Altria Gets 35% Stake in Juul

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.

Altria Eyeing a Minority Stake in Juul

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?

Juul Sues Makers of Copycats

Juul Labs has initiated lawsuits against several companies that it claims are infringing on its copyright. Some suits were filed with the International Trade Commission while others were filed in district courts. In total, more than 30 companies are affected by the suits. Most of the said companies are based abroad, with China and Uruguay taking the largest share of the companies listed in those complaints. The ITC (International Trade Commission) cannot award monetary damages in case Juul Labs wins the cases. However, the suits in the district courts can result in monetary awards, so that could explain why mirror suits were filed in these courts too. Juul claims that those look-alike products aren’t subjected to any controls and can endanger public health since minors can access them. In response, some of the companies cited are saying that Juul is using underhand tactics to lock out any competition in order to raise the price of its products. All that is left is for the competent entities to listen to both sides and decide appropriately.

Juul Feels the Heat and Increases Its Spending on Lobbying

Juul Labs, the manufacturer of Juul electronic cigarettes, have been under scrutiny by the FDA and Congress regarding why Juul products are so popular among teens and the youth. The FDA went on to describe teen vaping as an “epidemic” and the agency threatened to ban the sale of any flavored e-cigarette juice or product which is seen as appealing to teens and the youth. Juul Labs has responded by cooperating with the regulator as well as increasing its expenditure on lobbying by 167 percent in the third quarter of this year when that spending is compared to what was spent in the second quarter of this year. According to Juul’s declaration, it spent $560,000 on lobbying while the second quarter cost for lobbying was just $210,000. The e-cig maker appears to be in a fight for its very life. It will be interesting to look back and judge whether the lobbying had any effect in softening the rate at which regulators clamped down on different e-cig manufacturers.