Israel: Philip Morris circumvents ban on advertising heated tobacco at points of sale

A study published in the journal Tobacco Control[1] analyzed Philip Morris' marketing strategies for its heated tobacco product IQOS since the introduction of plain packaging and the ban on point-of-sale advertising in Israel. The results show that the manufacturer has made special efforts to circumvent these regulations and promote IQOS products at points of sale.

Philip Morris has adapted its marketing strategies since the tightening of laws in Israel regarding heated tobacco. A survey of 43 stores in 5 cities across the country showed that all stores that sell IQOS have special displays dedicated to this brand and that sellers receive financial incentives for selling heated tobacco.

Israel: Cutting-edge regulations on heated tobacco

Historically, Israel has been a pioneer in the global fight against tobacco use. As early as the 1980s, the country introduced legislation restricting tobacco advertising and imposed a ban on smoking in many public places. Recent years have seen a stagnation in this health policy, particularly due to the strong influence of the tobacco industry. However, the country has taken the lead in regulating new products and has implemented a wide range of measures banning advertising for heated tobacco. The IQOS device and its tobacco refills (Heets) have been marketed in the country since December 2016 and are currently the only heated tobacco products available in the country. Since April 2017, the IQOS device and Heets have been regulated like all other tobacco products. In March 2019, a ban on advertising (including at points of sale) came into effect for all nicotine products. In January 2020, the country imposed plain packaging and health warnings for heated tobacco products and also aligned taxation with that of manufactured cigarettes.

However, this ban remains partial because the current legislation does not include any reference to promotions or incentives offered to retailers, which are advertising methods, and price discounts to customers are still permitted.

Heated tobacco: Philip Morris uses marketing tactics similar to those used for traditional cigarettes

As restrictions on point-of-sale advertising expanded to include bans on displays and the imposition of plain packaging, PMI focused and strengthened its strategies with retailers. The tobacco company provides them with financial incentives linked to sales volumes of heated tobacco cigarettes and also provides price discounts to customers, which remain permitted under the current framework. The manufacturer is applying here the same sales tactics as those previously used for its other tobacco products.

The most common form of promotions offered to stores were financial incentives based on HEETS sales (37.5% of retailers reported receiving incentives). Some retailers reported receiving a discount based on sales, while others reported receiving incentives proportional to sales, with an additional incentive for each IQOS device sold. The most common form of promotion offered to customers was discounts on the price of HEETS (48.7% - on average 0.50 euro cents per pack of HEETS). Specific discounts were also offered when purchasing a pack (device + refills). These incentive marketing strategies (for both the retailer and the customer) increased after the ban on point-of-sale displays and plain packaging came into force.

The results of this study, together with those of a previous study conducted in Israel, suggest that PMI is also circumventing the point-of-sale display ban by using special displays and distinctive posters in order to continue to promote IQOS and HEETS at points of sale.

More than half of the retailers surveyed (56.8%, 3.8%) reported receiving more instructions and guidance from IQOS salespeople than for other tobacco products. These instructions related to the product's characteristics, their placement at the point of sale and the communication strategies to adopt with customers. According to tobacco retailers, this phenomenon had been reinforced after the ban on display at points of sale and the introduction of plain packaging came into force.

Keywords: Israel, IQOS, heated tobacco, marketing, points of sale

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