article-aa

Between 800 and 950 employees will be let go in what the San Francisco-based e-cigarette company called part of its “ongoing reset” unrelated to the COVID-19 pandemic. The layoffs come months after the company slashed 650 jobs as it grappled with declining market share and increased regulatory scrutiny. (Bloomberg, The Wall Street Journal)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Once the stuff of Silicon Valley dreams, Juul has been a particularly wretched investment for Altria Group. The tobacco giant has twice written down its US$12.8-billion investment in the company, valuing its 35 per cent stake at US$4.2 billion in January.

article-aa

The antitrust agency alleges tobacco giant Altria exited the e-cigarette market and agreed “not to compete in return for a substantial ownership interest in Juul”—35 per cent of the company, for which Altria paid US$12.8 billion in December 2018. The administrative trial is scheduled to begin on Jan. 5, 2021. Juul declined to comment to The Wall Street Journal. Altria general counsel said its investment “does not harm competition.” (The Logic, The Wall Street Journal)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The FTC hasn’t said if it wants to unwind the deal, but Altria’s stake in Juul is worth much less now than when it was acquired. In January, Altria wrote down its investment for a second time, cutting US$8.6 billion in total. Both sides have faced challenges. In November 2019, Juul announced it would lay off 650 staff and reduce expenses by US$1 billion. The two firms are also linked through their executive ranks: K.C. Crosthwaite, who became Juul’s CEO in September 2019, is Altria’s former chief growth officer, while the startup’s regulatory head, Joe Murillo, joined from the tobacco firm the following month.

article-aa

Thirty-nine states are investigating whether the e-cigarette company targeted teens in its marketing and made misleading claims about the safety of its products, including the concentrations of nicotine in its devices and their ability to help people quit smoking. (The Associated Press)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The San Francisco-based company has taken a hit to its business, losing about US$26 billion in value in recent months as regulators and public health officials call for e-cigarette restrictions or all-out bans to help curb the uptick in youth nicotine addiction and lung injuries linked to e-cigarettes. It’s responded by suspending sales of most of its flavoured products in Canada and the U.S., scaling back its global expansion plans and pulling out of Indonesia, where vendors continued selling to minors. On Monday, Juul said it will add a feature to its vapes in the U.S. that lock out users under the age of 21, and The Logic reported that the firm has applied for a patent for technology it says would use machine learning to help wean users off nicotine.

article-aa

The tobacco giant now values the vaping company at roughly US$12 billion, down from the US$38-billion valuation that saw it pay US$12.8 billion in cash for a 35 per cent stake in the company in December 2018. Altria had already written down its investment by US$4.5 billion in October 2019. (The Wall Street Journal)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Altria CEO Howard Willard said he was “highly disappointed” in the performance of the company’s investment. Since it bought in, e-cigarette manufacturers have faced lawsuits and increased regulatory pressure amid public health concerns and worries about vaping’s attractiveness to young people. Juul has tried to get ahead of the backlash; as my colleague Murad reported earlier this month, its Canadian subsidiary has temporarily stopped producing most flavours of its vaping pods—believed to be particularly appealing to the teens—in an attempt at “earning the trust of society.” That decision came after the parent company’s removal of most flavoured pods from the U.S. market over the last two years, in the lead-up to a federal ban. Altria also announced it will stop providing Juul with marketing and retail distribution, offering assistance with regulatory wrangling instead. Its shares were down nearly five per cent in late-day trading.

