Nicotine in Japan

“As an example to others, and not that I care for moderation myself, it has always been my rule never to smoke when asleep, and never to refrain from smoking when awake.” - Mark Twain

Japan’s history with nicotine is marked by pivotal moments, stretching back nearly half a millennium. Having been the launching point for heat-not-burn tobacco, the country has recently been cited as a reference point when considering how other markets may develop. This includes the United States, where Philip Morris International is currently trialing older versions of its IQOS product selectively, pending the FDA’s determination on the application for its newer ILUMA variants. However, comparing the United States and Japan reveals considerable contrasts.

Tobacco first arrived in Japan in the mid-16th century, transported as cargo by Portuguese trading vessels. Despite being a strange product that, in all senses, was foreign, the desire for it grew rapidly. The ability to acquire tobacco, however, lagged. Limited and sometimes infrequent shipments, often cigars, meant that consumption was restricted to the more affluent classes of society.

Tobacco’s availability in Japan underwent significant changes when traders and missionaries introduced seeds to the country, prompting the domestic cultivation of the crop. Affordability further improved as the Japanese eschewed cigars in favor of pipes, which could be packed with cheaper, finely chopped tobacco. Available, affordable tobacco led to a rapid increase in usage prevalence, which was further expressed by smoking being fit into various parts of Japanese culture. Much like tea, the process of smoking tobacco using a traditional Japanese pipe (kiseru) was deeply ritualistic. As growing importance was placed upon such rituals, the popularity and prestige of pipe-crafting as an art form followed.

Kiseru Smoking Pipe, Before 1894, Left. Three Courtesans, Kitagawa Utamaro, circa 1795, Right

Despite the widespread popularity of tobacco usage across Japan, the government made multiple efforts throughout the 17th century to prohibit it. In 1612, a nationwide ban on tobacco was implemented. The rationale for such drastic measures included concerns of smoking being a significant fire hazard, given that many towns across the country were dense and heavily constructed of wood, and that too many farmers would pivot to producing highly profitable tobacco over crops such as rice, thereby jeopardizing the country’s food security.

To ensure compliance with the tobacco prohibition, the government imposed harsh penalties. This included hefty fines, confiscation of tobacco and other belongings, and even lengthy prison sentences. But these measures, much like other attempts made around the world, were ineffective. Prevalence continued to spread throughout the country, undeterred by such punishments, and the government ultimately conceded to tobacco, although it still attempted to place restrictions on its cultivation and use.

In 1868, Japan underwent a radical transformation. The Meiji Restoration marked the end of the Edo period, dismantling the feudal government and reforming policy away from strict national seclusionism. The country became heavily influenced by Western thought, and with it, began to industrialize rapidly. This also greatly opened up the country to international trade. Toward the end of the 19th century, cigarettes were introduced to Japan. Understanding the product’s popularity and significance, the Japanese government established a state-owned tobacco monopoly, ultimately controlling all aspects of the industry within its borders. In a few short decades, cigarettes displaced pipes as the most prevalent form of tobacco product, and the monopoly became one of Japan’s key financial assets, producing staggering sums of direct profit, as well as indirect profits from taxation.

Alongside the rise of the cigarette, tobacco consumption in Japan grew until the 1970s, when its peak marked growing awareness and concerns of the health risks associated with tobacco. During the following decade, the Japanese government undertook numerous reforms aimed at reducing its involvement and influence in various enterprises, with the goal of increasing competition and efficiency. This included, in 1985, the privatization of the tobacco industry. The government monopoly was restructured as Japan Tobacco Inc., and following its initial public offering in 1994, the government began to sell down its stake; however, it still owns a considerable portion today, as the company’s single largest shareholder.

The Japanese government continues to benefit greatly from tobacco, both through its direct stake in Japan Tobacco and from substantial excise taxes on related products. This partly explains why the government has, at times, appeared to be lagging behind much of the world in tobacco control policies aimed at curbing usage. Nonetheless, the government has taken recent actions. In 2020, the government enacted a policy banning smoking in most indoor venues. Various tax schemes levied on tobacco were increased in 2006, 2010, 2018, 2021, and as recently as March 2025.

The Japanese government has sought to strike a balance between the economic benefits of tobacco and its health impact. At the same time, the country has had to address next-gen nicotine products. The way it has addressed those categories differs significantly from many other markets, forcing us to concede that category evolution, especially heat-not-burn in countries such as the United States, may unfold far differently.

The rise of IQOS

In November 2014, IQOS was first launched in Nagoya, Japan, followed by a similar launch in Milan, Italy. Most interestingly, heat-not-burn, as a category, could rightly be argued as a ridiculous technology. On paper, there are numerous reasons why the technology shouldn’t have succeeded. Developing and producing consistent devices is more challenging, and this process is expensive. Likewise, unless heavily subsidized, they are more expensive relative to other categories for the consumer. Ultimately, to best replicate the ritual of smoking within a reduced-risk system, disposable vapor, on paper, should be the de facto winner. Yet, heat-not-burn, led by IQOS, has been a radical success. Just over one year after launch, Philip Morris International highlighted the beginning of the ascent:

Philip Morris International, Q4 2015 Slide Presentation, Slide 25

The offtake share gained in the first year of launch was more than modest, when considering the considerable difficulties of increasing awareness of a nascent category and the added challenges associated with spurring consumer trial. By 2016, IQOS had gained significant total traction, with an estimated 1.4 million consumers converted. Fast forward to 2019, and IQOS had attracted 14 million total users, with an estimated 10 million having completely switched off cigarettes. By the end of 2024, the product had amassed more than 32 million users, despite the negative growth impact of Russia and Belarus. In Q4 2024, PMI’s heated tobacco units held 27.6% of total in-market sales.

As we enter the second half of 2025, Philip Morris International expects the FDA to decide on IQOS Iluma’s pending PMTA soon, prompting more minds to ponder the implications for the United States market. PMI believes, following full-scale launch, that IQOS will be able to capture 10% of total share of the cigarette and HTU market in the United States by 2030. To determine whether such an aspirational goal is possible, I propose a question about the start of the product’s journey. Out of all of the places in the world to first launch a novel product, why Japan?

The reduced-risk attributes of heat-not-burn can not be cited, as it is assumed that such a characteristic would appeal universally. Instead, several key considerations are worth noting. The first is that the Japanese appear more willing than most to try new technologies. The second is that the Japanese have distinct social expectations in which they value personal space, communal harmony, and go to great lengths not to disrespect those around them. In this regard, a product that does not produce smoke or an odor like a cigarette would not be found as offensive, and thus carry significant appeal.

Despite these straightforward reasons explaining why Japan may have been rationalized as an ideal starting point, there are other clear, yet less obvious points. In November 2014, Japan’s PMD Act (the Pharmaceuticals and Medical Devices Act) replaced the Pharmaceutical Affairs Law. This act specifically regulates nicotine for vaping products, irrespective of whether the nicotine contents are synthetic or tobacco-derived. Because of this, nicotine vapes require special licensing and pharmaceutical approvals, making them unable to be sold in standard retail outlets, such as convenience stores like 7-Eleven, Lawson, and FamilyMart.