[Exclusive] Philip Morris Next-Generation New Product, Korea Excluded from 10 Global Launch Countries

IQOS Mesh 2.0 and Capsule Vibe to Launch Globally in 10 Countries Within Q3
Excluding Korea... Tensions Between MFDS and Industry Over Liquid Ingredients

[Asia Economy Reporter Lee Seon-ae] Philip Morris's next-generation e-cigarette new products 'IQOS MESH' and 'VEEV' are set to launch in 10 countries this year, but they are expected to be difficult to find in the Korean market. This is because the Ministry of Food and Drug Safety (MFDS) announced the analysis results of harmful suspected substances in liquid-type e-cigarettes and has been in a standoff with the industry, effectively excluding Korea from the list of launch countries.

According to Philip Morris on the 13th, the 'IQOS MESH 2.0', a liquid-type (E vapor) category within the IQOS platform, will be launched in about 10 countries in the third quarter of this year. Currently, IQOS MESH is only sold in the United Kingdom.

According to Philip Morris, IQOS MESH is a product developed as a next-generation electronic vapor product platform. It uses a metal mesh with small holes to heat the liquid capsule VEEV. Each VEEV capsule has a new mesh heater, so there is no need for manual replacement. Users simply press a button to activate the heating process. When the heater contacts the liquid in the VEEV, it heats the liquid to generate nicotine-containing vapor. VEEV is designed to be used only with the mesh device. The VEEV capsules are manufactured, assembled, pre-filled, and pre-sealed through a fully automated process at a European production facility. Additionally, IQOS MESH features puff-activated heating and a low liquid detection system that ensures consistency and quality of liquid generation and inhaled vapor.

A Philip Morris Korea official explained, "The characteristic of the MESH product is that unlike the existing heated tobacco product IQOS, which heats tobacco sticks with a blade, MESH heats nicotine liquid using a metal plate shaped like a mesh." However, the official added, "It is true that the global headquarters of Philip Morris announced plans to launch the new liquid-type e-cigarette MESH this year, but it is difficult to confirm exactly which markets (countries) will be included."

Since liquid-type e-cigarettes are gaining popularity in the European market, IQOS MESH and VEEV are highly likely to be launched centered on Europe. Currently, the growth of MESH in the UK is strong. Korea has been continuously reviewing the launch of MESH, but due to the difficult market conditions, it is reported that Korea has been excluded from the launch countries this year.

Since the MFDS announced the analysis results of harmful suspected substances in liquid-type e-cigarettes at the end of last year, consumer perception has been unfavorable. The Korea Electronic Cigarette Association requested disclosure of information on the MFDS's research methods, and when the MFDS refused, they are currently considering litigation. As the conflict intensifies, JUUL Labs, which ambitiously entered the Korean market, is currently undergoing large-scale restructuring and downsizing its Korean business.

A tobacco industry official said, "Currently, due to safety issues raised by the MFDS, consumer perception of liquid-type e-cigarettes is also unfavorable," adding, "The heated tobacco product market in Korea is uniquely strong, so companies have no reason to launch liquid-type e-cigarettes by overextending themselves."

Philip Morris Korea is expected to focus on expanding its heated tobacco product business. The latest new product is 'IQOS3 DUO', released in October last year. 'IQOS3 DUO' can be used twice consecutively without recharging the holder, and features enhanced battery performance that allows faster charging compared to the existing 'IQOS3' or 'IQOS2.4+' models.

As of the fourth quarter of 2019, IQOS market share in Europe was 3.2% (1.5% in the same period last year, 0.7% in the previous quarter), 5.0% in Russia (3.3%, 1.0%), 17.6% in Japan (2.4%, 0.4%), and 6.3% in Korea (2.2%, 0.1%). Although market share expanded year-on-year in all countries except Korea, the reason for Korea's unique sluggishness is explained by Philip Morris as the MFDS raising safety concerns about e-cigarettes in June last year, causing confusion among smokers. Therefore, Philip Morris Korea plans to conduct marketing to regain market share by continuously communicating with consumers about e-cigarette safety issues.