Summary of Conference Call Notes Industry Overview - The Japanese HNB (Heated Not Burned) market has a global penetration rate of 43% in 2024, significantly higher than other countries, indicating substantial growth potential in the new tobacco market [1][3] - The global traditional cigarette market has an HNB penetration rate of less than 6%, highlighting the early development stage of this category [1][8] Market Dynamics - The Japanese new tobacco market is characterized by a "one leader, two strong" structure, with Philip Morris International (PMI) holding a 70% market share, followed by British American Tobacco (BAT) and Japan Tobacco with 15-16% and 14% respectively [1][4] - BAT has shifted some resources from its Hyper product line to Hilo, which is positioned in the high-end market, competing directly with PMI's IQOS [1][10] Product Launch and Promotion - Smoore International launched its new product in Miyagi Prefecture, a region with a high HNB penetration rate of 56%, facilitating product education and promotion [1][5] - The new products are prominently displayed in major convenience stores in Sendai, indicating successful initial promotion [1][5] Product Differentiation - Major brands in Japan have distinct product design philosophies: Japan Tobacco's Pro series uses low-temperature heating, PMI's IQOS is mid-range, and BAT's GLO Helo series targets high-temperature, high-volume consumers [1][6] Global Market Comparison - Other countries lag in HNB development, with penetration rates of 20% in Italy, 18% in South Korea, 16% in Ukraine, and 14% in Poland [1][7] Sales and Distribution - Convenience stores like Seven Eleven have effectively distributed tobacco products, with BAT's PROOM series occupying prime shelf space [1][9] Future Plans and Market Strategy - Smoore plans to fully launch its new products in Japan on September 1 and enter the European market by the end of the year, aiming to validate repurchase rates and consumer acceptance [1][14] - BAT aims to increase its new tobacco revenue share to over 50% within the next decade, reflecting a positive market outlook [1][18] Regulatory and Competitive Challenges - The high entry barriers in the new tobacco industry, coupled with recent regulatory changes in China prohibiting HNB production, pose significant challenges for new entrants [1][17] - Investors should monitor product sales feedback and industry dynamics, as Smoore's competitive advantage is supported by high industry barriers and BAT's brand channel support [1][2][15] Investment Outlook - Investors are encouraged to evaluate the new tobacco industry trends and competitive landscape, as there are positive signs in the Japanese market within a short promotional period [1][20]