Philip Morris USA Announces Third Market for IQOS

BOCA RATON, Fla. — Philip Morris USA Inc. (PM USA) is preparing to bring its heat-not-burn tobacco product, IQOS, to a new market in April.

The move into Charlotte, N.C., will come six months after the operating company of Altria Group Inc. began commercializing the alternative tobacco product in the United States.

IQOS is a key piece of Altria's noncombustible platform thanks to a pact between PM USA and Philip Morris International (PMI), the international tobacco leader behind the heat-not-burn product.

IQOS is currently in two U.S. markets. PM USA first introduced the product into the Atlanta market in early fall 2019, and then expanded into the Richmond, Va., market in November.

The tobacco company is using several methods to engage adult smokers and drive trial of IQOS, according to Altria Chairman and CEO Howard Willard. These methods included paid media, communications through its adult tobacco consumer database, and retail touchpoints at its boutiques and trade partner stores

Speaking at the Consumer Analyst Group of New York conference in Boca Raton on Feb. 19, Willard highlighted several findings from its initial introduction of IQOS in Atlanta:

• More than half of adult smokers who tried IQOS have ultimately purchased the product;
• More than half of the adult smokers who purchased IQOS are between the ages of 21 and 39; and
• Nearly three-quarters of the purchasers are male. 

"The key learning from our lead markets is that IQOS is resonating with adult smokers," Willard noted. "We’re focused on the consumer journey from awareness to conversion, and we’re encouraged that many adult smokers have found relevance in the IQOS proposition of real tobacco, less odor and no ash."

The expansion into Charlotte will include several enhancements over earlier launches, such as:

• A more disruptive retail fixture to drive awareness and trial;
• The use of more mobile retail touchpoints to broaden reach among competitive adult smokers; and 
• A centrally located boutique with a smaller footprint, allowing for guided trial throughout the store.

According to Willard, PMI is planning to submit a supplemental premarket tobacco application for IQOS 3 to the U.S. Food and Drug Administration (FDA). The upgraded device charges more quickly than the currently authorized 2.4 device, which should address some of the consumer feedback concerning the charging time.

PMI's modified risk application for the IQOS 2.4 device remains pending with the FDA. "We remain optimistic about its authorization," Willard said.

In addition to PM USA, Altria's wholly owned subsidiaries include U.S. Smokeless Tobacco Co. LLC, John Middleton Co., Sherman Group Holdings LLC and its subsidiaries, Ste. Michelle Wine Estates Ltd. and Philip Morris Capital Corp. Altria also owns an 80-percent interest in Helix Innovations LLC, and holds equity investments in Anheuser-Busch InBev SA/NV, JUUL Labs Inc. and Cronos Group Inc.