iQOS: a new tobacco heating product entering the tobacco and vape high-risk market

Tuesday saw a new development in the high-risk market that demands attention. Phillip Morris International’s new and unique dry tobacco vaporizer, called iQOS, was approved for sale in the US by the FDA. This is a potentially massive development, but it’s still too early to see where this goes.

However, for us working in high-risk payment gateway recommendations at Tasker Payment Gateways, this is of course big news. This means a whole new category of products being introduced to the market; a hybrid between traditional cigarettes and vaporizers (which have boomed in popularity over the last 10 years).

Let’s dig into what this product actually is, take a look at the story, and discuss where the dry tobacco vaporizer is likely to be positioned in the high-risk market. Here is what we know so far:

What is this new tobacco device?

As we mentioned earlier, this new product is a hybrid between a traditional, combustible cigarette and a vaporizer. This is maybe not surprising as its creators Phillip Morris International (PMI), and its sister company Altria, specialize in the two industries respectively. Altria owns a 35% share of the vape giant Juul, and Phillip Morris is one of the world’s largest tobacco manufacturers.

Effectively, the device heats a stick of tobacco in what can best be described as a Juul-like device that heats up the tobacco. The iQOS product includes an electronic heater blade that warms the tobacco stick. As a result of the heating chamber, with temperature settings, doesn’t actually burn the tobacco. The idea is that this is a completely new “heated tobacco product.”

Flavors and approach similar to smoking cigarettes

The device offers two “tastes” – either standard tobacco “non-flavor” or menthol (if a menthol stick is used). It then releases a nicotine-laden vapor that is similar in taste and nicotine level to a traditional cigarette.

What makes the “heat not burn” tobacco device different from a portable vaporizer

This “heat not burn” tobacco device is similar to vaporizers in that it’s a pen-shaped electronic device. It also comes with a battery pack, improving the device’s battery life, that gives off a little bit of a stylistic throwback to a cigarette case. It is clear that it’s trying to distinguish itself in style and appeal from vape products.

Another aspect that sets this type of product apart is that the heated tobacco-stick system tastes like tobacco. However, compared to traditional cigarettes and cigars, it has fewer harmful chemicals.

It’s also distinct from vape products in that it contains real tobacco with nicotine, as opposed to liquid nicotine extracts suspended in an e-liquid.

Where is this product likely to be positioned in the high-risk market?

While Phillip Morris is petitioning the FDA for permission to label the product as a “reduced risk alternative to smoking”, this is still in the pipeline. However, it’s very much being seen as an alternative to regular cigarettes, allowing cigarette smokers to find a way to wean themselves off smoking. However, the FDA has ruled that the product is still under the “cigarette” category.

This is significant for a couple of reasons that we’ll discuss below.

Advertising and marketing restrictions

As the iQOS product is still under the cigarette label, those who sell (or plan to sell) this product need to submit advertising and marketing plans for review. This also means that various warning labels need to be included, warning customers that nicotine is addictive.

Federal and legal restrictions

While it’s not extremely clear at this point what will happen in the future, as of now, pretty much the same legislation and restrictions will apply to this type of heated tobacco product as with regular cigarettes. This will obviously pose some real marketing challenges, but it doesn’t make the sales process impossible. Let’s reiterate: this is very early days for a brand new product type. Before we can make any assumptions on the scope and implementation of selling this product, we need to see where it settles within the high-risk market.

What’s the scoop on this new tobacco device?

To sum it all up, Phillip Morris International got FDA approval for the sale of its new product called iQOS on Tuesday, 30th of April.

Among the distinguishable elements of the FDA filing was that the product is different from both cigarettes and vaporizers.

One of the main reasons for distinguishing the iQOS “heat not burn” tobacco device from a vaporizer is in no small part due to the media storm surrounding vape usage among teenagers. We covered this in late 2018, if you want to read more about this back-and-forth from the FDA regarding vape sales.

However, the iQOS product is very much categorized a tobacco product and is considered a type of cigarette, even though it releases fewer toxic chemicals and carbon monoxide (seeing as the tobacco stick isn’t lit). This is a win for PMI, as they now enter the market with a tested product that has performed well in Japan and Italy, among other places, so far.

As quoted by the NY Times, André Calantzopoulos, chief executive of Phillip Morris International, said “The F.D.A.’s decision to authorize IQOS in the U.S. is an important step forward for the approximately 40 million American men and women who smoke,” adding “Some will quit. Most won’t, and for them, IQOS offers a smoke-free alternative to continued smoking.” Smoke-free smoking… It sounds intriguing.

Where does that leave us

It’s still very early days to land on any clear cut assumptions about what this product means for the high-risk cigar and vape market overall. However, it certainly looks to be an interesting development as it’s positioned right down the middle between cigarettes and vaporizers.

For us, this is an important change for a number of reasons, most pressingly as we have a huge number of vape and premium cigar clients we offer high-risk payment gateway and merchant account recommendations to. While we can only speculate at this time what might work for the sale of iQOS products, we look forward to seeing how this dry tobacco vaporizer development unfolds in the near future.

It’s too early to recommend high-risk payment gateways for the iQOS device as of yet, if you need a high-risk payment gateway for vape or premium cigar sales – we’re here for you. Simply use our contact form below, and we’ll be in touch as soon as possible.