From a very early age we were told that cigarettes were terrible for us and if we ever elected to take up such a habit, it would quite literally be the death of us. I remember, fondly, of a time in middle school, where we were shown a video of individuals who suffered devastating consequences to their health after years of smoking cigarettes. The idea that these little “cancer sticks” were the bane of human existence should have convinced us to avoid cigarettes like the plague, and yet, like any rebellious twelve-year-old confused about their body and their life, we didn’t listen. Could you blame us for being curious? After taking a drag, we realized how terrible cigarettes were and many, but not all, of us never took up the habit. Years down the line, smoking cigarettes has lost its original glitz and glamor, but tobacco addiction has simply switched over to a more attractive, aesthetically pleasing vessel for middle school students to satisfy their collective nihilistic demeanor.
Juul Labs Inc., a San Francisco-based company, is responsible for the creation of the aptly named “Juul” e-cigarette. For those unfamiliar with the name of the product, I can almost guarantee you’ve seen someone using one of these devices on a city bus or sneakily taking a puff at a children’s dance recital. A Juul looks like a longer, thinner flash drive that glows when you take a drag from the device. At the end of the day, the Juul is a vape, with the purpose of delivering nicotine to the consumer. Avoiding the potential tangent regarding the addictive qualities of nicotine, Juul Labs received a $1.2 billion investment from Tiger Global Management several months ago, bringing the company’s valuation to $16 billion. Harmful chemicals aside, Juuls have become quite a phenomenon across the country.
As the traditional act of smoking cigarettes as fallen drastically behind e-cigarettes and vapes, Altria Group (MO), in an effort to remain both relevant and profitable, announced on Wednesday morning that it was buying a 35% stake in Juul Labs Inc. for $12.8 billion. Juul Labs has recently come under mass scrutiny for the number of underage users of its products, and, in their announcement of the Altria (MO) deal, they explained that their “intent was never to have youth use JUUL products. Nevertheless the company agreed to a minority investment with Altria (MO), a company belonging to an industry notorious for corrupting youths with habitual cigarette smoking.
“Altria today announced a minority investment of $12.8 billion into JUUL for a 45% ownership in the company along with services to accelerate our mission. We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US. We were skeptical as well. But over the course of the last several months we were convinced by actions, not words, that in fact this partnership could help accelerate our success switching adult smokers.”
–Kevin Burns, Chief Executive Officer, JUUL Labs
Juul Lab’s goal has always been to give smokers, of all age-backgrounds, an opportunity to avoid combustible cigarettes, replete with carcinogens and harmful chemicals. Tobacco giant Altria (MO) invested in JUUL because the company recognized that cigarettes, which account for killing approximately half a million Americans each year, are not as popular as they used to be. Altria’s (MO) chief executive officer, Howard Willard, stated that the company, by way of the JUUL Labs deal, will be able to take “significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes.” Willard went on to expound that Altria (MO) has “long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction.”