Heat-not-burn

The Heat-not-burn tobacco is a smoking technology that employs heating tobacco, rather than burning it.^[1][2]

The heat-not-burn tobacco category is gaining widespread attention. Some believe the prospect of a safer cigarette – through heat not burn technology – will re-shape the tobacco landscape.^[3] In particular, the extraordinary success of Philip Morris International’s IQOS (aka Heatsticks) heat not burn launch in Japan has ignited interest in the heat not burn category.^[4]

Many believe Philip Morris will make a major product launch for iQOS in the US market,^[5] and file an application with the US FDA to market iQOS as a modified (reduced) risk product.^[6] Other commentators have suggested that the proposed acquisition of RJ Reynolds by British American Tobacco is in part driven by the need to compete in innovation of modified risk products including heat not burn.^[2][7]

Heat not burn systems rest on the premise that the vast majority of toxicants and carcinogens are formed by the actual burning of tobacco.^[8] Heat not burn compositions seek to achieve a reduced toxicant emission profile by heating the tobacco composition short of actual burning (pyrolization) and yet sufficiently to aerosolize desired emissions like flavors and nicotine.^[9]

Heat not burn systems are generally understood in the literature to result in emissions with drastically reduced toxicant profile. The most resistant toxicants appear to be ammonia and formaldehyde, both of which are associated with lower temperature degradation.^[8]

Product History

The first commercial heat not burn product was the R.J. Reynolds Premier,^[10] a “smokeless cigarette” launched in 1988 and immortalized in the book, Barbarians at the Gate, for tasting “like sh*t.”^[11] the Premier product concept went on to be further developed and re-launched as Eclipse in mid 90's,^[12] and the recently launched and withdrawn Revo.^[13]

Philip Morris’s launched a cigarette that was placed into an electronic heating device as Accord.^[14][15] Accord enjoyed little success in the US market, though refinements in Europe sold as “Heatbar” performed marginally better commercially,^[15][16][17]

Pax Labs launched Ploom, a butane fired heat not burn device.^[18] Ploom – now owned by Japan Toabcco has been replaced with a very different product called Ploom Tech (which is probably not thought of as a heat not burn product as non-tobacco derived vapor is merely passed through tobacco powder).^[19][19]

The extraordinary success of Philip Morris’ iQOS in Japan, and the large investments being made by Philip Morris to support follow on launches in other markets has sparked interest in the category.^[20]

Types of heat not burn products

There is no official definition of Heat not Burn. However, the very name of the category means that tobacco is not burned, but rather tobacco constituents are heated to aerosolize desired components. As a practical matter, different heating systems have been used, and different composition formats have been used. These different formats can have important implications for tax treatment, apart from the obvious question of consumer choice.

• Premier-Eclipse-Revo: This product is shaped like a conventional cigarette, but uses an internal carbon rod to heat the product. The heated “tobacco” is a reconstituted tobacco sheet with large glycerin content. When heated, the product creates an aerosol of nicotine, flavor and glycerin.^[21]
• Accord-Heatbar-iQOS: This product employs an electronic heating system, to heat a “cigarette” that contains reconstituted tobacco sheet. The tobacco sheet contains: tobacco, glycerin, water, guar gum, cellulose, propylene glycol and flavorings.^[22] The iQOS emission toxicant profile is substantially reduced as compared with a conventional cigarette.^[8][23]
• 3T (tobacco liquid)(Vapor Tobacco Manufacturing): This product employs a patented, aqueous system whereby desired components are extracted into water.^[24] The liquid is mixed with glycerin and aerosolized by an electronic heating system.^[24] The product is certified organic under the USDA national organic program.^[25]
• Ploom (Discontinued): Ploom initially employed a butane heating system, to aerosolize a pod containing glycerin, small pieces of tobacco and flavor. In a subsequent version, the butane heating system was replaced with an electric system.^[26]

Regulatory and Tax Treatment

As yet, no regulatory pathway specific to heat not burn products exists in any major jurisdiction. Tax treatment of the products has differed. Premier-Eclipse is taxed in the United States as a cigarette.^[27] The cigarette-like refills for iQOS have been taxed advantageously in Japan as pipe (not cigarette), and also enjoy an advantageous tax classification in Italy as compared with cigarettes.^[23] Ploom, while sold, was taxed as pipe tobacco in Japan and the United States.^[28][29]

