 sticks per pack to

enable them to retail at the same price as the new product.

C I G A R E T T E S I N J A P A N P a s s p o r t 2

Increasing Competition From Heated Tobacco

The ongoing rise in demand for heated tobacco, supported by manufacturers increasingly

turning their attention and resources to the category, is set to have a significant negative impact

on the development of cigarettes during the forecast period. As well as being perceived as less

harmful to health because it is smoke-free, heated tobacco also appeals to consumers who are

attracted to modern design-driven gadgets. Nonetheless, cigarettes is expected to remain the

largest area of the Japanese tobacco market by value at the end of the forecast period.

COMPETITIVE LANDSCAPE

Japanese Government Plays An Important Role With A Significant Stake in Jti

Japan Tobacco Inc, Philip Morris Japan KK, and British American Tobacco Japan Ltd

dominated the Japanese tobacco market in 2018. The Japanese Government continues to play

an important role in cigarettes. The government holds a 33% stake in the dominant player in the

market, Japan Tobacco (having reduced its stake from 50% in 2013), which is also the only

company allowed to produce cigarettes in Japan. In addition, the government continues to

closely control prices in the market.

Philip Morris Preparing for Withdrawal From Cigarettes

The second largest player in cigarettes, Philip Morris Japan saw its share of category volumes

decline significantly in the final two years of the review period as it looked to shift its focus to

heated tobacco, a growing category in which it is facing increasingly intense competition from

major rivals. Indeed, Philip Morris’s increasing emphasis on heated tobacco is laying the

foundations for its longer-term strategic aim of withdrawing from cigarettes completely.

Innovation Targets Demand for Flavoured Products

Towards the end of the review period, cigarette manufacturers targeted the strong demand for

menthol and fruit flavoured cigarettes amongst female smokers. Japan Tobacco launched

Mevius Premium Menthol Option Muscat Green 5 100s Slim and Mevius Premium Menthol

Option Muscat Green One 100s Slim in May 2019. By biting a capsule contained in the filter,

smokers can taste both menthol and fruit flavours. Similarly, British American Tobacco launched

the Kool Boost Double menthol cigarette, which contains a breakable capsule in the filter, in

March 2018.

TAXATION AND PRICING

Taxation Rates

▪ Cigarettes are taxed by the number of sticks, whilst cigars, cigarillos, fine cut tobacco and

pipe tobacco are taxed by weight. The conversion rate states that 1g of tobacco is equivalent

to one cigarette stick. The taxation rate for regular/king size and superking/long cigarettes is

the same.

▪ Until April 2019, Japan also had a separate tax imposed on ex-Class 3 cigarettes. Prior to

1985, imports of cigarettes were prohibited in Japan, while cigarettes were divided into three

classes depending on the quality of tobacco, with Class 3 being the lowest. From 1985, when

tobacco imports were allowed, the government consolidated Class 1 and Class 2 cigarettes

C I G A R E T T E S I N J A P A N P a s s p o r t 3

but continued to classify Class 3 separately as budget cigarettes. The tax rate for ex-Class 3

cigarettes, such as Japan Tobacco’s Golden Bat, Echo and Wakaba brands, is, therefore,

lower than for other cigarettes. However, tax reform in April 2015 led to a change regarding

the separate Special Tobacco Tax on ex-Class 3 cigarettes. The 2015 tax reform aimed to

repeal this lower tax rate for ex-Class 3 cigarettes between April 2016 and April 2019 – with

the tax rate on ex-Class 3 cigarettes increasing in stages. Price increases on ex-Class 3

cigarettes were planned as follows: JPY6.8 per stick in April 2016, JPY7.8 in April 2017,

JPY9.3 in April 2018, and JPY12.40 in 2019.

▪ In December 2017, the government announced a reform of the tobacco tax scheme from

2018 to 2022, to increase taxes on cigarettes and heated tobacco. The reform, the first since

2010, includes plans to increase the level of tax on cigarettes in three stages and on heated

tobacco in five stages up to October 2022.

