ALTRIA
The basic Juul device, which is rechargeable on a USB charging dock, shown with replaceable Juul pods. Photo: Juul Labs
Could Juul be the Newest Jewel in Altria’s Crown? An influx of cash for Christmas for the e-vapor startup. By Bob Crew, London Correspondent See TI Editorial on page 20 for the latest news on this topic.—Editor. t looks like there will be a $4- to $7-billion Christmas present for the Juul e-cigarette vaping company, probably at the beginning of 2019. This prospect has excited the media, both trade and general audience. From late November, there has been an avalanche of stories on the Internet describing the negotiations. And whether rightly or wrongly, almost all assumed that a successful acquisition is a foregone conclusion. One way or another, Altria/Philip Morris is in no-nonsense talks to take a stake in Juul Labs, the $16-billion e-cigarette U.S. startup that has swiftly
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and spectacularly grabbed three-quarters of the U.S. vaping market since its launch in 2015 (the company was called Pax Labs then). This news has to be the biggest “breaking-new-ground” tobacco industry story of the year, not only in the United States, but also globally. A stake in Juul by Altria is a big takeaway indeed. What a gift-wrapped present this is going to be for Juul if the deal is all set and ready to go in time for the festive season! Interestingly, these talks came hot on the heels of the U.S. Food and Drug Administration’s (FDA) recommendation of “sweeping measures” to crack down on what it has referred to as an “epidemic” of underage vaping.
20 TOBACCO INTERNATIONAL DECEMBER 2018
A Clear Path to Control But it really does need to be clearly understood that “a deal will only happen if Altria has a path to control,” according to a mystery person who has spoken to “several large investors in the Altria tobacco company.” Financial analysts at Wells Fargo have estimated that U.S. e-cigarette sales have risen from $2.5 billion in 2012 to $5.5 billion this year. Meanwhile, the traditional tobacco companies have, predictably, been pouring millions and/or billions of dollars into the carefully planned development of alternatives to combustible cigarettes. They have also had to watch their share of this new market dwindle as Juul has grown rapidly and been on a roll to become the jewel in the crown of the U.S. alternative e-cig vaping market. It’s not rocket science to deduce that, with a staggering a $2.5 to $5.5 billion leap in the market, it was only a matter of time before, sooner or later, a big tobacco company would set its sights.
