new York The world of e-cigarettes is in crisis: The largest manufacturer Juul wants to lay off 500 employees. This shows how hard recent scandals are weighing on dependent teenagers and mysterious lung diseases on the company.
So far, the e-cigarette manufacturer Juul actually knew only one direction: upwards. The San Francisco-based company was one of the most valuable unicorns-those start-ups worth more than a billion dollars. The tobacco company Altria had valued Juul at $ 36 billion when he secured a stake of 36 percent in December for $ 13 billion.
It was a very bad time to start: Since the beginning of the year, the deaths of e-cigarette smokers are increasing. Strange lung diseases are the reason. Although Juul is not directly related to the deaths, the mood has turned against e-cigarettes.
The mysterious Death Streak is not the only problem of the vendors. Critics complain that e-cigarette vendors use their marketing to directly address teenagers, not just smokers who want to get away from tobacco.
In addition, nicotine levels – ie the actual addictive substance – in electronic cigarettes should be significantly higher than in classic cigarettes. The prosecution therefore investigates against various manufacturers.
Even the US president has called the vaping addiction of young people on the scene: Donald Trump last asked to ban all flavors such as fruit and mint for e-cigarettes and to allow only the classic tobacco taste.
Especially the sweetish flavors are the starter versions that also taste and attract non-smokers. For Juul, however, these flavors make up 80 percent of sales.
Because of all these issues, Juul boss Kevin Burns stepped down in September apologizing for the teenage vaping epidemic. Meanwhile, K.C. Crosthwaite at the head of Juul, a top manager of the Marlboro manufacturer Altria. He should save the expensive investment. He brings along his many years of experience in the tobacco industry, which in the past often had to do with authorities and courts.
Altria manager reaches out
The planned redundancies are part of a larger reorganization of Juul. The company needs a "necessary reset", emphasizes the new boss Crosthwaite. Above all, he wants to kitten the relationship with the supervisory authorities.
This includes cutting the marketing budget and campaigning against Vaping for teens. The goal is "to obtain a license, with which we can operate in the US and worldwide," said the Juul boss.
The problems have not only shaken the relationship between the e-cigarette manufacturer and its major shareholder Altria. They also ended the merger talks between Altria and Philip Morris International. The two actually wanted to reunite, and for Philip Morris International was especially interesting Altria's participation in Juul.
But with the recent scandals at Juul, the two have broken the merger negotiations. Philip Morris International is now focusing again on its own e-cigarette variant Iqos. This was, unlike Juul, authorized by the FDA.
For Altria, the Juul debacle also has financial consequences. The analysts of the rating agency Fitch came in a study to the conclusion that the probability is "significantly increased" is that Altria will write off its Juul investment.
Altria presents the quarterly figures this Thursday – just on Halloween. The investors expect clear statements, how it continues with the Juul participation. In the past quarter, the company had already lowered its expectations for the year as a whole – and thereby scared off investors. The new skepticism about the e-cigarette should further increase the pressure on the Altria share.
More: The cigarette company Philip Morris is trying to get its customers to switch to the tobacco heater "Iqos". An advertising ban could prevent this now.