Let's start with the following conclusions:
1. HNB is one of the main development paths of new tobacco, keeping pace with atomization.
From now on, HNB may grow faster. It is estimated that the market scale outside China alone will at least double in the next five years, exceeding 300 billion yuan, and the sales penetration rate will be about 10%.
At present, the domestic HNB market is blank, but it is the inevitable trend of industrial development like new energy vehicles. Under the pressure of the rapid development of overseas and domestic e-cigarettes, it is only a matter of time. After all, there can be no problems in the big granary of profits and taxes. China's tobacco retail scale is about 1.5-1.6 trillion yuan, and 10% penetration is a 100 billion market.
In the long run, the whole tobacco industry is a large market of more than 5 trillion yuan. New tobacco has brought innovative breakthroughs to the contradiction between health and happiness of traditional tobacco, and the market scale has great potential.
2. Japan and South Korea are still the main battlefield of HNB, but if we only focus on the Japan and South Korea market, we will misjudge the development stage of HNB
In fact, the development of HNB is still very early, and there is still huge room for growth in the future.
From the perspective of regional space, the rapid relay of the European region has maintained a high-speed growth of more than 50% in the first three quarters of 2020. The United States, Southeast Asia, the Middle East and other markets are still in the embryonic stage of cultivation.
From the perspective of supply creating demand, the market is still dominated by Philip Morris, especially in regions outside Japan and South Korea, with a market share of more than 90%. However, with the determination of the development trend of HNB, several other tobacco giants have made significant efforts in recent years, and the speed of product release and market expansion has increased significantly. Bat's new-type tobacco plan takes HNB as the first category of new-type tobacco in the future, and the sales target exceeds atomization. In the early stage of industrial development, more participants and more new products can make the cake bigger.
3. There is a suspense about whether the development trend of new tobacco in the future is HNB or atomization
1. How big is the development space of HNB global market?
By 2019, the HNB terminal retail market had a size of about US $17.1 billion, with a growth rate of about 45%, compared with the market size of about US $19.5 billion and a growth rate of 25%. From a global perspective, HNB is a new tobacco technology path equivalent to atomization and growing faster.
Moreover, for future sales, several giants have given very clear development plans:
Fimo's new tobacco plan: in 2025, the non tobacco sales will exceed 250 billion pieces / 5 million boxes (the non tobacco target of 90-100 billion pieces / 1.8-2 million boxes in 2021), accounting for more than 30% of the overall tobacco sales. The proportion of sales revenue of non tobacco products reached 38% - 42%, and the corresponding sales revenue was about 13 billion US dollars. In 2019, iqos sales reached US $5.69 billion, accounting for about 18.5% of the overall revenue; The sales volume is 1.2 million cases, accounting for about 8% of the total tobacco.
Bat new tobacco plan: in 2025, the total revenue of new tobacco is £ 5 billion, of which HNB is the largest category (more than atomization). The revenue scale is expected to be about £ 2.5-3 billion (the proportion of sales revenue is about 10%), and the sales volume is about 800000-1 million boxes (the proportion of sales volume is about 7%). In 2019, bat HNB product sales amounted to £ 690 million, accounting for about 2.7% of the company's overall revenue and 180000 boxes, accounting for about 1.3% of the company's overall tobacco sales.
According to the giant's planning and the actual situation of the regional market, we reasonably calculate that HNB products are expected to achieve about 7 million large box sales and a terminal retail scale of US $50 billion by 2025, except for China.
HNB sales planning and overall HNB sales estimation of tobacco giants in 2025
2. Which countries does HNB mainly develop in at present? Where is the development potential?
1. HNB's main sales areas are Japan, South Korea and Europe.
The retail sales of Japan, South Korea and Europe account for about 62% and 36% respectively, and the markets in other regions account for less than 3%. The market base is relatively blank. Japan, South Korea, Russia, Romania, Czech Republic, Poland, Ukraine, Italy, Greece and Germany, the top ten sales countries, account for about 84% of HNB's global sales.
2. At present, Europe is the main market driver.
In the first three quarters of 2020, the revenue of iqos in Europe reached US $2.65 billion, accounting for 54% of the global revenue of iqos. In the first year, it surpassed East Asia (mainly Japan and South Korea, accounting for 44% of the revenue in the first three quarters), and the growth rate was as high as 50%, compared with 6.5% in East Asia.
From the perspective of the market scale of traditional tobacco, the scale of tobacco retail market in Europe is 3.8 times that of Japan and South Korea, and there is still great growth potential in the future. Especially in the Eastern / central / southern regions of Europe, the overall penetration rate of HNB exceeds 5%, and the iqos penetration rate of some countries is close to or even higher than that of South Korea, eg Lithuania 20%, Russia 5.8%, Greece 10.4%, Portugal 8.9%, Italy 7.8%, Hungary 9.5%, etc.
It is precisely because of the huge potential of the European market, which was basically monopolized by Philip Morris. Since 2019, tobacco giants have also begun to focus on and expand the European market.
In 2020, bat sold glo hyper in Russia, Romania, Germany and other places. At the same time, glo series products are also sold in Malaysia, Hong Kong, Canada and other places.
Nippon tobacco's ploom s products are also sold in Russia, Italy and the UK. Nippon tobacco also plans to use Winston's brand name to make ploom cigarette bombs in Russia.
After cooperating with Philippines and Mozambique, Hanyan first chose to release HNB product lil solid in Russia and Ukraine in 2020.
The active participation of giants will promote the rapid development of HNB market. In addition to the European market, Philip Morris has also laid out and cultivated in many regions. It is only a matter of time to recreate Japan and South Korea in the future.
The United States: the country with the greatest potential (except China). HNB has just begun to develop in the US market for policy and regulatory reasons, but it has great potential. Altria's Marlboro has about US $37.5 billion in retail sales in the United States a year. As long as it is converted into less than 1 / 3, it has exceeded the current Japanese and Korean market.
Germany and the UK: at present, HNB has begun to break slowly, and the penetration rate of 2020q3 iqos is 1.9% and 1.2% respectively. As a traditional tobacco country, Britain and Germany have an overall tobacco retail market of more than 350 billion yuan.
Southeast Asia: a region with large sales of traditional tobacco, with a scale of more than 300 billion yuan. At present, HNB has basically no penetration, which may be due to the low consumption level of some countries in the region and the relatively limited positioning audience of medium and high-end iqos. But in fact, the taste acceptance of consumers similar to Japan and South Korea is very high. Philip Morris has also started to set foot in the past two years and entered Kuala Lumpur, Malaysia and Manila, Philippines. The market feedback is positive. The iqos penetration rate of Kuala Lumpur 2020q3 has reached 11.4%. If there are cost-effective products in the future, they will surely detonate in Southeast Asia.
Middle East & South America & Africa: in recent years, Philippines and Mozambique have also begun to enter slowly, such as UAE, Dubai, etc.
It can be seen that there are many markets for HNB in the world, which is why Philip Morris is confident that the sales volume will triple in the next five years. With more players joining, the growth space of the industry will be greater.