This past year was a terrible one for Juul. In December of 2018 the NIDA-funded Monitoring the Future (MTF) survey revealed that the percentage of students who reported vaping nicotine during the past 30 days doubled among 12th graders (from 11% to 21%) and among 10th graders (from 8% to 16%). The lead author of the study said the policies and procedures in place were not working to prevent youth vaping. “We need new policies and strategies, such as the FDA’s actions announced last month to curb the sales of the JUUL-branded vaping devices.” Two studies published in the Journal of the American Medical Association found that 27.5% of high school students reported current use of e-cigarettes, and more than half who vape used Juul. “‘Juuling’ has become synonymous with vaping for some teens.”
In November of 2018 Juul Labs CEO Kevin Burns announced an action plan that stopped selling some Juul flavor pods at the retail store level (Mango, Fruit, Crème and Cucumber), leaving only Menthol and Mint flavors. They shut down social media accounts with Facebook and Instagram, saying, “By deterring social media promotion of the JUUL system by exiting our accounts, we can better prevent teens and non-smokers from ever becoming interested in the device.” There is an embedded video explaining the lengths Juul Labs planned to go to prevent teen access to their products.
Juul Labs then launched a multimillion-dollar ad campaign attempting to rebrand itself as a stop-smoking aid for adults, spending $11.8 million on TV ads in the first four months of 2019. The ads avoided key word associated with FDA-approved smoking aids, such as “quit,” “addiction” and “health.” Instead, the company’s ads referred to “switching,” to Juul to get a nicotine “fix.” Juuling was said to be an alternative to smoking. The Atlantic noted how Juul seemed to be following a familiar marketing strategy, one used by Big Tobacco.
Throughout the 20th century, as warnings about the health risks of cigarettes arose, tobacco companies repeatedly found new ways to downplay concerns and advertise their products as healthy options. When their claims were refuted by evidence, they traded them out for new claims.
No e-cigarette, including Juul, has been approved by the FDA to help smokers quit, and there is even a disclaimer to that effect on Juul’s website. “I think the Juul ads are very carefully written and lawyered to confuse the public,” said Stan Glantz, a tobacco control researcher at the University of California San Francisco. A letter from the American Heart Association, the American Academy of Pediatrics and four other groups said:
Juul, a product that FDA has found to be largely responsible for the current epidemic of youth usage of highly addictive e-cigarettes, is being advertised and marketed on a massive scale as a smoking cessation product, without the required review and approval by FDA.
In Europe, nicotine levels are capped and advertising is tightly restricted. Britain and other European countries have promoted e-cigarettes as a reduced-risk product to smokers. They also ban most e-cigarette ads on television, newspapers, magazines and websites. By contrast, the FDA permits marketing across all these requiring the ads carry a single warning message: “This product contains nicotine. Nicotine is an addictive chemical.”
There was also a surge of severe lung illnesses linked to vaping. By December 17, 2019, the CDC reported 2,506 hospitalized lung injury cases associated with vaping from all fifty states, and 54 confirmed deaths. Vitamin E acetate was identified as a chemical of concern among people with lung injury (EVALI) cases. The FDA found that THC was present in most samples tested, and most patients reported a history of using THC-containing products. The agency suggested adults who continued to use e-cigarette or vaping products should carefully monitor themselves; and those who do not currently use tobacco products should not start using e-cigarette products: “There is no safe tobacco product.”
Big Tobacco wanted to get a piece of Juul. In December of 2018, the tobacco giant Altria invested $12.8 billion for a 35% nonvoting stake in Juul Labs, with the ability to appoint one director to the board. They appointed K.C. Crosthwaite, Altria’s chief growth officer. The Motley Fool reported that upon regulatory approval, Altria’s nonvoting shares will automatically convert into voting shares and the tobacco company then had the right to appoint a third of Juul’s directors. Among other provisions, Altria would also be able to sell its shares on the market if Juul has an initial public offering. Companies exchanging nonvoting shares for voting shares in an acquired company are required to tell the FTC about it.
