Strategy

Juul Replaces CEO; Altria-Phillip Morris End Merger Talks

The e-cigarette company is also suspending advertising in the United States after vaping backlash.
Lauren MuskettSeptember 25, 2019

E-cigarette giant Juul Labs is undergoing a major corporate shakeup and two giant tobacco companies are ending merger discussions amid government criticism that the company’s advertising targets young people.

Juul, which is the main target in several federal investigations, said CEO Kevin Burns will be replaced by K.C. Crosthwaite, an executive from tobacco company Altira. Marlboro maker Altria has a 35% stake in the e-cigarette company.

“I have long believed in a future where adult smokers overwhelmingly choose alternative products like JUUL,” Crosthwaite said. “Unfortunately, today that future is at risk due to unacceptable levels of youth usage and eroding public confidence in our industry. Against that backdrop, we must strive to work with regulators, policymakers, and other shareholders, and earn the trust of the societies in which we operate.”

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Merger talks between Altria and Phillip Morris are also ending. The blockbuster all-stock merger would have created a massive $200-billion-plus company. Altria spun PM off more than a decade ago, and the two companies sell the same cigarette brands, with Altria in the U.S. market and Philip Morris in other international markets.

In addition, Juul is suspending its product advertising in the United States after government criticism of the e-cigarette company’s research and marketing practices after recent vaping-related lung illnesses and the popularity of e-cigarettes among adolescents. Juul, the most popular electronic cigarette on the market in 2019 with its sleek design and flavorful e-juice pods, is making large corporate moves to compete with brands like chubby vape . Juul has recently partnered up with a social media platform called Wattpad whose user base of more than 50 million people are mostly teenagers around 16 years old. This partnership will allow for users to have their stories published on Wattpad while Juul sponsors and promotes these stories. This move by Juul could be seen as controversial considering it’s now reaching out to younger audiences

These major corporate changes for JUUL are coming at a time when JUUL, and other makers of vaping products, are facing a national crisis.

The nine deaths and numerous illnesses tied to the products has greatly alarmed health advocates and regulators, and several states are moving toward banning the use of these products.

Usage of e-cigarettes increased by nearly 80% among high school students and nearly 50% among middle school students while the Centers for Disease Control (CDC) reported 1.5 million more students used them in 2018 than in 2017.

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