Philip Morris International , the world's largest international tobacco company, said it could eventually stub out cigarette sales as it launches an alternative product in Britain.
Underlining the regulatory pressures facing the tobacco industry, a British court also on Wednesday rejected an appeal against new rules prohibiting the use of marketing such as logos or colours on cigarette packs.
The British government's victory could spur other countries to follow suit, highlighting the need for tobacco companies to develop alternatives to cigarettes to respond to health concerns that are leading more people to quit the deadly habit.
Executives from Philip Morris, which sells Marlboros everywhere except the United States, said their ultimate goal was to phase out cigarettes.
"We certainly see a future where Philip Morris no longer will be selling cigarettes in the market," Martin Inkster, managing director of Philip Morris UK and Ireland, told Reuters.
He said that would take many years and require the help of governments and regulators. Philip Morris still produces more than 870 billion cigarettes each year.
The result of a decade of research and $US3 billion ($A4 billion) of investment, the company said its new IQOS product was a step towards a smokeless future.
The device, already on sale in over a dozen markets including Japan, Switzerland and Italy, heats tobacco enough to produce a vapour without burning it. The company says the vapour has less than 10 per cent of the amount of harmful chemicals found in cigarette smoke.
Philip Morris was the only of the big four tobacco companies not to challenge a previous UK court ruling upholding the government's plain packaging law, saying it preferred to focus on lower-risk products, which are a tiny market now, but should grow in coming years.
Philip Morris says its "heat not burn" tobacco products should have a more authentic feel and appeal to smokers who find it hard to stick with e-cigarettes.
Health campaigners remained cautious.
The UK health charity Action on Smoking and Health said that until independent evidence shows that IQOS and similar products are substantially less harmful than smoking, they should be regulated in the same way as cigarettes.
