Vaping is in crisis. Smoking is taboo. Altria has a solution: Iqos, an electronic cigarette-like gadget that heats, but doesn’t burn tobacco.
Philip Morris has been selling Iqos for a while in international markets. Altria will distribute Iqos in the United States for the first time Friday.
The timing couldn’t be better for the new nicotine product, as scrutiny grows around smokeless alternatives like e-cigarettes.
Iqos is a futuristic-looking device that looks like an e-cigarette. But don’t call it a vape. It heats tobacco sticks at a much lower temperature compared to a cigarette and delivers a “full and more authentic taste,” according to its website, without as many toxins. It also requires a charge after several uses.
Iqos has been on sale in 49 countries since 2014, and now its opening its first US location in an Atlanta area mall on Friday. Altria (MO) said it plans to expand sales of the “heatsticks” to other retailers like Circle K and Speedways.
Customers will have to buy the Iqos device at its stores to ensure sales are limited to people over 18 years old. It plans to “expand expeditiously” with stores, an Altria spokesperson told CNN Business. The company is using Atlanta as a testing ground on how to grow elsewhere in the United States.
The opening follows the Food and Drug Administration’s approval of Iqos in April. The agency allowed the Iqos to go on sale because it produces “fewer or lower levels of some toxins than combustible cigarettes.” Regulators also “placed stringent marketing restrictions” on the product, including FDA approval of its ads.
For Altria and Philip Morris (PM), the Iqos could be a profitable future as the companies try to develop smokeless alternatives despite ending plans last week to reunite.
The launch of Juul, which isn’t FDA approved, has been troubled, to say the least. Last month, Juul’s CEO resigned. The number of vaping-related deaths keeps growing and there are threats of federal regulation that could doom the e-cigarette company. Altria bought a 35% stake in Juul last December for about $13 billion, an investment that would have valued Juul at about $37 billion.
Unlike Juuls and other vapes, Iqos uses actual tobacco and doesn’t have wild flavors that the FDA is weighing a ban on because they could be attractive to young users.
Philip Morris said that Iqos has more than 11 million global customers and claims that 8 million people have abandoned cigarettes for Iqos. Smoke-free products now account for 14% of the company’s net revenue as cigarette sales are falling. The company hopes that 40 million of its cigarette smokers will use smoke-free products by 2025.
And the sector keeps growing: Electronic cigarette sales in the US nearly doubled to $4.5 billion in the 52 weeks ending August 24. Tobacco cigarette sales fell 3% to $59.3 billion during the same time period, according to figures from market research firm Nielsen.
– CNN Business’ Paul R. La Monica contributed to this report.
