The electronic cigarette market has witnessed a big event at the end of the year — One of the biggest tobacco giants Altria Group is reported to invest $12.8 billion and take a 35% stake of JUUL, the most influential e-cigarette brand in America e-cig market. In the agreement, JUUL will remain an independent company and get the full support from Altria including the top shelf space in convenience stores, ads inserted in packs of cigarettes, and distribution and logistics assistance.
According to the statistic published by Centers for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health’s National Cancer Institute, cigarette smoking has reached the lowest level among US adults. In 2017, a slight drop in cigarette smokers among adults from 15.5% in 2016 to 14% in the US. While on the contrary, the market of the e-cigarette products is substantially expanded. Though there are some analysists states that Altria has been paying too high of the price, other professionals hold different opinions. Stifel claims that the deal may help Altria “address the changing consumer attitudes toward nicotine.”
Apart from this purchase, Altria also announced its cost reduction plan includes layoffs and third-party investment reduction. “We are taking significant action to prepare for a future here adult smokers overwhelmingly choose non-combustible products over cigarettes,” said Howard Willard, the Chief Executive of Altria. By making good use of JUUL’s brand influence and market share, Altria aims at taking a more positive position in the market.