Summary 1 Taxation and Duty Levies 2013-2018

Units 2013 2014 2015 2016 2017 2018

Standard

cigarette

National

excise

tax

(JPY/1,0

00 sticks)

5,302 5,302 5,302 5,302 5,302 5,802

Regional

excise

tax

(JPY/1,0

00 sticks)

6,122 6,122 6,122 6,122 6,122 6,622

Special

Tobacco

Tax

(JPY/1,0

00 sticks)

820 820 820 820 820 820

Cigars/ci

garillos/fi

ne cut

tobacco

and pipe

tobacco

National

excise

tax

(JPY/kg) 5,302 5,302 5,302 5,302 5,302 5,802

Regional

excise

tax

(JPY/kg) 6,122 6,122 6,122 6,122 6,122 6,622

Special

Tobacco

Tax

(JPY/kg) 820 820 820 820 820 820

C I G A R E T T E S I N J A P A N P a s s p o r t 4

VAT/sale

s taxes

(%) *

4.8% 7.4% 7.4% 7.4% 7.4% 7.4%

Source: Euromonitor International from national statistics Note: * refers to TIRSP (Tax Inclusive Retail Selling Price): including all taxes

Average Cigarette Pack Price Breakdown

Summary 2 Average Cigarette Pack Price Breakdown: Brand Examples

P = ‘price’

in Japnese

yen

Premium Mid Priced Economy

Marlboro Mevius Wakaba

(Pack of

20)

(Pack of 20 (Pack of

20)

P % P % P %

Wholesale 191.63 36.85 156.51 32.61 51.16 14.21

Retailer 24.96 4.80 23.04 4.80 17.28 4.80

TOTAL

Retained

216.59 41.65 179.55 37.41 68.44 19.01

Specific

Excise

264.88 50.94 264.88 55.18 264.88 73.58

valorem

Excise

0.00 0.00 0.00 0.00 0.00 0.00

VAT 38.53 7.41 35.57 7.41 26.68 7.41

TOTAL

Tax

303.41 58.35 300.45 62.59 291.56 80.99

End Price 520.00 100.00 480.00 100.00 360.00 100.00

Source: Calculated from store-check data and Taxation and Duty Levies Table. Notes: Figures may not sum up to 100% due to rounding

CATEGORY DATA

Table 1 Sales of Cigarettes: Volume 2013-2018

million sticks 2013 2014 2015 2016 2017 2018 Cigarettes 194,053.9 186,200.0 182,300.0 173,900.0 151,466.9 132,685.0

C I G A R E T T E S I N J A P A N P a s s p o r t 5

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2 Sales of Cigarettes by Category: Value 2013-2018

JPY billion 2013 2014 2015 2016 2017 2018 Cigarettes Including 3,998.6 3,917.7 3,903.3 3,782.6 3,338.7 2,946.9 Fine Cut Stick Equivalent Fine Cut Cigarettes 0.8 1.1 1.2 1.4 1.4 1.5 Cigarettes 3,997.8 3,916.6 3,902.0 3,781.2 3,337.3 2,945.4

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 3 Sales of Cigarettes: % Volume Growth 2013-2018

% volume growth 2017/18 2013-18 CAGR 2013/18 Total Cigarettes -12.4 -7.3 -31.6

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4 Sales of Cigarettes by Category: % Value Growth 2013-2018

% current value growth 2017/18 2013-18 CAGR 2013/18 Total Cigarettes Including Fine Cut Stick -11.7 -5.9 -26.3 Equivalent Fine Cut Cigarettes 5.0 13.5 88.3 Cigarettes -11.7 -5.9 -26.3

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 5 Sales of Cigarettes by Blend: % Volume 2013-2018

