Altria will take its electronic cigarette pods from the market
Altria will take its electronic cigarette pods from the market
Group Inc. is recalling its capsule-style electronic cigarette devices and is suspending the sale of many flavors of electronic cigarettes to combat the use of minors, a move that puts pressure on newcomers Juul Labs Inc., which has grown quickly selling such products
The Food and Drug Administration (FDA) warned of a public health crisis due to the widespread use of electronic cigarettes by children and threatened to ban a wide range of flavored products.
Altria's "cigalike" device is designed to look and feel like a traditional cigarette. Most of the refills of their cartridges come in tobacco or menthol.
Photo:
Altria
Altria's electronic cigarettes, sold under the MarkTen and Green Smoke brands, are only a small portion of the US market. Juul is the dominant player, with devices similar to USB memories and pods in mango, cucumber and other flavors.
In a letter to the FDA, Altria CEO Howard Willard said that the use of electronic cigarettes by minors is "made up of flavors that go beyond" the traditional flavors of tobacco and menthol.
Altria, whose traditional cigarette brands include Marlboro, said it would continue to sell most of its electronic cigarettes and that the drop in sales would be irrelevant to its business in general. In contrast, most of Juul's growth came from flavored pods, and its expansion has threatened the lucrative, but decreasing, cigarette franchise.
Juul declined to comment on the Altria movement.
Altria represented 5.6% of the US electronic cigarette market. UU During the four weeks ended October 6, according to a report.
Analysis of Nielsen's data. That does not include online sales. Juul, whose products are sold online and in convenience stores, gas stations and vape stores, accounted for 74.5%.
As sales soared this year for Juul's vaporizers, Altria expanded the distribution of a similar product called MarkTen Elite with flavors such as Strawberry Brulee, Apple Cider and Hazelnut Cream. Former Altria boss Marty Barrington promoted the product at an analysts' conference in February, saying that Elite capsules contained more than twice as much liquid as Juul's.
The Juul vaporizer looks like a USB stick. It uses refills of pods containing liquid with nicotine in flavors such as mango and cucumber. A refill pod contains as much nicotine as a pack of cigarettes.
Photo:
Juul / Associated Press
This year, Altria also expanded online sales for a device called Apex, with pre-filled flavored Spiced Fruit and Piña Colada flavored tanks. Elite was in 25,000 stores and Apex was available online in 10 states. Sales of both will be suspended until the FDA authorizes them, the company said.
Altria said he would continue to sell electronic cigarette products that resemble traditional cigarettes but that for now limit them to the flavors of tobacco, menthol and peppermint. These so-called cigalike devices have been less popular among children than USB-shaped vaporizers with flavored pods, such as Juul's.
Altria said that approximately 80% of its volume of third-quarter electronic cigarettes will remain in the market after it extracts the Elite and Apex devices and flavor cartridges for its other electronic cigarettes.
Given the small part of Altria in the vaping business, some analysts worry that the growing sales of Juul devices may rob Altria's market share and also cannibalize the traditional cigarette business, where Marlboro still dominates the market.
On Thursday, Altria reported that its third-quarter revenue increased 1.6% over the previous year, but that sales for the first nine months of the year fell 1.2% to $ 19.3 billion. Shipments of Marlboro cigarettes were down 5.8% in the nine months, although Altria made up for those falls with higher prices.
Altria said on Thursday it would support federal legislation that requires a minimum age of 21 to buy all tobacco products, including electronic cigarettes. The federal law currently sets the minimum age at 18 years, although six states have increased their minimum age to 21 years.
"We believe that e-vapor products represent an important opportunity for adult smokers to change their fuel cigarettes," Willard wrote in his letter to the FDA. "However, the current situation with the use of e-vapor products by young people, if left unchecked, has the potential to undermine that opportunity for adult smokers."
Altria shares rose 1.4% on Thursday.
The movement of Altria comes after The FDA warned in September It could impose new restrictions on sales of electronic cigarettes, including the ban on flavors other than tobacco and menthol. The agency had asked Juul, Altria,
PLC and other major electronic cigarette manufacturers present compelling plans to reduce adolescent use or risk their products being recalled.
Juul, who was valued at $ 16 billion In a round of funding this summer, he has said that his products are intended to help adult smokers to quit smoking and that he has taken several measures to combat the use of minors, such as raising the minimum purchase age on his site. web to 21 years, add age verification tools to your website, and limit the number of pods that a single customer can buy per month.
Willard said Altria supports raising the minimum age to 21 years because federal data shows that young people gain access to tobacco through their friends. He said that 5% of tobacco users are between 18 and 20 years old, representing 2% of cigarette smokers and 15% of consumers of electronic cigarettes.
The FDA "appreciates any voluntary measures that companies can take to address access and appeal of electronic cigarettes to young people," a spokesperson said. "All policy options are on the table, including taking additional measures to address the flavors that attract children and combat illegal sales to minors."
After years of decreasing smoking rates in the US UU., Sales of electronic cigarettes increased in the last year, driven in part by online companies that sell vaporizers and nicotine fluids. Every $ 4 of Juul Pod contains as much nicotine as a pack of cigarettes.
The number of high school students who used electronic cigarettes in the past 30 days has increased approximately 75% since last year, according to preliminary federal data.
That would be about three million, or about 20% of high school students. Meanwhile, use among high school students has increased by almost 50%.
Nearly a third of young people between the ages of 13 and 18 who responded to a May survey by The Wall Street Journal with research firm Mercury Analytics said they are currently vape. Most of the teens who vapeted said they are doing it for different reasons to stop smokingAccording to the magazine survey conducted in 49 states. More than half said they do it because they like the flavors in electronic cigarettes and think vaping is fun.
More than two-thirds said they believe vaping can be part of a "healthy life."
Write to Jennifer Maloney in jennifer.maloney@wsj.com
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