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Why Marlboro Maker Bet on Juul, the Vaping Upstart Aiming to Kill Cigarettes
Tobacco-giant Altria says its $12.8 billion investment in the hot e-cigarette company will give it a piece of the fast-growing segment of the market. FDA scrutiny poses risks.
RICHMOND, Va.—The biggest U.S. tobacco company has made a $12.8 billion bet on a company whose stated goal is to get smokers to drop cigarettes. The calculated gamble: The move will help the Marlboro maker keep up with a quickly changing market. The risk: It could hasten its own decline.
Facing an accelerating fall in cigarette sales, Altria Group Inc. in December put billions into Juul Labs Inc., a controversial startup whose sleek, nicotine-packed vaporizers have fueled a surge in the e-cigarette market.
Addressing employees gathered at the company’s headquarters after the deal, CEO Howard Willard said a bold change was necessary. Smokers were switching to vaping, and Altria’s own e-cigarettes were unlikely ever to catch up to Juul. But some workers were worried the new boss was undermining the company’s core business, which churns out more than 300 million sticks a day.
The investment for a 35% stake in Juul—plus a $1.8 billion bet on a Canadian marijuana grower the same month—upended a century-old company known for its steady share price and reliable, generous dividends. Altria’s credit rating was downgraded. Investors dumped the stock. Hundreds of scientists, designers, lawyers and other staff lost their jobs in restructuring after the partnership.
The deal also intensified scrutiny of Altria by federal regulators, who blame Juul’s products for an increase in underage vaping and who have already moved to restrict their sales.
Altria CEO Howard Willard.
Photo:
Jason Andrew for The Wall Street Journal
It’s the dilemma facing many established companies in mature markets. How should one respond to new entrants that are disrupting the status quo, when the classic strategy—buy the disrupter—could potentially speed the decline of the legacy business? PepsiCo Inc. and Coca-Cola Co. have shifted away from sugary sodas by scooping up coconut water, coffee and kombucha. Big media companies such as Walt Disney Co. and AT&T Inc. are launching their own streaming services as they chase consumers who are cutting the cord. Walmart Inc. has invested billions in e-commerce sites such as Jet.com and India’s Flipkart as the retail giant works to fend off Amazon.com Inc.
Mr. Willard, 55 years old, said the leap into fast-growing Juul is the surest way to preserve the profits the company generates today by making 5 out of every 10 cigarettes sold in the U.S. “At a time when e-vapor is going to grow rapidly and likely cannibalize the consumers we have in our core business, if you don’t invest in the new areas you potentially put your ability to deliver that financial result at risk,” he said in an interview.
By Altria’s count, there are already 12 million adult vapers in the U.S., and the number is growing quickly. Many of those are cigarette smokers looking for a less harmful way to get their nicotine fix. Other vapers are children and teenagers who have never smoked before, and who acquire the devices even though sales are legally restricted to adults at least 18 years old. Youth use of e-cigarettes jumped 78% between 2017 and 2018—to one out of every five high-school students—thanks largely to the popularity of Juul.
The FDA this month announced new restrictions on retail sales of e-cigarettes in the fruity and sweet flavors the agency said appeal to youngsters. If underage use continues to increase, the agency could institute an outright ban on devices such as Juul’s, said Scott Gottlieb, the outgoing Food and Drug Administration chief.
Tobacco's New Landscape
E-cigarette sales are booming, while cigarette sales are shrinking, and Juul is the biggest player.
Retail volume growth
Juul’s share
E-cigarette
Cigarette
14 billion
’18 June 2017 –20 -100 -3 -80 -60 -40 -20-1- 0- 0 -20
Note: Sales from retail stores tracked by Nielsen for the 52-week period ended on each date; web sales not included. Volume growth for four-week period.
Sources: Wells Fargo analysis of Nielsen data
The longtime Altria insider, who took over as CEO in May 2018, said he did it because the future is coming faster than he or his colleagues expected.
“I’ve never believed this before: 10 years from now the majority of the tobacco products that are sold could very well be noncombustible products,” said Mr. Willard, his 6-foot-6-inch frame folded into a white leather chair at Altria’s headquarters.
That would mark a major consumer shift. U.S. sales of cigarettes, cigars and smoking tobacco were nearly $107 billion last year, compared with about $15 billion in sales of smokeless tobacco and vaping products, according to Euromonitor International estimates, which include web sales. Vaping products made up $5.6 billion of those sales.
