Philip Morris International (PMI) began selling its IQOS heated tobacco device in Austin, Texas on Thursday after a successful pilot, reported Reuters.
The launch comes after PMI reported that it saw quarterly shipments of HTU and oral smoke-free products exceeding 40 billion units for the first time last quarter, with full-year net revenues increasing by 14.2%. The company said its smoke-free business accounted for 40% of total net revenue and around 42% of gross profit last quarter.
According to Reuters, PMI hopes to capture a 10% share of U.S. tobacco and heated tobacco unit volume by 2030 and “build a substantial base of new users in the world's top market for smoking alternatives.”
PMI said on Thursday that the device “would be on sale at pop-up stores and mobile units, including one location in downtown Austin set to be in place for several months,” reported the outlet. PMI said it would host demonstrations and guided trials of the product for adults at the Austin MotoGP Red Bull Grand Prix of the Americas. PMI also reportedly had contracts with around 15 adult-only venues like bars where mobile units and "IQOS coaches" would be active, targeting existing nicotine users.
The device will be sold for $60 with the accompanying tobacco sticks available for $8, Francisca Rahardja, vice president and chief marketing officer, inhalables at PMI U.S., told Reuters. Rahardja said PMI is offering IQOS at a lower price versus some other markets in part to reflect the fact it is trying to build up appetite among new consumers.
PMI previously said it would launch IQOS in four cities in two U.S. states, but so far only the Austin launch has been announced, wrote Reuters. It is “pursuing a limited U.S. roll-out of an older version of the IQOS device while waiting for authorization to sell the latest iteration, dubbed ILUMA, in the country.”
The U.S. Food and Drug Administration is reportedly currently evaluating PMI's ILUMA application. The FDA has already authorized PMI to sell the older device and market it as reducing exposure to harmful chemicals versus cigarettes.
Earlier this month, Bloomberg reported that PMI is exploring a potential sale of its cigar business in the U.S. as it continues its shift toward smoke-free products.
The company is “working with advisers to gauge buyer interest in the asset,” according to people familiar with the matter, Bloomberg wrote. “Philip Morris is seeking over $1 billion for the cigar business, they said. Deliberations are ongoing and there’s no certainty they’ll lead to a sale, the people said, asking not to be identified discussing confidential information.”