As Philip Morris International (NYSE:PM) anticipates the U.S. rollout of its IQOS heated tobacco device this October, the global cigarette giant is creating a new executive position: CEO of Philip Morris America. PMI's current CFO Martin King will assume the role and report directly to PMI CEO Andre Calantzopoulos.
Philip Morris International has partnered with Altria (NYSE:MO) for the distribution and sale of the IQOS domestically. So far, the device has been introduced in two markets: Atlanta and Richmond, Virginia.
Going all-in on e-cigs
The IQOS heated tobacco device is Philip Morris's big bet on a smoke-free future. Rather than burning tobacco, as with a traditional combustible cigarette, or heating an e-liquid as most electronic cigarettes do, the IQOS heats actual tobacco to the point where a vapor, not smoke, is created. It is smoke that contains most of the toxic chemicals associated with traditional cigarettes and studies have found e-cigs contain 95% few harmful chemicals.
Philip Morris is the only electronic cigarette manufacturer to so far successfully navigate the Food and Drug Administration's regulatory process for being able to market a cigarette alternative. E-cig makers have until May to submit their own applications or face having their devices removed from store shelves.
So far, only British American Tobacco (NYSE:BTI) has submitted an application for its Vuse device. Leading e-cig Juul Labs is preparing its own application with assistance from Altria, but there are doubts about whether it will be approved because of the device's popularity with teenagers.
The new division of Philip Morris America should not be confused with Altria's Philip Morris USA business, which manufactures and sells traditional cigarettes in the U.S.