Although fewer and fewer Americans smoke each year, Altria has squeezed growing profits out of a market it has dominated for decades. Price increases have offset lower volumes, and the Marlboro brand has kept its grip on a U.S. market that for years has been shrinking 3% or 4% a year.
A Juul e-cigarette being recharged in a USB port.
Photo:
Gabby Jones/Bloomberg News
In 2017, three events stepped up pressure on the market leader. In January, British American Tobacco PLC struck a $49.4 billion deal to take control of Reynolds American, which sells Camel and Newports.
In July, the FDA announced a regulatory overhaul that threatened to turn the tobacco industry upside down. Dr. Gottlieb said that he would seek to reduce nicotine levels in all cigarettes so they would no longer be addictive and ban menthol cigarettes, moves expected to take years. At the same time, he said he wanted to help manufacturers bring to market less harmful products such as e-cigarettes, which heat a nicotine-laced liquid to deliver a vapor instead of burning tobacco, thereby avoiding many of the compounds in cigarette smoke known to cause cancer and other diseases.
Then, late in the year, Juul took off.
Juul’s vaporizers used snap-in pods with added flavors such as mango and cucumber, and looked nothing like cigarettes. The black-and-gray rectangular device was shaped like a USB flash drive and could be plugged into a laptop to charge.
The company’s sales surged. Juul’s advertising on social media and other platforms had pitched the brand as a cool lifestyle accessory with images of people in their 20s and 30s, which critics said made the brand attractive to teens. Later, Juul-related posts on Instagram and Twitter exploded, with much of the content posted by young people using the product. After two decades of declining teen cigarette use, “Juuling” was suddenly a verb for a trendy activity.
Altria had been trying for years to develop a successful e-cigarette. But the company’s careful, cautious culture made it difficult to innovate, former employees said.
Formerly known as Philip Morris, Altria was once a marketing powerhouse that blanketed American televisions, magazines and billboards. But a landmark legal settlement in the 1990s over the mounting public-health costs of cigarettes restricted the industry’s marketing. In the words of one former executive, it became “a law firm with a manufacturing arm.”
Altria’s MarkTen e-cigarettes, launched nationally in 2014, had a look, shape and feel that mimicked a traditional cigarette, based on Altria’s belief that smokers were looking to switch to something that felt familiar. Ultimately sales didn’t support that idea. Altria also didn’t advertise MarkTen on social media.
In July, the FDA announced a regulatory overhaul that threatened to turn the tobacco industry upside down. Dr. Gottlieb said that he would seek to reduce nicotine levels in all cigarettes so they would no longer be addictive and ban menthol cigarettes, moves expected to take years. At the same time, he said he wanted to help manufacturers bring to market less harmful products such as e-cigarettes, which heat a nicotine-laced liquid to deliver a vapor instead of burning tobacco, thereby avoiding many of the compounds in cigarette smoke known to cause cancer and other diseases.
Then, late in the year, Juul took off.
Juul’s vaporizers used snap-in pods with added flavors such as mango and cucumber, and looked nothing like cigarettes. The black-and-gray rectangular device was shaped like a USB flash drive and could be plugged into a laptop to charge.
The company’s sales surged. Juul’s advertising on social media and other platforms had pitched the brand as a cool lifestyle accessory with images of people in their 20s and 30s, which critics said made the brand attractive to teens. Later, Juul-related posts on Instagram and Twitter exploded, with much of the content posted by young people using the product. After two decades of declining teen cigarette use, “Juuling” was suddenly a verb for a trendy activity.
Altria had been trying for years to develop a successful e-cigarette. But the company’s careful, cautious culture made it difficult to innovate, former employees said.
Formerly known as Philip Morris, Altria was once a marketing powerhouse that blanketed American televisions, magazines and billboards. But a landmark legal settlement in the 1990s over the mounting public-health costs of cigarettes restricted the industry’s marketing. In the words of one former executive, it became “a law firm with a manufacturing arm.”
Altria’s MarkTen e-cigarettes, launched nationally in 2014, had a look, shape and feel that mimicked a traditional cigarette, based on Altria’s belief that smokers were looking to switch to something that felt familiar. Ultimately sales didn’t support that idea. Altria also didn’t advertise MarkTen on social media.
Altria’s MarkTen e-cigarettes for sale in 2014. The company discontinued the brand last year shortly before investing in Juul.
