PMI plans to use the IQOS 3 Duo pilot launch to refine its strategy ahead of the full rollout of IQOS Iluma across the US. Photo credit: Aphis Marta, CC4.0.
Following a successful six-month pilot program, Philip Morris International (PMI) on March 27, 2025, officially re-entered the US tobacco market with the direct-to-consumer launch of its heated tobacco product (HTP) IQOS in Austin, Texas. The rollout marks PMI’s first domestic commercial activity under its own brand since the company spun off from Altria in 2008.
The IQOS 3 Duo is now available for purchase to legal-aged adults 21+ through mobile retail units, adult-only pop-up stores, and a network of partner venues, with online sales set to follow in late April. Devices retail at US$60, and Heets consumables are priced at US$8—positioned about one dollar below the average Marlboro pack price to encourage conversion.
The local launch is supported by a multi-channel campaign, including in-person product coaching and visibility at the upcoming MotoGP Grand Prix. PMI has also onboarded 15 bar and venue partners to support adult consumer trial and education.
Austin was selected for the pilot launch based on consumer segmentation and demand modeling. The city is known for having a vibrant tech industry, attracting young, tech-savvy people open to new technologies and innovation. Furthermore, Texas has a low cigarette tax rate, and IQOS will be taxed there as cigarettes, which will give PMI a clue as to how the product would perform when taxed similarly to cigarettes.
While IQOS commands over 30% of the tobacco market in Japan and has strong footholds in parts of Europe, it enters a crowded and vape-dominated US market, where it will have to develop the category almost from scratch. However, PMI sees an opening, aiming to capture a 10% share of the combined cigarette and heated tobacco volumes by 2030. Analysts are optimistic, saying the US market with its nearly 30 million smokers is significant for PMI’s transition strategy towards a smoke-free future. “Vaping rates are high, but that doesn’t mean there’s no appetite for heated tobacco,” wrote Bernstein analyst Callum Elliott in a recent investor note, adding that PMI’s market share target “might actually be realistic.”
The launch is PMI’s second attempt to establish IQOS in the US market. In April 2019, the company had assigned the exclusive commercialization rights of the brand to Altria, which then launched IQOS in Atlanta, Richmond, Georgia, Virginia, North Carolina, and South Carolina. Due to a patent dispute with British American Tobacco (BAT), however, IQOS—which in 2020 became the first and to date only HTP to achieve modified risk status from the Food and Drug Administration (FDA)—was withdrawn from the market. The dispute with BAT was resolved in February 2024. Following a US$2.7 billion payment, PMI regained the exclusive US commercialization rights of IQOS as of April 30, 2024.
As PMI is presently only able to commercialize an older version of its IQOS device in the US, it will limit the rollout of IQOS to a few cities until FDA has authorized IQOS’ more up-to-date Iluma model, for which the company submitted premarket tobacco product applications and modified-risk tobacco product applications in October 2023. According to PMI’s chief financial officer Emmanuel Babeau, PMI will use the pilot launch of IQOS 3 Duo primarily to fine-tune its approach in anticipation of the nationwide introduction of IQOS Iluma. PMI previously said it would launch IQOS 3 Duo in four cities in two US states, but as of April 2025, only the Austin market introduction has been announced.
Whether the company will secure FDA approval for Iluma in the second half of 2025 as anticipated remains to be seen. The Trump administration’s recent restructuring of federal health agencies led to the termination of approximately 10,000 staffers across the Department of Health and Human Services (HHS), including significant cuts at FDA, inclusive of its Center for Tobacco Products (CTP). These staffing reductions have raised concerns about the FDA's ability to process new product applications promptly, which had already been a major issue before the job cuts. As PMI navigates this complex regulatory environment, the company's ability to expand its market share in the US. will depend not only on consumer adoption but also on the FDA's capacity to evaluate and approve new tobacco products amidst ongoing organizational challenges.