% retail volume 2013 2014 2015 2016 2017 2018 American Blend 95.9 95.9 95.9 95.9 95.8 94.6 Virginia 1.3 1.3 1.3 1.2 1.3 2.5 Other Blend 2.8 2.8 2.8 2.9 2.9 2.9 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 6 Sales of Cigarettes by Standard/Menthol/Capsule: % Volume 2013-2018

% retail volume 2013 2014 2015 2016 2017 2018

C I G A R E T T E S I N J A P A N P a s s p o r t 6

Standard (non-capsule/ 66.9 65.6 64.3 64.1 64.8 65.3 non-menthol) Flavour Capsule (all 6.8 7.6 7.7 7.5 7.2 7.0 flavours) Menthol (non-capsule) 26.3 26.8 28.0 28.4 28.0 27.7 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 7 Sales of Cigarettes by Regular/Slim/Superslim/Microslim: % Volume 2013-2018

% retail volume 2013 2014 2015 2016 2017 2018 Regular 94.5 94.3 94.0 94.0 93.9 93.8 Slim 0.6 0.6 0.6 0.6 0.6 0.6 Superslim 4.8 5.0 5.2 5.3 5.3 5.4 Microslim 0.1 0.2 0.2 0.2 0.2 0.2 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 8 Sales of Cigarettes by Pack Size: % Volume 2013-2018

% retail volume 2013 2014 2015 2016 2017 2018 < 20 2.1 2.1 2.1 2.2 2.3 2.4 20s 96.9 96.9 96.9 96.8 96.8 96.7 20 + 1.0 1.0 1.0 1.0 0.9 0.9 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 9 Sales of Cigarettes by Price Band: % Volume 2013-2018

% retail volume 2013 2014 2015 2016 2017 2018 Economy price band 6.9 7.4 7.1 6.7 6.4 6.4 Mid price band 76.8 76.1 76.7 76.9 76.9 76.9 Premium price band 16.3 16.6 16.1 16.5 16.7 16.7 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 10 NBO Company Shares of Cigarettes: % Volume 2014-2018

% retail volume Company 2014 2015 2016 2017 2018 Japan Tobacco Inc 60.1 56.8 61.3 61.3 61.8

C I G A R E T T E S I N J A P A N P a s s p o r t 7

Philip Morris Japan KK 22.8 23.2 23.7 22.7 21.1 British American 10.1 10.5 10.1 10.2 10.5 Tobacco Japan Ltd Santa Fe Natural 0.8 1.2 - - - Tobacco Japan Inc Others 6.2 8.2 4.9 5.8 6.6 Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 11 LBN Brand Shares of Cigarettes: % Volume 2015-2018

% retail volume Brand (GBO) Company (NBO) 2015 2016 2017 2018 Mevius Japan Tobacco Inc 32.1 33.5 31.4 31.4 Marlboro (Philip Philip Morris Japan KK 11.7 12.0 10.5 9.4 Morris International Inc) Lark (Philip Morris Philip Morris Japan KK 9.3 9.5 9.7 9.1 International Inc) Winston Japan Tobacco Inc 4.6 4.9 8.1 8.0 Seven Stars Japan Tobacco Inc 7.5 7.8 7.6 7.9 Kent (British British American 4.8 4.5 4.4 4.6 American Tobacco Plc) Tobacco Japan Ltd Kool (British British American 2.9 2.8 2.8 2.9 American Tobacco Plc) Tobacco Japan Ltd Pianissimo Japan Tobacco Inc 3.0 3.1 2.9 2.9 Wakaba Japan Tobacco Inc 2.3 2.3 2.1 2.1 Peace Japan Tobacco Inc 2.0 2.1 2.0 2.0 Natural American Japan Tobacco Inc - 1.5 1.8 2.0 Spirit Echo Japan Tobacco Inc 2.2 2.3 1.9 1.8 Parliament (Philip Philip Morris Japan KK 1.1 1.1 1.3 1.5 Morris International Inc) Hope Japan Tobacco Inc 1.4 1.4 1.3 1.4 Virginia Slims Philip Morris Japan KK 1.0 1.0 1.1 1.2 (Philip Morris International Inc) Lucky Strike British American 1.0 0.9 0.9 0.9 (British American Tobacco Japan Ltd Tobacco Plc) Hi-Lite Japan Tobacco Inc 0.4 0.4 0.4 0.4 Pall Mall (British British American 0.2 0.2 0.2 0.2 American Tobacco Plc) Tobacco Japan Ltd Camel Japan Tobacco Inc 0.0 0.0 0.0 0.0 Caster Japan Tobacco Inc 0.0 0.0 0.0 0.0 Natural American Santa Fe Natural 1.2 - - - Spirit (Reynolds Tobacco Japan Inc American Inc) Rothmans (British British American - - - - American Tobacco Plc) Tobacco Japan Ltd Cabin Mild Japan Tobacco Inc - - - - Cabin One Tasty Japan Tobacco Inc - - - - Cabin Prestige Japan Tobacco Inc - - - - Cabin Roast Blend Japan Tobacco Inc - - - - Cabin Super Mild Japan Tobacco Inc - - - - Cabin Ultra Milds Japan Tobacco Inc - - - -