Photo:
Bloomberg
As Juul sales surged, Altria doubled down on its own e-cigarette
technology. Executives prepared to expand distribution of a pod-based
vaporizer called MarkTen Elite with flavors such as Strawberry Brulee
and Hazelnut Cream, and to expand online sales of Apex by MarkTen, which
had prefilled tanks in Spiced Fruit, Piña Colada and other flavors.
But by early 2018, Mr. Willard, who was then the chief operating officer and in line to take over as CEO, was privately concerned that Altria’s own e-cigarettes couldn’t catch Juul. While publicly expressing confidence in the strength of the cigarette market, he was talking to the startup.
Although Juul had become a status symbol among new, teenage vapers, the company presented itself as a disrupter of Big Tobacco, aiming to convert adult cigarette smokers to its product. It was initially skeptical of Altria’s intentions.
Altria already knew many of its cigarette smokers were looking for an alternative and had been working to offer them options. Before launching MarkTen e-cigarettes, it had bought the maker of Skoal and Copenhagen smokeless tobacco. And it was waiting for FDA approval on a heat-not-burn tobacco device called IQOS it planned to market in partnership with Philip Morris International .
Many e-cigarettes didn’t deliver enough nicotine to satisfy the cravings of smokers. Juul had a stronger kick. By May 2018, Juul had captured 64% of e-cigarette sales in stores tracked by Nielsen, according to Wells Fargo .
But by early 2018, Mr. Willard, who was then the chief operating officer and in line to take over as CEO, was privately concerned that Altria’s own e-cigarettes couldn’t catch Juul. While publicly expressing confidence in the strength of the cigarette market, he was talking to the startup.
Although Juul had become a status symbol among new, teenage vapers, the company presented itself as a disrupter of Big Tobacco, aiming to convert adult cigarette smokers to its product. It was initially skeptical of Altria’s intentions.
Altria already knew many of its cigarette smokers were looking for an alternative and had been working to offer them options. Before launching MarkTen e-cigarettes, it had bought the maker of Skoal and Copenhagen smokeless tobacco. And it was waiting for FDA approval on a heat-not-burn tobacco device called IQOS it planned to market in partnership with Philip Morris International .
Many e-cigarettes didn’t deliver enough nicotine to satisfy the cravings of smokers. Juul had a stronger kick. By May 2018, Juul had captured 64% of e-cigarette sales in stores tracked by Nielsen, according to Wells Fargo .
Using a Juul e-cigarette.
Photo:
Gabby Jones/Bloomberg News
Speaking to staff for the first time as their CEO that month, Mr.
Willard warned that Altria was facing a rapidly changing landscape. They
would have to be more agile, he told the crowd gathered in an
auditorium at a cigarette manufacturing facility in Richmond. And they
would have to take a more blunt assessment of their weaknesses,
particularly in e-cigarettes. MarkTen was now a distant third behind
Juul and BAT’s Vuse. Any new product would have to go through a
yearslong approval process, since the FDA in 2016 had issued rules for
new products entering the market.
By the fall, Mr. Willard was privately making plans to scrap Altria’s own e-cigarette efforts.
“It was an emotional decision for us because we had put our best people to work on the e-vapor organic effort,” the Altria CEO said, in the interview. “It just so happened that in the end, Juul came up with a more compelling product.”
Mr. Willard was an ardent suitor. He had never smoked until 2015 when he took the No. 2 job at Altria and became an occasional user of its products. In negotiations with Juul, he brandished a Juul vaporizer and once in a while took puffs. He courted Juul’s investors and Juul CEO Kevin Burns with pledges to help convert smokers. “I was surprised how quickly Howard got there and said he was committed to our mission,” Mr. Burns said in an interview.
Still, Juul couldn’t be swayed: It wouldn’t sell a majority stake.
Juul told Altria that another tobacco company had approached the startup. The company was BAT, Altria’s biggest rival, according to people familiar with the discussions. Juul’s negotiators also told Altria the startup was analyzing a potential initial public offering that would value the company north of $30 billion, according to other people familiar with the discussions.
Mr. Willard went to his board members to talk again about Juul. Now, his plan was bigger and riskier. He wanted to buy a minority stake at a valuation above $30 billion. The Altria boss said he faced tough questions from them. How could he justify such a rich price? And how would a minority stake in a competing product help Altria?