article-aa

The e-cigarette company is soliciting buyers for a 28-storey building it bought five months ago. Juul paid US$1,093 per square foot, one of the highest rates ever paid for an office building in the city. The company planned to move employees into the new office—which is five times bigger than its current headquarters—in 2020. (San Francisco Chronicle)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Juul’s financial outlook has changed drastically since it bought the building. At the time, it had 1,200 employees in the city and was growing rapidly. Now, in the face of intensifying regulatory pushback, it’s planning to scale back its spending by US$1 billion and cut 650 employees—about 16 per cent of its global workforce. The company laid off 245 staff in the Bay Area this week. Juul owns the greatest share of the e-cigarette market by far, placing it at the centre of a panic around the uptick in youth vaping and the more than 2,000 deaths linked to e-cigarette use. In Canada, a new survey of more than 75,000 high school students in B.C., Alberta, Ontario and Quebec found that between 19 and 32 per cent of them had vaped in the last month. Canadian health officials have called for emergency legislation to stop young people from getting addicted to e-cigarettes, but regulators have been slow to act. Parts of the U.S. are moving faster: On Thursday, New York’s state attorney general announced plans to ban flavoured e-cigarettes as early as next week.

article-aa

The San Francisco-based e-cigarette company will lay off 150 more employees than previously announced as it faces regulatory pressure in the U.S. The company will lose about 16 per cent of its workforce with the cuts, which are intended to “right-size” the business after a pace of adding about 300 staff per month. Juul told The Logic the cuts will focus on the marketing team, which has already suspended broadcast, print and digital advertising in the U.S. (The Mercury News, The Logic)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The cuts follow a US$14-billion decrease in Juul’s valuation after Altria, its biggest shareholder, wrote down its US$12.8-billion investment by US$4.5 billion. Last month, Juul stopped selling most of its flavoured products in the U.S.—which account for about 80 per cent of its sales in the country—in anticipation of legislation to ban the products, which are known to be attractive to young people and non-smokers. Lisa Hutniak, Juul’s head of communications in Canada, declined to answer The Logic’s questions about whether the cuts will affect the company’s business in Canada, where there have been proportionately fewer cases of vaping-related illnesses than in the U.S., and where lawmakers are taking a less urgent approach to regulation.

article-aa

Siddharth Breja, who was vice-president of global finance at Juul from May 2018 to March 2019, claims the company shipped a batch of about one million contaminated e-cigarettes in 2019, which he said it never issued a recall for or told customers about. Breja’s suit—which claims he was fired for whistleblowing and objecting to the company’s conduct—also alleges Juul sold pods that were almost a year old. Breja claims that when he advised then-CEO Kevin Burns against selling the old products, Burns replied, “Half our customers are drunk and vaping like mo-fos, who the fuck is going to notice the quality of our pods.” (The Logic)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: This is another in a string of bad headlines for Juul. The company pulled much of its product in the U.S. earlier this month in anticipation of sweeping bans on flavoured vaping products. It also plans to lay off between 10 and 15 per cent of its workforce—about 500 people—to focus on regulatory compliance rather than marketing. Despite the popularity of Juul’s products—its products account for about 75 per cent of the U.S. e-cigarette market——it has largely avoided blame for the rise in vaping related illnesses in the U.S., with health officials pointing instead to THC-containing products and devices bought on the black market. But this suit calls into question the company’s quality control at a time when regulators are on high alert for what exactly is causing vapers to get sick.

article-aa

The company plans to cut between 10 and 15 per cent of its staff as part of a “necessary reset,” said CEO K.C. Crosthwaite. Juul, which is facing broad regulatory pressure, will also reduce its marketing budget and focus instead on “earning a license to operate in the U.S. and around the world,” said Crosthwaite. (Wall Street Journal)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The U.S. Food and Drug Administration (FDA) is expected to enact regulations banning e-cigarette companies from selling certain flavoured products; they’ll also need to apply for FDA approval before selling their products in the U.S. Juul, the market leader, has tried getting ahead of the laws by pulling candy-, dessert- and fruit-flavoured “e-juice” and halting federal lobbying efforts against the FDA—a measure that could be hurting its growth in the short term. Health Canada is also reviewing its vaping regulations after a rise in vaping-related lung injuries in the U.S. So far, it’s business as usual for Juul in Canada, despite public health groups calling for an immediate ban on flavoured products, which accounted for about 80 per cent of the company’s sales this year.