Philip Morris International Expands Smoke-Free Cigarette Alternative in US Amid Tariff Threats

Philip Morris International (PMI) is expanding its smoke-free cigarette alternative, IQOS, in the US amid tariff threats. IQOS heats tobacco without producing smoke, reducing exposure to harmful chemicals, and has been authorized for sale in the US by the FDA. PMI launched IQOS in Austin, Texas, and expanded availability to Killeen, Texas, a strategic choice due to its large population of adult smokers open to trying new alternatives and relatively lenient tobacco laws.

Philip Morris International (PMI) is making significant strides in the U.S. market by expanding its smoke-free cigarette alternative, IQOS. The company's decision to introduce IQOS in the U.S. comes amidst ongoing tariff threats, but PMI remains confident in the product's potential.

IQOS, a heated tobacco product, heats tobacco without producing smoke, thereby reducing exposure to harmful chemicals. It has been authorized for sale in the U.S. by the FDA, marking a significant milestone for the company. PMI launched IQOS in Austin, Texas, and subsequently expanded its availability to Killeen, Texas, home to one of the largest military bases in the U.S. [1]

The choice of Texas for the initial launch was strategic, given the state's large population of adult smokers open to trying new alternatives and its relatively lenient tobacco laws. Texas has fewer smoking restrictions in government workplaces, private workplaces, restaurants, bars, casinos, gaming establishments, and retail stores compared to other states. Additionally, Texas does not have import or export warehouse fees and has a cigarette tax of $1.41 per pack, well below the national average of $1.93. [1]

PMI's IQOS expansion is part of a broader strategy to navigate the market amid tariff threats. The company has 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 mitigate potential tariff impacts and manage supply and distribution more effectively. [1]

Despite the tariff uncertainties, IQOS has shown strong performance. In the second quarter of 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. [1]

Investor confidence in PMI and IQOS is evident in the increased stakes held by institutional investors. Raymond James Financial Inc. boosted its holdings in PMI by 2.1%, acquiring an additional 92,513 shares. Other institutional investors, such as Cortland Associates, have also increased their stakes significantly. [2]

PMI's expansion of IQOS in the U.S. is a strategic move that positions the company to capitalize on the growing demand for smoke-free alternatives. As the product gains traction in the market, PMI is well-positioned for continued success. [1]

References:
[1] https://www.thestreet.com/retail/pmi-expands-smoke-free-cigarette-alternative-in-us-amid-tariff-threats
[2] https://www.marketbeat.com/instant-alerts/filing-raymond-james-financial-inc-acquires-92513-shares-of-philip-morris-international-inc-nysepm-2025-08-16/