He argued that U.S. cigarette volumes would continue to decline at a faster clip, while e-cigarette volumes would increase 15% to 20% a year. Altria expected Juul’s international revenue to equal its domestic revenue by 2023. Juul’s overseas sales wouldn’t compete with Altria, which has sold only in the U.S. since 2008, after splitting off its international business, Philip Morris International.
Altria could see a return on its investment through a potential IPO of the startup or through a share of Juul’s profits.
By the fall, Mr. Willard was privately making plans to scrap Altria’s own e-cigarette efforts.
“It was an emotional decision for us because we had put our best people to work on the e-vapor organic effort,” the Altria CEO said, in the interview. “It just so happened that in the end, Juul came up with a more compelling product.”
Mr. Willard was an ardent suitor. He had never smoked until 2015 when he took the No. 2 job at Altria and became an occasional user of its products. In negotiations with Juul, he brandished a Juul vaporizer and once in a while took puffs. He courted Juul’s investors and Juul CEO Kevin Burns with pledges to help convert smokers. “I was surprised how quickly Howard got there and said he was committed to our mission,” Mr. Burns said in an interview.
Executive Milestones
- 1992 Howard Willard joins company.
- 1993 On “Marlboro Friday,” price slashed 20% to fight discount brands.
- 1994 Media reveal industry’s manipulation of nicotine content.
- 1998 Landmark settlement with 46 states over public-health costs of cigarettes; restrictions added on marketing.
- 2000 Philip Morris supports federal oversight.
- 2002 Miller beer brand sold.
- 2003 Name changed to Altria Group.
- 2007 Altria spins off majority stake in Kraft Foods.
- 2008 Agrees to acquire Copenhagen and Skoal smokeless tobacco brands for $10.4 billion; spins off Philip Morris International.
- 2009 FDA gains regulatory control over tobacco; taxes increase.
- 2014 MarkTen e-cigarettes launched nationally. Competitors Reynolds American and Lorillard announce merger.
- 2015 Juul e-cigarettes launched.
- 2017 British American Tobacco acquires Reynolds American; FDA signals regulatory overhaul.
- 2018 Willard becomes CEO; Altria invests $12.8 billion in Juul.
Still, Juul couldn’t be swayed: It wouldn’t sell a majority stake.
Juul told Altria that another tobacco company had approached the startup. The company was BAT, Altria’s biggest rival, according to people familiar with the discussions. Juul’s negotiators also told Altria the startup was analyzing a potential initial public offering that would value the company north of $30 billion, according to other people familiar with the discussions.
Mr. Willard went to his board members to talk again about Juul. Now, his plan was bigger and riskier. He wanted to buy a minority stake at a valuation above $30 billion. The Altria boss said he faced tough questions from them. How could he justify such a rich price? And how would a minority stake in a competing product help Altria?
He argued that U.S. cigarette volumes would continue to decline at a faster clip, while e-cigarette volumes would increase 15% to 20% a year. Altria expected Juul’s international revenue to equal its domestic revenue by 2023. Juul’s overseas sales wouldn’t compete with Altria, which has sold only in the U.S. since 2008, after splitting off its international business, Philip Morris International.
Altria could see a return on its investment through a potential IPO of the startup or through a share of Juul’s profits.
Mr. Willard believed that Juul’s rapid growth wasn’t a fad but a
lasting brand that could attract smokers around the globe even as U.S.
regulators cracked down.
By early November, both Altria and Juul had come under pressure from the FDA to address the spike in teen vaping. Altria announced it was pulling some of its flavored e-cigarettes from the market. Juul said it would limit its bricks-and-mortar sales to tobacco, mint and menthol flavors, although other flavors remain for sale on its website, which has age-verification controls.
At the 11th hour in negotiations, Juul made a big demand, according to people familiar with the matter. It wanted access to Altria’s consumer mailing list—a direct line to Altria’s consumers that a company would normally protect from rivals. Altria agreed to send out communications on Juul’s behalf.
Altria, for its part, secured an agreement that largely prevents Juul from entering partnerships with other tobacco players.
By early November, both Altria and Juul had come under pressure from the FDA to address the spike in teen vaping. Altria announced it was pulling some of its flavored e-cigarettes from the market. Juul said it would limit its bricks-and-mortar sales to tobacco, mint and menthol flavors, although other flavors remain for sale on its website, which has age-verification controls.
At the 11th hour in negotiations, Juul made a big demand, according to people familiar with the matter. It wanted access to Altria’s consumer mailing list—a direct line to Altria’s consumers that a company would normally protect from rivals. Altria agreed to send out communications on Juul’s behalf.
