• by Steve Ellwanger , November 1, 2022

As Altria Group Inc.’s share of the cigarette market continues to decline, the company has increased its options for heat-not-burn (HNB) products in the United States in an international joint venture with Japan Tobacco.

The Horizon Innovations LLC partnership will market HNB devices branded Ploom, which Japan Tobacco already sells overseas.

Simultaneously, Altria has been designing its own HNB products—which heat tobacco sticks to produce a nicotine aerosol—for U.S. distribution.

The deal with Japan Tobacco was announced last week on the same day that Altria’s Q3 earnings results showed a nearly 1% drop in cigarette market share year over year for the period ended Sept. 30.

The .9% drop was the company’s biggest share decline in two years, with Marlboro losing .4% of its market share for the fourth consecutive quarter.

As of Sept. 24, Altria represented 48.6% of U.S. cigarette sales volume—with 43.4% attributed to Marlboro and 3.2% to L&M—in retail outlets tracked by NielsenIQ.

U.S. regulatory approval for Horizon Innovations’ HNB devices will take several years, as the joint venture plans to file Premarket Tobacco Product Applications with the U.S. Food and Drug Administration in the first half of 2025.

In the meantime, Altria has essentially left the U.S. e-cigarette market following its September breakup with vape marketer Juul Labs Inc. and this month’s parting of the ways with Philip Morris International and its HNB devices branded iQos.

As investment firm Cowen & Company noted in a report last week, Philip Morris is targeting a 10% share for iQos in the United States by 2030.

“Given the long time horizon on FDA approval (which PM already has for iQos), the companies have a long road ahead to develop a product that can effectively compete against iQos (the clear market share leader in Japan),” Cowen said of the Altria/Japan Tobacco partnership.

Altria said that development of its own HNB platform—called HTC1—is expected to be finalized by the end of this year. It plans to file PMTA submissions by the end of 2024.

Japan Tobacco’s international distribution network will be used to test HTC1 in overseas test markets.