According to the “Wall Street Journal”, Altria, formerly known as the infamous Philip Morris, is working to join forces with Juul Labs Inc. According to an anonymous source, negotiations are already underway. While the tobacco company would hold only a fractional share of the Californian start-up if the agreement goes through, this transaction would represent a tectonic shift in the tobacco industry.
Juul Labs has risen like a shooting star since its inception three years ago. Today, the young company has a solid grip on 72,9 % of the electronic cigarette market in the USA, and counts over a thousand employees for a turnover approximated at 245 Million dollars for 2017. Recently, however, Juul’s commercial strategies have come under fire. The FDA’s main worry is how Juul seems to encourage vaping amoung younger consumers.
Across the table, Altria is one of the most powerful multinationals in the world. Founded in 1965, they employ around 8 300 people. Power-house brands owned by the firm include Marlboro, the world’s best-selling cigarette since the 70s. But recently the group has been suffering with the global dip in cigarette consumption, and the company’s worth has tumbled 15% across stock markets last year. And just this November, like a stab to the heart, the FDA banned the sale of menthol cigarettes, cutting a sector that represents one third of the tobacco market.
Change of tack for Juul Labs
Some observers have expressed surprise, even shock at this new reality where an e-cigarette giant does business with a tobacco company such as Altria. A certain amount of respect for Juul Labs had been established with their oft-stated total independence from Big Tobacco, given their mission statement was to eradicate cigarettes and replace them with vaping devices, products which have been proven to be largely less harmful to human health. Yet since its creation, the young San Francisco company has been under wave after wave of legislative attacks by the FDA.
Siding with Altria could allow Juul Labs to benefit from the legal expertise of the cigarette company in the shadow boxing game of regulatory strategy. Since the 90s, tobacco giants have been confronted time and time again by legal trouble for endangering the health of consumers, falsified documents, and other very serious infractions. Despite this, for many vaping enthusiasts, this new collaboration has the bitter taste of betrayal.