Altria, for its part, secured an agreement that largely prevents Juul from entering partnerships with other tobacco players.
Strategic Rethink
Sales of the cigarette brands owned by Altria have been declining for decades...
Altria's U.S. cigarette shipments
250 billion units
200 150 100 50 0 ’15 ’10 ’05 000 ’95 ’991
...but the company has improved revenue through price increases.
Altria's U.S. cigarette revenue
billion
$25 20 15 10 5 0 ’10 ’05 000 ’95 ’15 ’991
Shares fell on news of Altria's investment in Juul.
Altria stock-price performance
$70 65 60 55 50
Nov. 28
Talks with Juul first reported
45 40 019 018
Sources: SEC filings (shipments, revenue); SIX (share price)
In early December,
Altria announced it was shutting down its e-cigarette business
altogether. Two weeks later, it signed a deal with Juul valuing the
three-year-old brand at $38 billion.
Some Altria employees were angry they were facing job cuts. About 900 jobs, or 10% of Altria’s total workforce, have been eliminated, while the Juul investment has made some of the startup’s employees millionaires overnight.
“Large-scale organizational change is hard,” Mr. Willard said. “For a long time, we had a pretty stable business, and we had a somewhat risk-averse culture.” The company needs to leave some of that behind and be more innovative, he said.
Reaction to Altria’s pivot has been mixed. Some industry observers called it a brilliant move. Others such as Morgan Stanley analyst Pamela Kaufman said that cigarette price increases could accelerate Juul’s cannibalization rate, and that Altria’s share of Juul’s profits is unlikely to offset the lost profitability on a pack of cigarettes.
Altria’s shares have partially rebounded this year as the company’s chief has explained in more detail the rationale behind the deal. He also has said rival BAT brands such as Newport and Camel have more to lose in the U.S. than Marlboro from e-cigarettes, because they are more popular with smokers aged 21 to 29—the cohort most interested in switching from cigarettes.
Juul projects its 2019 global sales at $3.4 billion.
One big unknown is how the FDA will regulate vaping. Convenience stores and gas stations will effectively be banned from selling most flavored e-cigarettes under the restrictions announced earlier this month.
“Now that Altria and Juul are controlling the leading pod-based flavored product that seems to be the most favored product among kids, they’re going to be a key to trying to address this crisis,” Dr. Gottlieb said in an interview. The FDA boss said he plans to depart the agency, leaving in question the fate of the broader regulatory overhaul he had proposed for the tobacco industry.
Mr. Willard said Altria supports efforts to combat youth use, and is lobbying to raise the minimum purchase age for any tobacco product to 21 from 18. Juul has strengthened the age-verification tools on its website and closed its Facebook and Instagram accounts in the U.S. The startup has said it never targeted teens and that its marketing now features adult cigarette smokers who have switched to Juul.
Altria also said last month that it would limit its retail support of Juul this year, expanding its distribution into no more than 20,000 additional stores.
One sales point that hasn’t changed: the convenience store for Altria employees inside its Richmond research center. It sells bottled water, snacks and Marlboro cigarettes. It doesn’t have plans to add Juul.
Write to Jennifer Maloney at jennifer.maloney@wsj.com and Dana Mattioli at dana.mattioli@wsj.com
Some Altria employees were angry they were facing job cuts. About 900 jobs, or 10% of Altria’s total workforce, have been eliminated, while the Juul investment has made some of the startup’s employees millionaires overnight.
“Large-scale organizational change is hard,” Mr. Willard said. “For a long time, we had a pretty stable business, and we had a somewhat risk-averse culture.” The company needs to leave some of that behind and be more innovative, he said.
Reaction to Altria’s pivot has been mixed. Some industry observers called it a brilliant move. Others such as Morgan Stanley analyst Pamela Kaufman said that cigarette price increases could accelerate Juul’s cannibalization rate, and that Altria’s share of Juul’s profits is unlikely to offset the lost profitability on a pack of cigarettes.
Altria’s shares have partially rebounded this year as the company’s chief has explained in more detail the rationale behind the deal. He also has said rival BAT brands such as Newport and Camel have more to lose in the U.S. than Marlboro from e-cigarettes, because they are more popular with smokers aged 21 to 29—the cohort most interested in switching from cigarettes.
Juul projects its 2019 global sales at $3.4 billion.
