In a landmark deal, Japan Tobacco (JT) Group, through its subsidiary Japan Tobacco International (JTI), has entered into a joint venture with Altria Group’s subsidiary PM USA. The two parties will market and commercialise heated tobacco sticks (HTS) products in the US with JT’s Ploom-branded devices and Marlboro-branded consumables.
The companies have also signed a long-term, non-binding global memorandum of understanding to explore commercial opportunities for a wide range of potentially reduced-risk products (RRP).
The announcement comes hot on the heels of Altria Group, as reported, reaching an agreement with Philip Morris International to end the two companies’ commercial relationship covering IQOS – a line of heated tobacco and electronic cigarette products – in the US as of 30 April 2024.
The JT Group said it believes that the new partnership will support its strategic ambition to build a global presence in RRP, through a strong focus on HTS, and drive sustainable growth for stakeholders.
“I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria” – JT Group CEO Masamichi Terabatake
The company added: “Joining forces with Altria, the leading US tobacco company, to enter the nascent HTS segment in the US will increase growth opportunities for both companies, enhancing the JT Group’s and Altria’s objectives to provide a wide range of harm reduction products to adult consumers around the world.”
The JV is structured to exist in perpetuity and establishes Horizon Innovations LLC as the exclusive JV vehicle responsible for the US commercialisation of current and future HTS products owned and developed by either party.
Horizon will commercialise HTS products in the US under the Ploom and Marlboro trademarks.
JTI will have a 25% economic interest in Horizon to reflect its HTS product contribution. PM USA will have a 75% stake, which JT said is reflective of the company’s strong distribution network and infrastructure, as well as its initial capital contribution of US$150 million to Horizon.
Subsequent capital contributions made to Horizon will be split according to the parties’ respective economic interests. JTI and PM USA will both maintain independent ownership of their respective intellectual property (IP), including any IP acquired after the formation of the JV that supports the development of future HTS products.
As part of the JV, JTI and PM USA will combine their scientific and regulatory expertise to jointly prepare US Food and Drug Administration filings, including a Premarket Tobacco Product Application (PMTA) for the latest version of Ploom HTS products.
The parties currently expect to submit the PMTA for these products in the first half of 2025. Upon PMTA authorisation, JTI will supply HTS devices and PM USA will manufacture HTS consumables for Horizon. In addition, JTI and PM USA have agreed to commercialisation milestones for Horizon, which include distribution requirements and minimum levels of cumulative marketing investments.
JT Group CEO and President of the Tobacco Business Masamichi Terabatake said: “As part of our strategic focus on HTS, we’re very enthusiastic to launch our Ploom brand in the US, the world’s largest RRP market in value, through our partnership with the market leader, Altria.
“We also look forward to entering into a long-term strategic collaboration with Altria to further explore global commercial opportunities in the RRP category. I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”
Japan Tobacco International CEO Eddy Pirard said: “By forming this JV, we are bringing together the marketing, innovation, R&D and science capabilities that JTI has developed over the years, with Altria’s science, US regulatory experience and vast infrastructure, to create a very strong proposition for the US adult smoker.”
