Altria Group Inc. is expanding sales of the iQOS alternative cigarette product to Richmond in November.
The Henrico County-based tobacco giant said Thursday that it will open a dedicated store at 3402 W. Cary St. in Carytown — sandwiched in between a McDonald’s and Penzeys Spices — to sell the rechargeable “heat not burn” device during face-to-face interactions. An exact opening date has not been determined.
About 150 retail stores in the Richmond region will sell the tobacco “heat sticks” that go into the iQOS device, the company said.
The iQOS device is sold at dedicated stores only to those who are 21 years or older who affirm that they are smokers.
The expansion to Richmond comes after Altria first introduced the product in this country in the Atlanta market in September.
“Altria has a sizable employee base in Richmond and deep connections with the community that could accelerate early adoption of iQOS,” Howard A. Willard III, the company’s chairman and CEO, told analysts on a conference call Thursday.
Altria is a major employer in the Richmond area and is the parent company of top U.S. cigarette maker Philip Morris USA.
In Atlanta, the company has opened dedicated stores, kiosks or has areas within retail locations to sell the device. The heat sticks are sold in about 500 retail stores in the Atlanta area.
Altria said it expects to deploy a similar marketing strategy in Richmond as it has in the Atlanta market.
“We are pleased to expand iQOS availability as an alternative to adult smokers and look forward to sharing more details in the future,” Willard said. “The performance of iQOS in Atlanta and other lead markets will be an important input to our future commercialization plans for the brand. The primary goals of the lead markets are to determine how to best communicate with adult smokers and how to scale our efforts.”
The iQOS device was first introduced in overseas markets in 2014 by Philip Morris International Inc., a former Altria subsidiary that was spun off in 2008.
Philip Morris International says it has 12 million iQOS users globally and about 8.8 million smokers have switched to the product, which is available in 51 international markets.
In late April, the FDA approved the introduction of iQOS in the U.S., where Altria has the rights to sell the product under an agreement with Philip Morris International.
The iQOS device was introduced first in the Atlanta area as part of a lead market before the company’s planned rollout of the brand in other parts of the U.S. Atlanta was chosen as a lead market because it has several hundred thousand smokers, including a large number of Marlboro smokers, the company has said.
Production of the On! brand, an oral nicotine pouch product, should begin at the Philip Morris USA plant in South Richmond during next year’s first quarter, Willard said.
“In 2020, we are targeting annualized capacity of 50 million cans by midyear and 75 million cans by year-end, with additional capacity available if necessary,” he said.
During the third quarter, Altria acquired an 80% ownership stake in On!, a Switzerland-based maker of oral nicotine products. It formed a new subsidiary, Helix Innovations LLC, as the parent company of the venture that will make and sell the On! product.
The On! product is a pouch that contains nicotine but no tobacco leaf.
That puts the product in an emerging category of products designed to be used orally, giving the user nicotine without direct exposure to tobacco leaf.
The deal is the third significant investment by Altria in new product lines in the past year.