C I G A R E T T E S I N J A P A N P a s s p o r t 8

Frontier Menthol Japan Tobacco Inc - - - - Philip Morris Philip Morris Japan KK - - - - (Philip Morris International Inc) Others Others 11.1 8.5 9.5 10.3 Total Total 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 12 Sales of Cigarettes by Distribution Format: % Volume 2013-2018

% retail volume 2013 2014 2015 2016 2017 2018 Store-Based Retailing 87.6 89.1 89.2 89.2 88.9 88.9 - Grocery Retailers 87.3 88.8 89.0 88.2 88.6 88.7 -- Convenience Stores 68.0 68.4 69.0 68.6 68.8 68.9 -- Discounters - - - - - - -- Forecourt Retailers - - - - - - -- Hypermarkets - - - - - - -- Supermarkets 11.0 12.4 12.6 12.6 12.7 12.7 -- Food/drink/tobacco 6.0 5.8 5.2 4.8 4.6 4.6 specialists --- Food/drink 2.0 1.8 1.6 1.5 1.5 1.5 specialists --- Tobacco specialists 4.0 4.0 3.6 3.3 3.1 3.1 -- Independent Small 1.2 1.1 1.1 1.1 1.4 1.4 Grocers -- Other Grocery 1.1 1.1 1.1 1.1 1.1 1.1 Retailers --- Newsagent- 1.1 1.1 1.1 1.1 1.1 1.1 tobacconists/kiosks --- Street vendors - - - - - 0.0 - Mixed Retailers 0.2 0.2 0.1 0.1 0.1 0.1 -- Department Stores 0.2 0.2 0.1 0.1 0.1 0.1 -- Other Mixed Retailers - - - - - - - Non-Grocery Specialists 0.1 0.1 0.1 0.9 0.1 0.0 -- Drugstores/ - - - - - - parapharmacies -- Other Non-Grocery 0.1 0.1 0.1 0.9 0.1 0.0 Specialists Non-Store Retailing 11.9 10.4 10.2 10.2 10.6 10.6 - Vending 11.7 10.2 10.1 10.1 10.4 10.4 - Internet Retailing 0.2 0.2 0.2 0.2 0.2 0.2 Non-retail channels 0.6 0.5 0.5 0.5 0.5 0.5 - Bar-tobacconists - - - - - - - Hotels/restaurants/bars 0.6 0.5 0.5 0.5 0.5 0.5 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 13 Illicit Trade Estimate of Cigarettes: Volume 2013-2018

million sticks 2013 2014 2015 2016 2017 2018 Legal sales 194,053.9 186,200.0 182,300.0 173,900.0 151,466.9 132,685.0

