Interview Synopsis

Juul & the US vapour market – 2022 growth outlook & regulatory landscape

  • Public Equity
  • Consumer
  • North America

Since being valued at USD 38bn in 2018, e-cigarette company Juul Labs has endured a testing couple of years. Lawsuits, media backlash and regulatory decisions prohibiting the sale of flavoured pods have seen its value tumble to below USD 5bn as of July last year.*

Delayed FDA ruling hangs over Juul Labs and US vapour market

A former executive at the company told Third Bridge Forum that Juul Labs has endured “significant share erosion” in recent years, but that authorisation by the US Federal Drug Administration (FDA) that will allow it to continue selling its products would go a long way to helping the company bounce back.

On paper, the specialist said there was still a “huge opportunity” for these types of products in the US, despite the impact the outlawing of various flavoured pods had had on sales. Juul Labs has so far only penetrated half of all retail outlets in the country, and with a number of innovative items set to be released once it is granted approval, the specialist said they were “bullish” it could regain its market share. 

The specialist also believes Juul will be granted a PMTA by the FDA because “the science is too strong for these products to be denied”. However, they told us more flavours could ultimately be restricted as regulators look to appease parent groups who argue e-cigarettes are a gateway to younger people becoming addicted to combustible cigarettes. 

The loss of more flavours such as menthol would have a negative effect on Juul’s sales, the specialist said. The loss of flavoured pods had already contributed to customers moving from Juul to disposable vapour products, which the specialist told us are not governed by the same restrictions as electric pod-based systems and can therefore sell an assortment of flavours. The specialist warned these products are a bigger threat to Juul than competitors such as Myblu. However, they expect the FDA to “clamp down” on them once its decision on pod-based systems is complete.

The specialist said a positive PMTA ruling should be the end of the regulatory challenges for Juul, which nonetheless still faces a number of lawsuits that are of “significant importance”. The specialist said Juul should be able to pull them all under one general litigation like previous tobacco lawsuits, although they warned that it would be “expensive”. 

Such a move is in line with the changes Juul is making to its management structure, with the company hiring ex-tobacco leaders with regulatory and legal experience rather than those with commercial expertise. The specialist argued the company would not be in “the position they are today” if they had made these changes earlier. 

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* New York Times

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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