Philip Morris International (PMI), the world's largest cigarette manufacturer, is making a bold move in the U.S. tobacco market by bringing its most popular heated tobacco product to American consumers, providing them with a unique smoke-free cigarette alternative.
Tobacco use remains the leading cause of preventable disease and death in the U.S. In a country where, according to the CDC, nearly one in five, or 49.2 million, adults over the age of 21 use tobacco products, and 11.6% smoke cigarettes, there is a clear demand for alternatives.
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Already available in over 70 countries, IQOS heats tobacco without producing smoke, reducing exposure to harmful chemicals and making it a better alternative to real cigarettes while providing a similar feeling. However, PMI emphasizes that IQOS is not entirely risk-free and still contains nicotine.
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What is IQOS?
- Produces no smoke, just vapor
- Reduces exposure to harmful chemicals
- Delivers a cigarette-like experience
- Still contains nicotine and is not risk-free
IQOS's better-for-you claims were supported when the FDA authorized its sale in the U.S., deeming it appropriate for public health promotion, a first-of-its-kind decision for a heated tobacco product.
Philip Morris makes strategic entry into the U.S. market with IQOS
Despite the FDA approval, PMI (PM) didn't launch IQOS in the U.S. until 2024, when it launched the “be the first” campaign in Austin, Texas. This marketing initiative was designed to create excitement in the market and gauge consumer interest.
The campaign generated significant buzz, with over 5,000 people joining the waitlist to be among the first to try the product.
By the end of March 2025, IQOS officially became available for purchase in Austin through a dedicated retail store in downtown, select bars and restaurants, and an e-commerce platform.
Following this first launch, PMI expanded availability to Killeen, Texas, home to one of the largest military bases in the U.S., located around 70 miles north of Austin.
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Texas was a strategic choice for the launch. PMI identified the state as a strong initial market due to its large population of adult smokers open to trying new alternatives, as well as its relatively lenient tobacco laws.
Compared to other states, Texas has fewer smoking restrictions in government workplaces, private workplaces, restaurants, bars, casinos, gaming establishments, and retail stores.
According to the Texas Comptroller of Public Accounts, Texas also has no import or export warehouse fees and a cigarette tax of $1.41 per pack, well below the national average of $1.93.
As for its next targeted state, PMI revealed it plans to start selling IQOS products in Fort Lauderdale, Florida. The “be the first” campaign has already launched in the area, and the product will be available very soon.
PMI is confident in IQOS' U.S. expansion, despite looming tariffs
As PMI continues its IQOS expansion, the newly imposed U.S. tariffs have created uncertainty around supply chain stability and manufacturing costs for many companies. However, PMI has long developed a strategy that makes it well-equipped to navigate the market.
Although founded in London, UK, in 1847, PMI became a global company in 1987, with operational headquarters in Stamford, Connecticut, and Switzerland.
In 2022, PMI acquired Swedish Match, the maker of ZYN nicotine pouches, which has a U.S.-based production facility in Wilson, North Carolina. This domestic manufacturing presence helps PMI lessen potential tariff impacts and gives it greater flexibility in managing supply and distribution.
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“Tariffs are one of those things where we plan for scenarios, but currently we don’t see a significant impact on IQOS and the business,” said VP and Chief Brand Officer Francisca Rahardja to The Street.
In PMI's second-quarter earnings for fiscal 2025, IQOS grew 11.45% year over year, reaching approximately 34 million users worldwide. This product has become PMI's top-performing smoke-free offering and a significant revenue contributor.
Although in its early stages, this strong performance has also been reflected in the U.S.
“When we look at the performance in Austin and military bases, it’s pretty much in line with our expectations and what we are seeing around the world,” said Rahardja.
With favorable results in the U.S. and no comparable smoke-free tobacco product currently being offered in the American market, PMI believes IQOS is well-positioned for continued success.
