The protracted negotiations between “Big Tobacco” company Altria and Juul Labs finally came to an end with both companies announcing that Altria had injected $12.8 billion in Juul Labs in exchange for a 35 percent stake in the electronic cigarette maker. Insiders privy to the details of the deal say that Altria is contractually bound not to sell its stake or acquire more shares for at least six years from the date when the deal was signed. The partnership with Altria marks a huge turnaround for Juul since it had positioned itself as being opposed to Big Tobacco. However, Juul’s recent issues with regulators and legislators may have convinced it to sign the deal so that Altria can deploy its lobbying and financial muscle to help deal with the authorities breathing down Juul’s neck. Altria also brings superior distribution and retail systems to the deal, while the tobacco giant will get a slice of the massive sales made by Juul (75 percent of the entire e-cig market in the US). One can only hope that this “marriage” won’t result in the total takeover of the vaping industry by Big Tobacco and its ills.
The Wall Street Journal published a news item revealing that combustible cigarette maker Altria is having discussions with Juul Labs in order to acquire a significant minority stake in the electronic cigarette giant. It is widely expected that the outcome of those talks will be announced in a few weeks. But why would Juul be reversing its earlier distance from “Big Tobacco” firms in its marketing efforts? Juul has the lion’s share of the e-cig market (75 percent) and it has come under intense pressure from regulators regarding the popularity of its products among teens. Teaming up with Altria could be a mutually beneficial arrangement in which Juul Labs benefits from the decades Altria has in dealing with tough regulatory scrutiny and pressure, while Altria stands to line its coffers with earnings from the sale of Juul products. Interestingly, both companies announced separately in recent weeks that they were halting the sale of some of their flavored e-cigarette products in light of concerns over teen vaping. How will this new deal affect the future of both companies?
Amid intense pressure from the FDA and legislators, some electronic cigarette makers are turning to self-regulation. They probably fear that they could lose their businesses if the FDA clamps down on them. Altria, one of the leading e-cig makers, has announced that it will stop making some of its flavored products until the FDA brings clearer rules on flavored e-cigs or the issue of teen e-cig use is conclusively addressed. The flavored products to be affected by this announcement are pod-based (similar to Juul pods). They constitute 20 percent of the products made by Altria. Other electronic cigarette makers are yet to make any decisions about their flavored products as they await the outcome of the investigations being conducted by the FDA on the matter. One can only hope that the attempts to stop minors from using electronic cigarettes don’t turn into a widespread witch-hunt targeting the vaping industry as a whole.