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  By Emma Rumney
  
  LONDON, March 28 (Reuters) - Philip Morris International is preparing
  to launch its flagship heated tobacco device IQOS in Austin, Texas,
  indicating it will be the first testing ground for its U.S.
  
  entry, job adverts on LinkedIn show.
  
  IQOS, the top selling heated tobacco device globally, sits at the core of the world's
  biggest tobacco company's efforts to transform its image from a purveyor of cigarettes to a driving force behind the switch to healthier options.
  
  
  Investors are waiting to see if Philip Morris (PMI) can create a market for heated tobacco in the United
  States, where vaping currently dominates.
  
  The country offers PMI a substantial base of new users
  and, potentially, a hefty new income stream that could prove transformative as it
  tries to generate an increasing proportion of revenue from
  products other than cigarettes.
  
  PMI spent the vast majority of $10.7 billion of expenditure on smoking alternatives
  between 2008 and 2022 on IQOS' development.
  
  The Marlboro maker had said it planned to launch the device in four cities in two U.S.
  states starting with one city in the second quarter, ahead of a broader roll-out likely in 2025.
  However it had not released further details, including around which cities or
  states it is targeting.
  
  Job adverts posted on LinkedIn reveal that the
  company is laying the groundwork for an IQOS launch in Austin, Texas.
  The adverts, posted this month, include positions as field sales representatives,
  territory managers and retail sales advisors.
  
  
  Whether or not IQOS takes off in the United States
  will be significant given the market's size. Euromonitor estimates total U.S.
  nicotine sales, excluding nicotine replacement therapies, were worth some $143.6 billion in 2022.
  
  
  While cigarettes accounted for the vast majority of
  that, Euromonitor forecasts their value will shrink by 30% by 2027.
  
  The value of vapes, heated tobacco products and other alternatives will
  rise by 36% over the same period, it says.
  
  TESTING GROUND
  
  Products like IQOS work by heating up sticks of ground up tobacco without burning them in an attempt to avoid the harmful chemicals released via combustion.
  
  Heated tobacco products have so far been largely absent from the U.S.
  market aside from limited sales of IQOS managed by PMI's former parent, Altria, and
  another product offered on a limited scale by British American Tobacco.
  
  
  
  PMI paid Altria $2.7 billion for the rights to market IQOS in the United States in 2022.
  BAT has subsequently cast doubt on the category's potential in the country, where
  vaping and other alternatives are already well established.
  
  
  
  Texas offers an interesting trial market given its broad demographics,
  ranging from super rural to highly urban, said Brett Cooper, managing partner and analyst at Consumer Edge, an equity
  research firm. He added that diverse cities like Austin, Houston and Dallas provide
  access to a wide range of consumer groups.
  
  
  Tobacco taxes in the state are also relatively low,
  according to Centers for Disease Control and Prevention (CDC) data.
  The excise tax rate on a pack of cigarettes in Texas stood
  at $1.41 in September 2023, the data shows - far higher than the 17 cents in Missouri but also well below the more than $5 per pack in New York.
  
  
  Texas introduced new laws around e-cigarettes in January, restricting devices
  that resemble food products like candy or fruit juice, or that include a symbol or celebrity
  image targeted at minors or depict cartoon-like fictional characters.
  
  
  PMI bets IQOS can win a 10% share of U.S. tobacco and heated tobacco unit
  volume by around 2030.
  
  Ahead of IQOS' launch, the company has also been building out its lobbying firepower across the United States.
  The company wants two thirds of its revenue to come from "smoke-free" products by 2030.
  
  (Reporting by Emma Rumney; Editing by Matt Scuffham and Susan Fenton)
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