Philip Morris USA Plots Expansion Path for IQOS

RICHMOND, Va. — Altria Group Inc.'s alternative tobacco lineup is making its way across the United States as the company's Philip Morris USA (PM USA) brings IQOS to its third market.

PM USA introduced the heat-not-burn tobacco product to the Charlotte, N.C., market in mid-July. In addition to bringing IQOS to a new area, PM USA reopened its IQOS boutiques in Atlanta and Richmond following lockdown restrictions driven by the COVID-19 pandemic.

The move into Charlotte comes on the heels of the Food and Drug Administration's (FDA) approval of Philip Morris International's (PMI) application to market IQOS as a modified risk tobacco product, as Convenience Store News previously reported.

IQOS is the first electronic nicotine product to be granted marketing orders through the FDA's modified risk tobacco process.

PM USA, under an exclusive licensing agreement with PMI, commercializes IQOS in the United States. The FDA's decision includes the IQOS device, Marlboro Heatsticks, Marlboro Smooth Menthol Heatsticks, and Marlboro Fresh Menthol Heatsticks.

"We view this as a significant step towards our vision and we're looking forward to communicating with adult smokers the additional benefits of switching to IQOS," said Altria CEO Billy Gifford during the company's earnings call on July 28. "We're excited to get back on track with our IQOS rollout and our future expansion plans to accelerate adult smoker conversion."

In its third market, PM USA launched "a more disruptive retail fixture that communicates the benefits of real tobacco, no ash, and less odor" and plans to start HeatSticks distribution to retail stores in the next few weeks, Gifford added.

"By the end of August, we expect HeatSticks to be in a total of 700 retail stores across the three lead markets. PM USA will continue to leverage its IQOS retail ecosystem, including IQOS mobile, popup, and kiosk retail format which allows for more strategic and agile marketing plans," he said.

PM USA's expansion strategy will bring IQOS to four new markets over the next 18 months. Though not named, those markets will include large adult smoker populations and expand the availability of IQOS devices through retail partnerships, according to Gifford.

The tobacco company also plans to expand HeatSticks distribution to the surrounding geographies and all seven IQOS markets.

With the move into new markets, the IQOS website has been enhanced to include virtual tutorials; an expert video chat functionality will be available this fall.

"These digital enhancements and the ability to have devices delivered to smokers in lead markets with the proper age verification will provide smokers with flexible options to learn about and access IQOS," Gifford explained.

Altria is based in Richmond. It's wholly owned subsidiaries include PM USA, 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.

The company 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.