Vaping giant Juul Labs debates pushing back on US' new ban on e-cigarettes
File image of an e-cigarettes store in San Francisco, California, USA, June 26, 2019. EPA-EFE FILE/JOHN G. MABANGLO
By Jennifer Maloney
New York City, USA, Sep 12 (efe-epa).- American vaping giant Juul Labs was on Thursday debating internally whether to embrace or push back on part of the plan by the administration of United States President Donald Trump to pull most e-cigarettes from the market, according to EFE/Dow Jones.
The policy – affecting sweet and fruity vaping products along with mint and menthol – would be a crippling hit to the startup, which generates more than 80 percent of its sales from flavors that would be banned.
But Juul insiders agree that the move could help curb underage vaping and avert an even bigger threat to the market-leading e-cigarette maker: the possibility that the Food and Drug Administration could take Juul off the market altogether.
Though the company has decided to support a ban on most flavors, there remains a point of disagreement around menthol and mint. Some inside the company want to lobby the Trump administration to make an exception for one or both of those flavors, arguing that if Juul's goal is to convert cigarette smokers, it should offer an option for smokers of menthols, according to one of the people.
FDA officials in the past had expressed reluctance to restrict sales of menthol-flavored vaping products, saying that they represent a less-harmful alternative for smokers of combustible menthol cigarettes.
On Wednesday, Alex Azar, the secretary of Health and Human Services, cited preliminary data from a federal survey showing that the popularity of mint and menthol e-cigarettes had surged this year among teens.
Nearly 28 percent of high-school students surveyed this year reported vaping at least once in the past 30 days, up from 21 percent last year, according to the data.
The FDA's plan is to pull every vaping product off the market, except for those formulated to taste like tobacco.
Juul's tobacco-flavored pods represent less than 20 percent of the company's US sales, according to people familiar with the matter. The brand's most popular flavors are mint and mango. Some Juul users could switch to a tobacco flavor if no other were available. But some vapers could go back to smoking traditional cigarettes, analysts say.
Blamed for the rise in teen vaping in the US and under investigation by the FDA, the Federal Trade Commission, congressional committees and several state attorneys general, Juul has been pushing to expand overseas.
The startup recently issued $785 million in convertible debt, in part to fund that expansion. It launched this week in China, its 19th country.
In the first half of 2019, Juul had $1.27 billion in global revenue, including more than $100 million outside the US, according to people familiar with the matter.
Juul last year voluntarily stopped selling its sweet and fruity flavors in bricks-and-mortar stores, but continued selling flavors like mango and cucumber on its website, which has age controls.
Since then, it has called on regulators to take action against crack down on a proliferation of Juul knockoffs and other competitors who have crowded the market with fruity-flavored products that health officials say are appealing to young people.
Several Juul investors said this week they welcomed tighter oversight of the industry because it could clear out counterfeit, kid-friendly and potentially hazardous products and allow regulated products to remain.
The landscape will change in May 2020, when e-cigarette manufacturers must apply for an FDA review of any vaping product they want to sell beyond that point. They can also apply to bring flavored products back on the market.
Juul is preparing application materials for four flavors – mint, menthol, mango and Virginia tobacco – in two nicotine strengths, 5 percent and 3 percent, according to some of the people familiar with the matter.
Juul also has had internal discussions on renaming its popular mint-flavored pods to a menthol variant as part of that application, the people said. A Juul spokesman said Thursday that the company would make its submissions to the agency by May but hasn't made a final decision on which products to submit.
The FDA's planned ban could complicate ongoing merger talks between Marlboro makers Philip Morris International and Altria Group.
Altria invested $12.8 billion for a 35 percent stake in Juul last year, so its value to Philip Morris hinges in part on the e-cigarette maker's prospects. Altria sells Marlboro in the US and Philip Morris sells it elsewhere. The two companies were split apart in 2008.
Altria this week said it agreed that urgent action was needed and that it looked forward to reviewing the FDA's guidance. A spokesman for Philip Morris said the best way to guard against youth use of new nicotine products is by submitting them for FDA review.
Both companies declined to comment on their merger talks. EFE-EPA