References

1. "Heat-not-burn". PMI Science. 2014-12-16. Retrieved 2016-11-11.
2. "Innovation Drives BAT's $47 Billion Bid -- WSJ". www.morningstar.com. 2016-10-24. Retrieved 2016-11-11.
3. Bonnie Herzog, Wells Fargo, “PM: Investor Day Outlines Major Transformation Underway,” October 2, 2016.
4. Yui, Monami (2016-08-28). "Big Tobacco Wants to Turn Japan's Smokers Into Vapers". Bloomberg.com. Retrieved 2016-11-11.
5. jennymkaplan, Jennifer Kaplan (2016-10-24). "The World's Biggest Tobacco Firm Tells Smokers to Quit". Bloomberg.com. Retrieved 2016-11-11.
6. "All eyes on iQOS". Tobacco Reporter. 2016-06-01. Retrieved 2016-11-11.
7. Bonnie Herzog, Wells Fargo, “Equity Research,” October 21, 2016.
8. "Heat-not-burn". PMI Science. 2014-12-16. Retrieved 2016-11-11.
9. Harlay, Jérôme (2016-11-09). "What you need to know about Heat-not-Burn (HNB) cigarettes". Vaping Post. Retrieved 2016-11-11.
10. Mcgill, Douglas C. (1988-11-19). "'Smokeless' Cigarette's Hapless Start". The New York Times. ISSN 0362-4331. Retrieved 2016-11-11.
11. Haig, Matt (2005-01-01). Brand Failures: The Truth about the 100 Biggest Branding Mistakes of All Time. Kogan Page Publishers. ISBN 9780749444334.
12. "New heat-not-burn brand from RAI". www.tobaccojournal.com. Retrieved 2016-11-11.
13. Journal, Richard Craver/Winston-Salem. "Reynolds ends Revo test market in Wisconsin". Winston-Salem Journal. Retrieved 2016-11-11.
14. "Accord - Tobacco Products". tobaccoproducts.org. Retrieved 2016-11-11.
15. "Has Philip Morris Learned from Heat-not-Burn Tobacco's Past?". Euromonitor International Blog. 2014-01-23. Retrieved 2016-11-11.
16. "New cigarette heats tobacco rather than burning it". Mail Online. Retrieved 2016-11-11.
17. Mulier, Thomas; Thesing, Gabi (2014-06-26). "Philip Morris Sees $700 Million Boost From iQOS Smoking Device". Bloomberg.com. Retrieved 2016-11-11.
18. Jredheadgirl (2013-10-19). "Jredheadgirl: The Ploom modelTwo, Getting Reacquainted With the Concept of Tobacco VaporJredheadgirl". Jredheadgirl. Retrieved 2016-11-11.
19. "JT announces launch of next-generation Ploom". Tobacco Reporter. 2016-01-26. Retrieved 2016-11-11.
20. "PMI to launch iQOS into US". Tobacco Reporter. 2016-10-11. Retrieved 2016-11-11.
21. Hilts, Philip J. (1994-11-27). "Little Smoke, Little Tar, but Full Dose of Nicotine". The New York Times. ISSN 0362-4331. Retrieved 2016-11-11.
22. "What's in Our Products?". www.pmi.com. Retrieved 2016-11-11.
23. "Philip Morris rolls out iQOS smokeless smokes". Nikkei Asian Review.
24. O'Connell, Thomas (Jul 9, 2013), Method for preparing tobacco extract for electronic smoking devices, retrieved 2016-11-11
25. "Search for Vapor Tobacco Manufacturing LLC".
26. Lavrinc, Damon. "Review: Ploom Model Two". WIRED. Retrieved 2016-11-11.
27. Mickle, Tripp (2014-11-17). "Reynolds's New Cigarette Merely Heats Tobacco". Wall Street Journal. ISSN 0099-9660. Retrieved 2016-11-11.
28. "Ploom and Ploom tobacco pods to go on sale in on 12 December 2013 | JT Global Site". www.jt.com. Retrieved 2016-11-11.
29. "Ploom modelTwo Slays Smoking with Slick Design and Heated Tobacco Pods - SolidSmack -". SolidSmack. 2014-04-23. Retrieved 2016-11-11.