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The city of Austin, in Texas, will be where Philip Morris International (PMI) first tests its Iqos 3 in the US, with testing set to go ahead within the next three months.
Multiple sources have essentially confirmed this is likely the case through job postings on LinkedIn, though PMI has continued to neither confirm nor deny the accuracy of these investigations.
A spokesperson told TobaccoIntelligence simply: “All PMI has said regarding US commercialisation of Iqos is that a first city test is planned with the Iqos 3 system in Q2.”
With all signs pointing to Austin, and PMI not bothering to deny it – which it would have to do if it was outright wrong – it is worth looking at why the city has been chosen as the initial testing ground.
It was noted by some sources that Texas has a low cigarette tax rate, which could be a reason for PMI’s interest in running the trial there. Heated tobacco products (HTPs) would be taxed as cigarettes in Texas – as they would be in the majority of US states. However, there are some jurisdictions where tobacco sticks would be taxed under different tobacco product regimes, potentially lowering the tax burden placed on the products.
Why Austin? For its tax category or its weirdos?
But given this is a trial, perhaps PMI wanted to see how HTPs would perform when taxed similarly to cigarettes whilst avoiding any unnecessary complications or excise issues further down the line that might arise from basing a trial in states such as Florida, Illinois or Minnesota where heated tobacco falls under a different category or its duty is still currently open to interpretation.
Austin also provides a unique variety of demographics for the US. It is a university town with a strong alternative and liberal reputation in an otherwise conservative state. This likely means that PMI will be able to assess Iqos’s attractiveness to an array of adult testers in a small area – from the university-educated to rural blue-collar workers through to the socially conservatively inclined.
The city also represents a relatively compact mid-sized urban area that should not burden initial logistics of a trial run. Austin is considered the 10th largest city in the US. But as a greater metropolitan area, it falls down to a more manageable 28th in ranking.
These factors all add up to make a good argument for PMI to keep Austin not only weird, but also well-stocked in heated tobacco.
– Freddie Dawson TobaccoIntelligence staff
Photo: Larry D. Moore, Wikimedia Commons
