O tobacco industry is facing changes stemming from new laws and a new vision of the population that put their future at risk. Faced with this, many companies are looking to shift their strategy to focus on technology, which in theory would ensure their survival.
Today we have the largest and clearest example of this after the tremendous $ 12.8 billion investment that Grupo Altria, owners of Philip Morris USA and Marlboro cigarette manufacturers, is doing in JUUL, a young company that is causing a lot of noise thanks to its interesting technological / social approach within electronic cigarettes.
Okay, who or what is JUUL?
JUUL is an electronic cigarette that was born in 2015 as a project of American PAX Labs In 2017, and after seeking a change in marketing strategy, JUUL becomes an independent company that focuses on the manufacture of this peculiar electronic cigarette.
JUUL's approach is to try to offer a cigarette that does not look like the rest of the cigarettes, its design is very similar to a USB stick. In fact, its charging system is based on a small USB magnetic base that can be connected to any port or socket with the use of an adapter.
This technological approach, supported by attractive design, has by the end of 2017 JUUL has become the most popular electronic cigarette in the United States. Until September 2018, JUUL had a market share of 72%.
To date, JUUL has 72% of the US electronic cigarette market.
This cigar is manufactured in Shenzhen, China, while its cartridges or 'JUULpods', which are the adapters that offer flavor, are manufactured in the United States. According to the company, the main ingredient of the JUUL flavor is in the small amounts of nicotine salts extracted from tobacco leaf, thus ensuring that it is "healthier than consuming a normal cigarette".
The company began with 200 employees and today has more than 800 employees, whose marketing is limited to the United States, but they have already advanced in 2019 plan to launch a product for the international market.
According to the company, Each cartridge offers up to 200 vapors and contains only 5% nicotine, which is equal to 59 mg / ml. JUUL markets its & # 39; pods & # 39; in eight different flavors, Virginia Tobacco, Classic Tobacco, Mint, Menthol, Cream, Fruit, Cucumber and Mango.
The price of JUUL starts from the $ 35 for the cigar, or $ 50 for a kit that includes the cigarette and four cartridges. While & # 39; pods & # 39; is priced from $ 16, in a package that includes four cartridges of the same taste.
Being the most popular electronic cigarette in the United States comes with consequences, as this has caused a lot of research by the US Food and Drug Administration, which has resulted in changes in the laws. and restrictions on its sale.
The above is due to a growing participation of adolescents in this market of vaping, which served to increase the popularity of JUUL, but also their problems. For example, the company had to close its social networks and change all its advertising; no longer allowed to sell packages of flavors in physical stores, which is limited to your online store; and those who want to buy online, must demonstrate, through an ID and social security number, that they are over 21 years of age.
The old wolf disguises himself as a sheep.
As I mentioned, being the most popular electronic cigarette in the world brings its advantages and disadvantages. Today, JUUL is valued at $ 38 billion and confirmed that Grupo Altria will make a capital injection of 12,800 million dollars, in exchange for a 35% stake in the company.
This announcement brought a series of criticisms to JUUL, which in the end, after a speech against the tobacco industry, decided to give in to the pressures. However, Kevin Burns, CEO of JUUL, went on to clarify that this move will bring a number of benefits to his company and the company that owns Philip Morris.
"We understand the controversy and skepticism associated with affiliation and association with the largest tobacco company in the US We are skeptical, but over the past few months we have been convinced by the actions, not by the words, that in fact this partnership could help accelerate our success in the change of adult smokers, we understand all the uncertainty.
According to JUUL, this agreement will only allow Grupo Altria to have a 35% stake in the company, not anymore, at least for now. While JUUL will have access to the entire Altria database and distribution network, which will seek to reach a greater number of potential consumers.
On the other hand, JUUL will have a space next to Altria's products in retail stores, which today are more than 230,000 chains, which also includes the entire sales force and access to the area of design and advertising. That is, it seems that those who gain most from this association are JUUL, or not?
Alongside Altria, which in recent months has made some interesting strategic moves, including the acquisition of a 45% stake in Cronos, focused on marijuana products, are confirming the closure of its own electronic cigarette division, including all products MarkTen and Green Smoke as well as oral nicotine products VERVE.
Given this, it seems that Altria is betting everything for JUUL, whom they see as your savior to stay in business, since most of its consumers are going to the electronic side. That is, Altria wants to keep its customers, but now it will be through a new product, which is none, since it is the fashion electronic cigarette, which has more consumers and what, due to prohibitions, has been transformed the object of desire of adolescents.