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Juul Labs e-cigarettes banned in US

Juul Labs e-cigarettes banned in US

The US health agency (FDA) struck hard on Thursday to try to curb vaping among young people. It has banned the sale in the United States of all Juul Labs brand electronic cigarettes, a blow for the company which plans to appeal.

The start-up enjoyed phenomenal success in the late 2010s with its USB-shaped vaporizers and fruity-flavored nicotine refills. But the FDA said it had failed to demonstrate that the marketing of its products was “appropriate for the protection of public health”. Following this decision, “the company must stop selling and distributing” the products for which it currently has authorization and those already in stores “must be withdrawn” from sale.

Prohibited flavored tastes

The agency had already banned in 2020 the marketing of refillable vapes, of the Juul type, with flavored tastes, only authorizing tobacco and menthol flavors. She was also tasked with reviewing vaping products to ensure that the benefit to adults, including helping them quit smoking traditional cigarettes, outweighed the risks posed to younger people.

As part of this review, it challenged the vapers of several companies but also gave the green light to certain products presented by the companies RJ Reynolds (subsidiary of British American Tobacco), Logic or Njoy.

The ban announced Thursday demonstrates the FDA’s commitment “to ensuring that all e-cigarettes and other products that deliver nicotine through an electronic device currently on the market meet public health standards,” the boss said. of the agency, Robert Califf, in the press release.

A marketing strategy aimed at young people

The agency does not consider that Juul’s products present an “immediate risk” but judges that the company has not provided enough data to be able to assess “the potential toxicological risks”. The San Francisco-based start-up claims to have “provided enough information and data” to resolve all the issues raised by the agency. She plans to seek a stay of the decision and explore all options available to her, including an appeal.

The start-up has been accused of having largely participated in the skyrocketing of vaping among adolescents with advertisements and marketing operations particularly targeting high school students. Faced with pressure from the authorities, Juul Labs had already suspended sales of flavored refills, popular with young people, in 2019 and had undertaken to review its marketing strategy.

Juul Labs’ value plummets

The company currently holds 36% of the market share of electronic cigarettes in the United States, valued at around 5.3 billion dollars per year, according to figures from the firm Nielsen quoted in a note from Goldman Sachs. This is less than the 70% of 2019 but it remains number one. If the ban remains in force, Juul Labs “still has a promising presence in other markets”, in Asia or Europe for example, add Goldman Sachs analysts.

The American tobacco company Altria, which owns 35% of the shares of Juul Labs, had made a big bet on Juul Labs in 2018 by investing more than 12 billion dollars in an operation valuing it 38 billion. She then wanted to diversify her business, sales of classic cigarettes declining for a long time in the United States.

But in the face of new restrictions from health authorities and costly legal disputes, the value of Juul Labs has since melted. Altria, which has already recorded more than 11 billion charges on this unfortunate investment in its accounts, estimates that the start-up was worth less than 5 billion dollars at the end of March.

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