Altria gives itself a second chance in vaping with NJOY
Altria Group is one of the largest manufacturers of tobacco products in the world.
Days after exiting its stake in e-cigarette maker Juul, Altria – owner of the Marlboro brand, among others – announces a $2.75 billion investment in new e-cigarette maker NJOY.
Through this investment, Altria obtains full ownership of NJOY's portfolio of vaping products, the Virginia-based company said Monday, including its vaping pod product (ACE Pods).
< p class="e-p">We believe we can responsibly accelerate the adoption of NJOY ACE by American adult smokers in ways that NJOY as an independent company could not, said Billy Gifford, CEO of & #x27;Altria.
Vaping product manufacturer NJOY offers an array of electronic cigarettes, including pod models (pods).
The agreement also provides for the payment to NJOY of an additional $500 million in cash, subject to regulatory approval of certain products by NJOY Holdings Inc, headquartered in Scottsdale, Arizona.
Of note, NJOY is one of the few vaping companies whose products have obtained clearance from US federal regulators. NJOY's Ace Pods are currently the only pod vaping product with US Food and Drugs Administration approval.
Altria's investment in NJOY comes just days after the multinational announced it was swapping its minority stake in Juul Labs for a license to some of Juul's tobacco intellectual property heated.
Altria, which invested $12.8 billion in Juul in 2018, has seen its investment melt like snow in the sun over the years. Recently, the book value of this investment hovered around $250 million. A major loss for the American tobacco company.
Juul faces significant regulatory and legal challenges and uncertainties, many of which could exist for many years, explained Nilly Gifford.
Vaping device company Juul reached settlements last December covering thousands of lawsuits legal proceedings concerning its electronic cigarettes.
Juul faced more than 8,000 lawsuits from individuals and families of users of its products, school boards, municipal governments, and Indigenous communities. The settlement resolved most of these cases, which had been consolidated in federal court in California pending multiple trials.
The financial terms of the settlement n& #x27;have not been publicly disclosed.
A rising star in the vaping industry, Juul rose to the top of the US market more than five years ago thanks to the popularity of flavors such as mango, mint and crème brûlée added to its products. But its rise has been fueled by heavy use of its products by teenagers, some of whom have become highly addicted to Juul's high-nicotine pods.
Parents, school administrators and politicians have widely blamed the company for the rise in the number of underage smokers, which now includes dozens of flavored e-cigarette brands that are the choice teen favorite.
In the turmoil of lawsuits and government sanctions, Juul dropped all advertising in the United States and discontinued most of its flavors in 2019.
Altria's interest in Juul's heated tobacco intellectual property comes months after it struck a deal with Japan Tobacco to help it in its efforts to to introduce a combustionless cigarette to the U.S. market.
Altria announced in October that it was launching a new venture with Japan Tobacco to market cigarette alternatives developed by the two companies for the American smokers.
The partnership's first effort will be to secure U.S. regulatory approval for Japan Tobacco's Ploom, a small, handheld device that heats tobacco without burning it.
With information from Associated Press, and Reuters