Meanwhile, Juul was trying to stay ahead of what was looking like an Armageddon of federal regulation for the industry. In a CNBC documentary, Juul CEO Kevin Burns said he would tell the parents of teens addicted to Juul products, he was sorry: “First of all, I’d tell them that I’m sorry that their child’s using the product.” He went on to say Juul was not intended for them. “I hope there was nothing that we did that made it appealing to them. As a parent of a 16-year-old, I’m sorry for them, and I have empathy for them, in terms of what the challenges they’re going through.” In August of 2019, Burns told Tony Dokoupil on CBS This Morning, not to use their product, telling him, “Don’t use Juul.” Then at the end of September of 2019, Juul Labs announced Kevin Burns would resign as CEO and be replaced by K.C. Crosthwaite.
In a statement announcing that Altria was moving ahead with notifications of its conversion, the company said: “Altria continues to believe that its investment and the services Altria has agreed to provide JUUL will promote competition and have long-term benefits for adult smokers. Altria continues to anticipate that the conversion of its JUUL shares will occur as planned.” When the move is completed, Altria will have much more control over the direction Juul takes. Juul should be in a much better position to meet regulatory requirements because it will have Altria to help it meet the government’s expectations.
The New York Times reported that in changing its leadership, Juul was looking to Big Tobacco for its survival as it faces a federal criminal inquiry, new bans on some of its products, and multiple state and federal investigations into its marketing practices. In announcing its change of leadership, Juul also said it would not fight a proposal to ban most flavored e-cigarettes, which would have a seriously negative effect on its domestic sales. The company also said it would end its marketing campaign, “Make the Switch,” which the FDA said could be construed as an illegal effort “to portray its e-cigarettes as safer than traditional cigarettes.”
Within the last week alone, several television networks decided to stop broadcasting Juul’s ads; Massachusetts announced a four-month ban on the sale of all vaping products; Rhode Island announced a ban on flavors; Walmart said it would stop selling all e-cigarettes; and the F.D.A. announced it had opened a criminal inquiry into the supply chain of vaping products and devices. The Federal Trade Commission also has been investigating Juul’s marketing practices. And the United States attorney for Northern California opened a criminal investigation into the company, a development first reported by The Wall Street Journal.
This anticipates a regulatory face-off at the FDA in May of 2020 when the agency will determine whether e-cigarettes can remain on the domestic market. Juul’s new CEO said this may drive the market for e-cigarettes overseas. At an all-hands meeting at Juul headquarters, Crosthwaite told employees, “International expansion continues to be a huge opportunity given the number of smokers around the world.” But India said it would ban the sale of e-cigarettes, and the attempt to enter the Chinese market fell flat when the country’s tobacco regulator issued a notice asking e-commerce platforms and businesses to shut online stores that sell e-cigarettes.
At the end of October, The Motley Fool said Altria wrote down its Juul investment by $4.5 billion, reflecting how the company sees recent events impacting Juul’s sales and earnings. Altria’s CEO, Howard Willard said in a conference call with analysts, “Certainly in the range of scenarios when we made our investment in Juul, we did not anticipate this dramatic of a change in the e-vapor category.” For the time being, Altria is standing with Juul: “Despite this impairment charge, we remain committed to Juul’s success.”
Nevertheless, former FDA Commissioner Scott Gottlieb said in November of 2019 he thought Juul Labs’ products should be removed from the market, citing the above two studies published in the Journal of the American Medical Association. “It’s very clear that Juul can’t keep their products out of the hands of kids. . . . What’s driving the youth use is primarily Juul.” He said they’ve hooked a lot of kids. Following the study, Juul halted sales of its mint flavor, saying “these results are unacceptable and that is why we must reset the vapor category in the U.S. and earn the trust of society by working cooperatively with regulators, Attorneys General, public health officials, and other stakeholders to combat underage use.” K.C. Crosthwaite said Juul would support any FDA flavor policy and a regulatory process to get its nicotine pods cleared for sale in the US.
But is it too little, too late?