One big unknown is how the FDA will regulate vaping. Convenience stores and gas stations will effectively be banned from selling most flavored e-cigarettes under the restrictions announced earlier this month.
“Now that Altria and Juul are controlling the leading pod-based flavored product that seems to be the most favored product among kids, they’re going to be a key to trying to address this crisis,” Dr. Gottlieb said in an interview. The FDA boss said he plans to depart the agency, leaving in question the fate of the broader regulatory overhaul he had proposed for the tobacco industry.
Mr. Willard said Altria supports efforts to combat youth use, and is lobbying to raise the minimum purchase age for any tobacco product to 21 from 18. Juul has strengthened the age-verification tools on its website and closed its Facebook and Instagram accounts in the U.S. The startup has said it never targeted teens and that its marketing now features adult cigarette smokers who have switched to Juul.
Altria also said last month that it would limit its retail support of Juul this year, expanding its distribution into no more than 20,000 additional stores.
One sales point that hasn’t changed: the convenience store for Altria employees inside its Richmond research center. It sells bottled water, snacks and Marlboro cigarettes. It doesn’t have plans to add Juul.
Write to Jennifer Maloney at jennifer.maloney@wsj.com and Dana Mattioli at dana.mattioli@wsj.com
Appeared in the March 23, 2019, print edition as 'The Vape Invader.'
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Susan Cameron elected President and CEO of Reynolds American Inc.; Daniel Delen to retire
Reynolds American Inc.
P.O. Box 2990Winston-Salem, NC 27102-2990
Contact: Investor Relations: Morris Moore
(336) 741-3116
Media:
Top Company Interviews
Maura Payne
(336) 741-6996
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RAI 2014-06
Susan Cameron elected President and CEO of Reynolds American Inc.; Daniel Delen to retire
WINSTON-SALEM, N.C. - April 16, 2014 - The board of directors of
Reynolds American Inc. (NYSE: RAI) has elected Susan M. Cameron
president and chief executive officer, effective May 1. She will also
remain a member of the RAI board of directors.
Cameron served as president, CEO and a member of the RAI board from 2004
to 2011. She also served as chairman of the board of RAI between 2006
and 2010. In 2011, she retired from the company and the board. She
rejoined RAI's board of directors in December 2013.
Cameron replaces Daniel M. Delen, who has chosen to retire and resign
from the RAI board. Delen has served as president and CEO of RAI since
2011. Delen will continue to consult with the company for two years to
ensure a smooth transition and provide strategic insights and other
services to management.
"Susan's 30 years of experience with our companies and her previous
service in this role make her an exemplary choice for this key
leadership position," said Thomas C. Wajnert, non- executive chairman of
RAI's board of directors. "Susan was the architect of RAI's 'total
tobacco' strategic direction more than 10 years ago, and we're pleased
to have her back with the company to further our vision of transforming
tobacco," Wajnert said.
"Under Daan Delen's leadership, RAI and its operating companies have
demonstrated that their strategic plans to transform tobacco are sound,
and their ability to operationally deliver against those strategies is
excellent. On behalf of the board and RAI's shareholders, I thank him
for his leadership and his commitment to providing outstanding returns
to our investors. We wish him nothing but the best in his future
endeavors," Wajnert said.
"I'm excited about returning to RAI," Cameron said. "Daan has provided
tremendous leadership over the last three years, and as a result, RAI
and its operating companies are foundationally very strong. Being back
on the board of directors for the last five months gave me the
opportunity to dive back into the businesses. RAI's strategic mission to
transform the tobacco industry is a fascinating journey. I'm looking
forward to the opportunity to not just advance, but accelerate, that
momentum as CEO," she said.
"I am confident that RAI and its operating companies will continue to
reach new levels of success - both commercially and in their influence
on the future of the tobacco industry," Delen said. "After 25 years in
this industry, I have the opportunity to pursue new interests, and I
will do so knowing that the RAI companies and their employees are in the
best possible hands to see that journey through," he said.
Web Disclosure
RAI's website, www.reynoldsamerican.com,
is the primary source of publicly disclosed news about RAI and its
operating companies. We use the website as our primary means of
distributing quarterly earnings and other company news. We encourage
investors and others to register at www.reynoldsamerican.com to receive alerts when news about the company has been posted.
ABOUT US
Reynolds American Inc. (NYSE: RAI) is the parent company of R.J.
