Imperial shuns "heating products" pushed by Big Tobacco rivals

By Martinne Geller

LONDON, May 6 (Reuters) - Imperial Tobacco Group is taking a different path to its rivals as the industry searches for the most promising technology for e-cigarettes and other "vaping" products that could eventually outsell cigarettes.

It's rare for the top competitors in a global business to have such contrasting visions of the future but the British company has no taste for the tobacco heating products that others are embracing alongside e-cigarettes as potentially less toxic alternatives to traditional cigarettes.

"It's not something we're interested in," Matthew Phillips, Imperial's corporate affairs director, told reporters on Wednesday, drawing a line between his company and larger rivals

Philip Morris International (Xetra: A0NDBJ - news) , British American Tobacco (LSE: BATS.L - news) and Japan Tobacco International, who are all betting on tobacco heating devices in addition to e-cigarettes.

Often referred to as "heat not burn" devices, they make tobacco hot enough to create a vapour without burning it completely. They could be key if their tobacco base makes them more satisfying for smokers who fail to stick with e-cigarettes, which use nicotine-laced liquid. But Imperial says they have "fundamental challenges".

Because they are made from tobacco, Phillips said they will be viewed and taxed like cigarettes. Marketing them as having reduced risk is "a very, very big ask," he said, adding that they face scientific problems as well.

"There's no difference really between those products and traditional tobacco products," Phillips said. "It's probably better described generically as 'heat and burn' rather than 'heat not burn'."

LIKE MILK IN A SAUCEPAN

Japan Tobacco International (JTI), which took a stake in a tobacco vapouriser called Ploom in 2011, believes different companies' products operate at different temperatures, making generalisations difficult.

Ian Jones, JTI's head of regulatory and scientific affairs, says heating tobacco is like heating milk in a saucepan.

"At low temperatures, the milk is heated, but as the temperature increases there may be some scorching where the milk touches the saucepan," Jones explained.

"In a similar way, whether a heated tobacco product scorches (or burns) the tobacco will depend on the temperature at which the tobacco is heated."

British American Tobacco plans to test a tobacco heating product this fiscal year. With a portfolio that already includes an e-cigarette and a medically licensed nicotine inhaler, the world's No. 2 tobacco company is banking on a range of products to suit different consumers' needs.

Philip Morris last year began testing a device that uses its tobacco-laden Marlboro HeatSticks in Japan and Italy. It plans national roll-outs there this year and expansion into additional markets.

The world's biggest tobacco company sells HeatSticks with no claims of reduced risk, but is currently conducting a scientific assessment with the aim of substantiating such a claim. A spokeswoman had no comment on the assertions by Imperial's Phillips.

"We believe that the heat-not-burn product provides adult smokers with the best alternative to cigarettes based on taste, satisfaction and ritual," its chief financial officer told analysts in March. (Reporting by Martinne Geller; editing by Susan Thomas)