C I G A R E T T E S I N J A P A N P a s s p o r t 9

Illicit trade 82.1 78.1 75.3 71.6 62.3 54.3 % penetration of 0.0 0.0 0.0 0.0 0.0 0.0 illicit trade Actual consumption 194,136.0 186,278.1 182,375.3 173,971.6 151,529.2 132,739.3

Source: Euromonitor International from official statistics, trade associations, trade interviews

Table 14 Forecast Sales of Cigarettes: Volume 2018-2023

million sticks 2018 2019 2020 2021 2022 2023 Cigarettes 132,685.0 123,131.7 114,881.9 107,529.4 100,970.1 95,113.9

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 15 Forecast Sales of Cigarettes by Category: Value 2018-2023

JPY billion 2018 2019 2020 2021 2022 2023 Cigarettes Including 2,946.9 2,941.6 2,766.8 2,688.3 2,617.7 2,554.7 Fine Cut Stick Equivalent Fine Cut Cigarettes 1.5 1.6 1.6 1.7 1.7 1.8 Cigarettes 2,945.4 2,940.1 2,765.2 2,686.6 2,616.0 2,552.9

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 16 Forecast Sales of Cigarettes: % Volume Growth 2018-2023

% volume growth 2018/19 2018-23 CAGR 2018/23 Total Cigarettes -7.2 -6.4 -28.3

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 17 Forecast Sales of Cigarettes by Category: % Value Growth 2018-2023

% constant value growth 2018/2019 2018-23 CAGR 2018/23 Total Cigarettes Including Fine Cut Stick -0.2 -2.8 -13.3 Equivalent Fine Cut Cigarettes 4.5 3.4 18.3 Cigarettes -0.2 -2.8 -13.3

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 18 Forecast Sales of Cigarettes by Blend: % Volume 2018-2023

% retail volume

C I G A R E T T E S I N J A P A N P a s s p o r t 1 0

2018 2019 2020 2021 2022 2023 American Blend 94.6 94.5 94.4 94.3 94.2 94.1 Virginia 2.5 2.4 2.4 2.4 2.4 2.7 Other Blend 2.9 3.0 3.2 3.3 3.4 3.2 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 19 Forecast Sales of Cigarettes by Standard/Menthol/Capsule: % Volume 2018- 2023

% retail volume 2018 2019 2020 2021 2022 2023 Standard (non-capsule/ 65.3 65.3 65.3 65.2 65.2 65.2 non-menthol) Flavour Capsule (all 7.0 7.0 7.0 7.0 7.0 7.1 flavours) Menthol (non-capsule) 27.7 27.7 27.7 27.7 27.7 27.7 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 20 Forecast Sales of Cigarettes by Regular/Slim/Superslim/Microslim: % Volume 2018-2023

% retail volume 2018 2019 2020 2021 2022 2023 Regular 93.8 93.8 93.7 93.7 93.6 93.6 Slim 0.6 0.7 0.7 0.7 0.7 0.7 Superslim 5.4 5.4 5.4 5.4 5.5 5.5 Microslim 0.2 0.2 0.2 0.2 0.2 0.2 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 21 Forecast Sales of Cigarettes by Pack Size: % Volume 2018-2023

% retail volume 2018 2019 2020 2021 2022 2023 < 20 2.4 2.5 2.7 2.8 2.9 3.0 20s 96.7 96.7 96.5 96.4 96.4 96.3 20 + 0.9 0.7 0.8 0.8 0.8 0.7 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 22 Forecast Sales of Cigarettes by Price Band: % Volume 2018-2023

% retail volume

C I G A R E T T E S I N J A P A N P a s s p o r t 1 1

2018 2019 2020 2021 2022 2023 Economy price band 6.4 6.4 6.4 6.3 6.3 6.3 Mid price band 76.9 76.9 76.9 76.9 76.9 76.9 Premium price band 16.7 16.7 16.7 16.7 16.7 16.7 Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources