The introduction of Juul vapes in 2015 was a game-changer for the e-cigarette industry. The compact, discreet, and easy-to-use devices quickly gained popularity among smokers looking for a less harmful alternative to traditional cigarettes. However, the rise to fame was swift for Juul.
Altria Group Inc. agreed to buy vaping startup Njoy Holdings Inc. for roughly $2.75 billion in cash, closing their business relationship with Juul Labs Inc. This marks a new direction for the Marlboro tobacco company when it comes to cigarette alternatives.
The deal closing was announced early Monday morning after reports surfaced last month. As Juul continues facing legal challenges, Altria Chief Executive Officer Billy Gifford stated, “we are continuing to explore all options for how we can best compete in the e-vapor category.”
Representatives from Juul commented that the company now has “full strategic freedom” to explore other partnerships after being released from Altria.
The e-cigarette company rose to fame in 2015, capturing nearly 70% of the U.S. e-cigarette market by 2017, its valuation skyrocketing to $16 billion. However, the company’s success was short-lived.
In 2018, concerns about Juul’s popularity among teenagers led to increased scrutiny from the U.S. Food and Drug Administration (FDA). The agency accused Juul of marketing its products to minors and demanded that the company take action to address the issue.
Despite their efforts to limit underage access to their products, Juul’s reputation was tarnished, and the company faced numerous lawsuits from parents, schools and health organizations claiming that the company’s marketing tactics had contributed to a surge in teenage vaping.
Moreover, Juul’s profits took a hit as the FDA launched an investigation into the potential health risks of e-cigarettes.
By 2020, Juul’s market share had plummeted to around 50%, and the company’s valuation had dropped to $10 billion. In addition to the regulatory challenges, the COVID-19 pandemic further impacted Juul’s sales as many vape shops were forced to close.
Altria shares were up 1% this morning, giving it a market valuation of about $83.9 billion.
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