Juul woes come full circle: e-cigarette maker to pay $438.5 million

Juul woes come full circle: e-cigarette maker to pay $438.5 million

E-cigarette maker Juul suffered a major financial blow on Tuesday after tentatively agreeing to pay $438.5 million to settle an investigation into its controversial marketing practices – a significant sum for a company whose 2021 net income was $2.475 billion, according to their financial filings. In the aftermath, Juul potentially shut down an investigation involving nearly three dozen states. It’s been a long and winding journey for the beleaguered company, which has raised eyebrows in recent years for buying up an entire issue of a scientific journal and allegedly targeting young people with its ads.

This latest practice is what forced Juul to agree to the nine-figure settlement paid to a number of US states, as studies have repeatedly shown that e-cigarettes have become a preferred method of smoking nicotine among people. youth. Indeed, a recent peer-reviewed study estimated that between $130 million and $650 million of Juul’s net revenue in 2018 came from young people.

According to a 2021 report from the Food and Drug Administration (FDA), approximately 2.55 million American adolescents – or about 1 in 11 (9.3%) – currently use a nicotine product; “current” is defined here as meaning that they have used the product within 30 days. This includes 2.06 million secondary school students, or 13.4% of all high school students, and 470,000 middle school students (4%).

E-cigarettes were overwhelmingly the preferred method of consuming nicotine, with 2.06 million middle and high school students (7.6%) reporting smoking while vaping. In contrast, only 410,000 (1.5%) said they preferred cigarettes.


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The Centers for Disease Control and Prevention (CDC) reports that, since 2014, e-cigarettes have remained the most frequently used tobacco product among young people. There is also circumstantial evidence that the multitude of flavors of e-cigarettes has helped the product gain traction: in 2021, 85.8% of high school students and 79.2% of college students who consumed e-cigarettes within 30 days did it with a flavored cigarette. version.

A 2022 meta-analysis of existing scholarship concluded that “the use of e-cigarettes as a therapeutic intervention to quit smoking can lead to lifelong nicotine addiction.”

“The first thing is that e-cigarettes almost always contain nicotine,” Robert Schwartz, a University of Toronto professor and executive director of the Ontario Tobacco Research Unit, told Salon. He explained that nicotine products are “very highly addictive”, adding that “research has shown very clearly that young people who vape nicotine become addicted to that nicotine”.

He explicitly linked this to e-cigarette marketing campaigns, which he said were indeed analogous to those of Big Tobacco years ago.

“A lot of the same kinds of approaches have been taken,” Schwartz pointed out. “It’s all about lifestyle. Juul, in its early youth promotions, promoted it as cool. It’s the ‘thing to do’ and using all sorts of colors and appealing images of youth themselves using vaping products, they clearly adopted tobacco tactics.”

As the recent tentative settlement makes clear, the popularity of e-cigarettes like Juul among young people is precisely what has put the company in its current predicament. When the company was first proposed in 2004 (as Ploom), its founders described it as “the rational future of smoking”. By 2007 the company had started and was valued by PitchBook at around $3 million in February 2008. In 2015, original founders Adam Bowen and James Monsees sold the Ploom brand and line of vaporizers to a tobacco company Japanese company named JTI, and on June 1 of the same year, JTI officially launched the Juul.

2016 was perhaps the pinnacle year for Juul, with sales up 600% as the product took off, becoming a cultural touchstone among Millennials and Gen Z. In November 2017, the products Juul had captured a third of the e-cigarette market – and with that success came scrutiny of ad campaigns that made them look cool and appealing to young people. Scott Gottlieb, then commissioner of the FDA, launched an “undercover blitz” against Juul in April 2018, with the stated aim of ending the sale of tobacco products to young people. In the largest coordinated enforcement effort in the agency’s history, the FDA sent more than 1,300 warning letters and fines to retailers accused of targeting minors with their tobacco products.

“A lot of the same kinds of approaches have been taken,” Schwartz pointed out. “It’s all about lifestyle. Juul, in its early youth promotions, promoted it as cool. It’s the ‘thing to do’ and using all sorts of colors and appealing images of youth themselves using vaping products, they clearly adopted tobacco tactics.”

Yet despite this negative publicity — as well as increased heat from the FDA and bans on Juul products in municipalities from San Francisco to Israel — Juul continued to thrive. In 2019, however, the House of Representatives joined the FDA in investigating Juul’s marketing practices as well as a recent decision by tobacco company Altria to buy 35% of the company. Before the end of the year, other countries like China and India had also stopped selling Juul products or banned them altogether. In 2021, Altria and Juul claimed the company was worth between $5 billion and $10 billion – and had been valued at $38 billion just two years earlier. In June 2022, the FDA finally dropped the hammer and ruled that Juul could not sell or distribute its e-cigarettes in the United States.

Although proponents of e-cigarettes claim they can be a quit smoking tool, scientific evidence strongly suggests that this is not the case. A 2022 meta-analysis of existing scholarship concluded that “the use of e-cigarettes as a therapeutic intervention to quit smoking can lead to lifelong nicotine addiction.” Similarly, a 2022 study in the British Medical Journal on vaping in 2017 found that “on average, using e-cigarettes to quit smoking in 2017 did not improve successful quitting or prevent relapses. “.

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