Recently, Connecticut Attorney General William Tong announced that American e-cigarette giant Juul agreed to pay more than $400 million to reach a settlement agreement to resolve multi-state investigations into its sale of high-nicotine products to minors. It is reported that the funds from the settlement agreement will be used for work such as nicotine use prevention and education.
The reporter combed and found that this is not the first time that Juul has been in trouble. In recent years, as the United States has tightened regulatory policies on e-cigarettes, the company has been repeatedly accused by state governments in the United States and issued sales bans. And since 2019, Juul’s global market share and revenue performance have begun to decline. In the same year, the company briefly entered the Chinese market, but after only a few months, it completely lost the opportunity to launch products on Chinese e-commerce platforms, and then exited sadly.
Multi-channel promotion of e-cigarettes to minors
According to William Tang, the U.S. government investigation found that in recent years, Juul has been attracting young people by hosting parties, giving free samples and placing a large number of advertisements. In addition, the company especially favors social media “influencers” and uses their posts to promote e-cigarettes to minors.
According to reports, since the release of e-cigarette products by Juul in 2015, the number of teens using e-cigarettes in the United States has soared, so that the US Food and Drug Administration declared that the use of e-cigarettes by minors in the United States has become an “epidemic”. Since 2020, multiple states in the United States have launched investigations into Juul. Investigators pointed to Juul’s claims in earlier promotions that the company’s products were “safe” and “beneficial” as an alternative to traditional cigarettes.
William Tong said that Juul agreed to pay about $438.5 million to settle with more than 30 states in the United States. “Through this settlement agreement, we have received hundreds of millions of dollars to help reduce nicotine use. It also makes Juul The company has accepted a series of strict prohibition terms to combat the promotion and sale of e-cigarettes to minors.” It is understood that Connecticut alone will receive $16 million for nicotine prevention and education.
The settlement resolves a major legal crisis facing Juul, but the company still faces hundreds of separate lawsuits from minors. As part of the settlement, Juul said it would not use anime, youth influencers to create ads and not place ads on public transport. The company also said it would shift its sales customer base to older smokers.
Prosecuted in the U.S.
This isn’t the first time Juul has run into trouble.
As early as November 2019, the California government in the United States sued the company, accusing it of using advertising to attract young people to use e-cigarettes, but without warning about the possible harms of using e-cigarettes. In addition, North Carolina has also accused Juul’s e-cigarette flavors of making young people addicted to nicotine. In June 2021, Juul agreed to pay $40 million and curb ads targeting young people to settle the case.
In June 2022, the U.S. Food and Drug Administration issued a statement issuing a sales ban on all products currently sold by Juul in the United States. That means the company must stop selling and distributing these products or risk being enforced.
After reviewing the company’s premarket application for tobacco products, the U.S. Food and Drug Administration found that the application lacked sufficient evidence on the product’s toxicological profile to demonstrate that the product was marketed to ensure public health, the statement said. The statement pointed out that some of the company’s research findings contained insufficient and conflicting data to provide evidence that its products met standards.
Entered the Chinese market briefly
It is understood that Juul is headquartered in San Francisco. It was originally an e-cigarette brand under Pax Labs, an American e-cigarette company. It was established in 2015 and separated from Pax Labs in July 2017 to become an independent company. At the end of 2018, Altria Group, the parent company of the well-known cigarette brand Marlboro, announced that it would acquire a 35% stake in Juul for $12.8 billion.
At its peak, Juul’s e-cigarette sales accounted for more than 70% of the U.S. e-cigarette market. However, with the tightening of e-cigarette regulations in the United States, Juul’s market share and revenue performance have begun to decline. In 2019, Universal Fund halved Juul’s valuation to $19 billion at the end of the third quarter of that year. Subsequently, Juul announced several layoffs, and announced that it would gradually withdraw from many international markets such as China, and its business scope was reduced to core markets such as the United States.
Nandu previously reported that in July 2019, it was reported that Juul will officially enter the Chinese market. On September 9 of that year, Juul’s flagship stores on Tmall and JD.com were officially launched. However, after less than a week of business, the two online stores suddenly went offline. After a brief adjustment, they were brought back online on September 15, but they went offline again the next day.
On November 1 of that year, the State Tobacco Monopoly Administration and the State Administration for Market Regulation issued the “Notice on Further Protecting Minors from Electronic Cigarettes”, requiring all market players not to sell electronic cigarettes to minors, urging electricity The commercial platform closed the e-cigarette store and removed the e-cigarette products from the shelves. So far, Juul has completely lost the opportunity to launch products on Chinese e-commerce platforms.
At the end of 2019, there were media reports that Juul had withdrawn from China, and at the same time, news such as “Shenzhen layoffs, compensation N+3, Beijing executives left, Shanghai company changed legal person.” and other news. Although it has not been officially confirmed, a former Juul China employee in Shenzhen told Nandu reporters that the above report was “basically true” and claimed that he had been laid off in November of that year. Other than that, I don’t want to disclose any further information.
