* Q3 profit up from year ago, but falls short of consensus
* Local cigarette sales volume down 11.8 pct y/y over Jan-Sept
* Reiterates forecast for 4.8 pct drop in 2017 operating profit (Recasts with quarterly figures)
TOKYO, Nov 1 (Reuters) - Japan Tobacco Inc, the world's No.4 tobacco company, on Wednesday posted a lower-than-expected quarterly profit, hurt by a sharp drop in domestic cigarette sales as more smokers switched to vaping products.
Its operating profit came in at 156.4 billion yen ($1.37 billion) for the third quarter ended September, calculations based on Japan Tobacco's nine-month results show, up from 149.6 billion yen a year ago but below an average estimate of 162.2 billion yen from five analysts polled by Thomson Reuters.
For the first nine months of the year, profits were down 5 percent at 469.7 billion yen, also below an average estimate of 475.5 billion yen from five analysts.
Japan Tobacco, which commands more than 60 percent of the cigarette market at home, has been caught on the wrong side of a growing popularity of "heat not burn" cigarette alternatives and has lagged behind rival Philip Morris International Inc in the category in its own backyard.
Philip Morris started selling its IQOS vaping device in Japan in 2014 and expanded nationwide in April last year, while Japan Tobacco rolled out its Ploom Tech battery-powered smokeless tobacco product in central Tokyo only in July this year after production delays.
Rising demand for vaping products chipped away at Japan Tobacco's cigarette sales at home, which fell 11.8 percent from a year ago in terms of volume over January to September. In September alone, the year-on-year decline was 13.6 percent.
For 2017, Japan Tobacco kept its operating profit forecast at 565 billion yen, down 4.8 percent from the previous year. This is below an average estimate of 575.9 billion yen from 20 analysts polled by Thomson Reuters. ($1 = 113.7700 yen) (Reporting by Taiga Uranaka; Editing by Himani Sarkar)