Upstart Juul may be getting the tobacco industry’s attention.
Virginia-based Altria Group, one of the world’s largest tobacco companies, is looking at a possible investment in Juul Labs, the largest e-cigarette company in the U.S., according to reports.
Altria, formerly known as Philip Morris, which produces Marlboro cigarettes and other tobacco products, is looking to get a foothold in the e-cigarette market, as traditional cigarette smoking has declined significantly over the years.
Juul, on the other hand, has become the dominant e-cigarette company in the U.S. with nearly 70% market share.
Here’s what you need to know:
- As of November 29, 2018, no deal has been officially announced, but the two companies are reportedly in talks for Altria to take a minority stake in Juul.
- Juul is valued at around $16 billion, and its sales grew 800% between 2017 and 2018. Juul is a private company that markets and sells flavored e-cigarette vaporizers at a variety of retail locations.
- Altria’s market cap of $103 billion has fallen around 13% over the past year, according to the New York Times.
- In a similar development, Altria is also in talks with Canadian cannabis producer Aphria, which may open another potential revenue channel in the future.
The global e-cigarette market is expected to increase to more than $86 billion by 2025 from about $14 billion in 2017, according to industry analysts. Meanwhile, the total number of adult smokers in the U.S. decreased to 15.5% in 2016, or around 38 million people, from 20.9% in 2005, according to the Centers for Disease Control.
There are some butts about it
Juul is a private company, and it has recently faced scrutiny from the Food and Drug Administration as “vaping” among teenagers has soared.
Keep up with the news from the world of business and finance by subscribing to the Stash newsletter.