Japan’s Heated Tobacco (HNB) Boom: A Full Landscape of Regulation, Market Shifts & Brand Competition

Nov,11 2025

1. Japan’s HNB Regulation: A Unique Mix of Flexibility and Structure


In Japan, heated tobacco products (HNB) are primarily regulated by the Ministry of Finance and the Ministry of Health, Labour and Welfare. HNB is considered a tobacco product and is called heated cigarette (たばこ). The Tobacco Business Act regulates the use of heated cigarettes. The Tobacco Tax Law was revised in 2008, establishing a new category of "heated cigarettes." Currently, there are no specific ingredient restrictions for this type of tobacco product, but there are restrictions on warning labels, which are currently plain text. Cigarettes must display nicotine and tar content on the packaging. HNB sales in Japan require a license from the Ministry of Finance. Japan revised the Health Promotion Law, strengthening comprehensive smoking bans in public places, but HNB products are not subject to these restrictions. In terms of sales channels, online, vending machines, convenience stores, and specialty stores are permitted. The law does not prohibit any form of tobacco advertising, promotion, or sponsorship. Heated tobacco products in Japan must display nicotine and tar content on the packaging. Battery-powered devices also require PSE certification. The following are the regulatory differences between HNB and e-cigarettes.



2. Distribution Controls: Strict Packaging, Testing & Tax Rules


Although retail access is flexible, Japan enforces strict requirements for HNB distribution:


- Mandatory warnings on “impact on others,” “impact on users,” and “minors prohibited”

- At least 50% of the main display area must be covered by warnings

- Nicotine/tar emission testing, PSE certification, and METI device registration required

- HNB taxation uses a complex cigarette-equivalent conversion formula


This model—commercial freedom paired with strict compliance—supports rapid adoption while maintaining regulatory accountability.


3. Japan’s Tobacco Market Shift: Cigarettes Down, Heated tobacco Up


From 2019 to 2024, the Japanese tobacco products market showed an overall trend of first increasing and then decreasing. The market was relatively stable in the early stages, with sales remaining at a high level. However, starting in 2022, the industry entered a rapid downward trend, declining for three consecutive years. This reflects that, under the influence of multiple factors such as shrinking traditional cigarette consumption, accelerated substitution with new tobacco products, stricter tobacco control policies, and changes in population structure, the industry is entering a development stage where structural adjustments and demand contraction coexist. In 2024, the sales volume of the Japanese tobacco products market was US$27.372 billion, a year-on-year decrease of 6.42%.



From 2019 to 2024, the structure of the Japanese tobacco product market underwent significant adjustments, with the proportion of traditional cigarettes continuously declining and heated tobacco products (HNB) becoming the main substitute. Driven by policy support (such as Japan's Health Promotion Law allowing its indoor use in specific locations) and product positioning, HNB's market share has steadily increased, gradually approaching the level of traditional cigarettes. Overall, HNB is becoming a significant force driving the evolution of the Japanese tobacco market structure. In 2024, heated tobacco products accounted for 43.51% of all tobacco products in Japan.


4. HNB Sales Performance: From Policy Boost to Technology-Driven Growth


From 2019 to 2024, the Japanese heated tobacco products (HNB) market experienced a process of initial growth, a period of correction, and then a steady recovery. Early market expansion was primarily driven by policy factors such as the relatively relaxed restrictions on indoor use of HNB products under the Health Promotion Law, coupled with increased consumer acceptance of alternative products. In 2022, sales fluctuated briefly due to adjustments in the consumption tax and supply chain factors, but overall penetration continued to rise. By 2024, the market size approached $12 billion, accounting for a major share globally, and growth momentum is gradually shifting from policy-driven to supported by product technology upgrades and increased user loyalty.




5. Market Structure: Sticks Dominate (96.77%)


From 2019 to 2024, the Japanese heated tobacco products (HNB) market showed a continuous trend of increasing sales of tobacco cartridges and decreasing sales of heating devices. Tobacco cartridges, as the main source of revenue, saw their sales share increase year by year, with their high-frequency consumption nature dominating overall revenue. Heated devices, as disposable or infrequently purchased products, maintained a low and relatively stable revenue share. In terms of market share by sales revenue, in 2024, heated tobacco cartridges accounted for 96.77% of sales revenue in Japan, while heated tobacco devices accounted for only 3.23%.




From 2019 to 2024, sales of heated tobacco devices in Japan showed an overall upward trend. Early growth was primarily driven by product iterations and promotions, while the mid-term saw slight fluctuations due to market adjustments. In 2024, device sales reached approximately 14 million units, with the growth rate stabilizing. Rising penetration rates coupled with a slowdown in new user acquisition meant that sales growth stemmed more from replacement demand from existing users than from the expansion of new users, indicating that the market has gradually entered an operational phase centered on repeat purchases of tobacco cartridges.



From 2019 to 2024, sales of heated tobacco product (HNB) cartridges in Japan continued to grow, with the average annual growth rate gradually increasing. Total sales in 2024 approached 65 billion cartridges, an increase of over 13% compared to 2023. This trend indicates that with deepening market education and enhanced user loyalty, repeat purchases of HNB cartridges have become the main driver of industry growth. In contrast to the decline in traditional cigarette sales, this further solidifies the proportion and importance of HNB in overall tobacco consumption.




6. Brand Landscape: TEREA Dominates, PMI Takes Over


From 2021 to 2024, the Japanese heated tobacco products (HNB) market saw a trend towards brand concentration. Philip Morris International (PMI) significantly increased its market share by launching IQOS ILUMA and its dedicated cartridge TEREA, becoming a major market driver. During the same period, the market share of brands under British American Tobacco (BAT) and Japan Tobacco (JT) remained relatively stable, but growth was relatively limited. Due to the promotion of closed-system heating and the strengthening of the device-cartridge binding mechanism, market concentration continued to rise. By 2024, the top three brands collectively held the vast majority of the market share, and the competitive landscape stabilized.


Welcome!
To use the NextGen Lab website you must be aged 21 years or over. Please verify your age before entering the site.
Subscribe to our newsletter to
get NextGen Lab updates.