Smokeless tobacco categorized as ‘e-cigarette' here
By Park Jae-hyuk
Philip Morris will begin presales of its IQOS smokeless cigarettes Saturday at IQOS brand shops in Gwanghwamun and Garosu-gil in Seoul, according to the world's largest tobacco company's Korean branch, Friday.
"The exact amount of presold products has yet to be compiled, as it is still difficult to estimate consumer demand," a Philip Morris International (PMI) Korea spokeswoman said. "The brand shops are not pop-up stores, so they will continue to be in operation."
PMI Korea announced earlier it will sell IQOS here beginning on June 5. CEO Chong Il-woo said at a press conference last week that the product will shift the industry's paradigm once and for all. He emphasized it is a wiser choice for smokers.
CU convenience stores in Seoul will sell IQOS next month.
"BGF Retail running CU stores will likely enjoy a rise in sales, as the number of customers is expected to grow," Samsung Securities analyst Nam Ok-jin said.
In response to the release of IQOS, the Korean government decided earlier this week to categorize electronic tobacco products using solid material as e-cigarettes. The previous enforcement ordinance only mentioned products using a liquid solution.
"We've expected IQOS to be categorized as e-cigarettes," the PMI Korea spokeswoman said.
The government initially planned to import IQOS as pipe tobacco. Japan and Germany categorize IQOS as pipe tobacco, not e-cigarettes.
The current law bans people from smoking e-cigarettes in non-smoking zones just like conventional tobacco. But e-cigarettes have an outstanding advantage of low tax, which means smokers can save money.
The Ministry of Health and Welfare is reportedly mulling various measures over the new type of cigarette, after sending official documents to 19 countries that sell IQOS.
But still, the lower tax rate on e-cigarettes including IQOS has been in dispute. Although some lawmakers tried to revise the law, the bill is pending in the National Assembly.
According to the Ministry of Strategy and Finance, IQOS will be levied at a lower consumption tax rate than conventional tobacco, even though IQOS is similar to conventional products in terms of ingredients.
Also, health warning images and ingredient lists are not mandatory for e-cigarettes. Tobacco-makers can do outdoor advertising for their e-cigarettes as well.
Due to the advantages, KT&G and PMI Korea's other local rivals are expected to push ahead releasing their own e-cigarettes, according to industry officials.
"Because KT&G and other firms also plan to release their e-cigarettes, CU may not enjoy positive effects from its exclusive sales of IQOS," KB Securities analyst Park Shin-ae said.
Some observers said IQOS may not be popular in Korea compared to Japan that prohibits e-cigarettes using liquids. They pointed out IQOS will have to overcome barriers to the existing e-cigarette market here.
By Park Jae-hyuk
Philip Morris will begin presales of its IQOS smokeless cigarettes Saturday at IQOS brand shops in Gwanghwamun and Garosu-gil in Seoul, according to the world's largest tobacco company's Korean branch, Friday.
"The exact amount of presold products has yet to be compiled, as it is still difficult to estimate consumer demand," a Philip Morris International (PMI) Korea spokeswoman said. "The brand shops are not pop-up stores, so they will continue to be in operation."
PMI Korea announced earlier it will sell IQOS here beginning on June 5. CEO Chong Il-woo said at a press conference last week that the product will shift the industry's paradigm once and for all. He emphasized it is a wiser choice for smokers.
CU convenience stores in Seoul will sell IQOS next month.
"BGF Retail running CU stores will likely enjoy a rise in sales, as the number of customers is expected to grow," Samsung Securities analyst Nam Ok-jin said.
In response to the release of IQOS, the Korean government decided earlier this week to categorize electronic tobacco products using solid material as e-cigarettes. The previous enforcement ordinance only mentioned products using a liquid solution.
"We've expected IQOS to be categorized as e-cigarettes," the PMI Korea spokeswoman said.
The government initially planned to import IQOS as pipe tobacco. Japan and Germany categorize IQOS as pipe tobacco, not e-cigarettes.
The current law bans people from smoking e-cigarettes in non-smoking zones just like conventional tobacco. But e-cigarettes have an outstanding advantage of low tax, which means smokers can save money.
The Ministry of Health and Welfare is reportedly mulling various measures over the new type of cigarette, after sending official documents to 19 countries that sell IQOS.
But still, the lower tax rate on e-cigarettes including IQOS has been in dispute. Although some lawmakers tried to revise the law, the bill is pending in the National Assembly.
According to the Ministry of Strategy and Finance, IQOS will be levied at a lower consumption tax rate than conventional tobacco, even though IQOS is similar to conventional products in terms of ingredients.
Also, health warning images and ingredient lists are not mandatory for e-cigarettes. Tobacco-makers can do outdoor advertising for their e-cigarettes as well.
Due to the advantages, KT&G and PMI Korea's other local rivals are expected to push ahead releasing their own e-cigarettes, according to industry officials.
"Because KT&G and other firms also plan to release their e-cigarettes, CU may not enjoy positive effects from its exclusive sales of IQOS," KB Securities analyst Park Shin-ae said.
Some observers said IQOS may not be popular in Korea compared to Japan that prohibits e-cigarettes using liquids. They pointed out IQOS will have to overcome barriers to the existing e-cigarette market here.
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