Cigarette maker Altria which owns Marlboro brand cigarettes announced that it is buying a minority stake in vaping firm Juul Labs which shows how the fast growth of e-cigarettes is changing tastes of smokers. Atria stated that this move was in preparation for a future where smokers are increasingly moving towards non-combustible products over cigarettes. Altria is buying 35 percent of Juul Labs that is based at San Francisco for £ 38 billion. Juul was founded three years ago and it recently raised funds from private investors valued at about $16 billion. It is already a market leader in e-cigarettes at its home country USA and its deal with Altria will help its distribution to convenience stores and other retail stores.
Experts say that this partnership will help Juul use Altria’s lobbying expertise to stay clear of government regulations as the increase in vaping habits of teenagers has led civic bodies to raise an alarm to ban underage smoking. According to data of Center for Responsive Politics, Juul has spent around $890,000 in lobbying this year but that is way below Altria’s expenditure of more than $7 million this year for the same purpose making it one of the biggest spenders in tobacco industry of US.
Last year Altria made another un-traditional purchase by investing $1.8 billion in Canadian cannabis producer Cronos. Juul has grown by leaps and bounds and according to Nielsen retail data analyzed by Wells Fargo as it grew from 13.6 percent in 2017 to more than 75 percent of market in December 2018. The concern about vaping among youngsters has however led FDA to announce new curbs on sales of its popular flavored e-cigarette products called Mango and Cool Cucumber. Altria’s Marlboro Man that was once the symbol of its glory and popularity has also said that it will soon discontinue some of its own e-cigarette brands after the tie up with Juul.