Reynolds Tobacco Company; American Snuff Company, LLC; Santa Fe Natural
Tobacco Company, Inc.; Niconovum USA, Inc.; Niconovum AB; and R.J.
Reynolds Vapor Company.
? R.J. Reynolds Tobacco Company is the second-largest U.S. tobacco company. R.J.
Reynolds' brands include two of the best-selling cigarettes in the U.S.: Camel and Pall
Mall. These brands, and its other brands, including Winston, Kool,
Doral, Salem, Misty and Capri, are manufactured in a variety of styles
and marketed in the U.S.
? American Snuff Company, LLC is the nation's second-largest
manufacturer of smokeless tobacco products. Its leading brands are
Grizzly and Kodiak.
? Santa Fe Natural Tobacco Company, Inc. manufactures and markets
Natural American Spirit 100% additive-free natural tobacco products,
including styles made with organic tobacco.
? Niconovum USA, Inc. and Niconovum AB market innovative nicotine
replacement therapy products in the U.S. and Sweden, respectively, under
the Zonnic brand name.
? R.J. Reynolds Vapor Company makes and markets VUSE e-cigarettes, a highly differentiated vapor product.
Copies of RAI's news releases, annual reports, SEC filings and other
financial materials, including risk factors containing forward-looking
information, are available at www.reynoldsamerican.com. To learn how RAI and its operating companies are transforming the tobacco industry, go to the RAI website, Transforming Tobacco.
Teens say vaping deaths, potential flavor ban not stopping them from smoking e-cigarettes
MIAMI –– Charles Penichet has heard about the
dangers of vaping. But he's dismissive. After all, the practice is
quite popular among his friends at Florida International University
(FIU).
"I have friends now that are 19. …
They've been smoking for, like, two to three years, and they're like
pretty hardcore addicts," said Charles Penichet, 23, a senior on campus.
Paulina Nunez, a 21-year-old FIU senior, said what started as a casual habit for many teens has become an heavy addiction."A lot of my friends do smoke it," said Nunez. "It is just very accessible, very easy to use, and I feel like it's more socially acceptable than cigarettes."
Though e-cigarettes have come under fire following a growing number of vaping-connected deaths across the country, its use among teens continues to soar. Politicians are now trying to curb the practice by banning some flavored products popular among teens and offering treatment programs so addicts can kick the habit.
But a generation that has grown up "smoke-free" is becoming increasingly hooked on the Big Tobacco alternative: vaping. Researchers say what was once advertised as a way to get cigarette smokers to put down their smokes has become the first step on a road to youth addiction.
Vaping has become a nationwide epidemic that is filling rooms and lungs with smoke. Sleek, pencil-shaped electronic cigarettes loaded with nicotine and chemicals have many young adults hooked. Trendy brands offer "choices." Flavors such as watermelon and grape line the shelves, promising a healthier alternative to traditional cigarettes, and a way to blow off some steam.
But health officials say vaping could cost people their lives. The epidemic has caused numerous lung injuries, killing seven people so far, and sickening hundreds.
About 4.9 million middle and high school students were "current users" of some type of tobacco product in 2018, according to the Center for Disease Control and Prevention, meaning they had used a tobacco product within the last 30 days. That number was up from 3.6 million in 2017. College students in Florida explained why they got hooked on the habit.
"I like it because it has a delicious flavor. It has high amounts of nicotine. But it doesn't have the bad components of the cigarettes," said Abdullaziz Kawiyani, a sophomore at Florida International University.
Some 4.9 million middle and high school students were "current
users" of some type of tobacco product in 2018, according to the CDC,
meaning they had used a tobacco product within the last 30 days.
(Elina Shirazi)
Joseph Martinez, a sophomore, explained the appeal."It helps satiate a little fidget they might have," Martinez said. "It's portable. It's popular, you can do it anywhere, it doesn't produce any smoke. You can hide it from anyone."
Wasim Maziak, a professor and researcher in epidemiology at FIU, has been conducting research on e-cigarette users and their preferences. He says his studies show smokers have a noticeable preference for flavored items over generic tobacco flavors.
Flavors such as watermelon and grape line the shelves, promising a
healthier alternative to traditional cigarettes and a way to blow off
some steam.
(Elina Shirazi)
"Last
year we had a sharp increase of about 80 percent from the year before
in e-cigarettes. … This is not a casual hobby," Maziak said. "They are
kind of really getting into the serious business of nicotine addiction."CDC CORRECTS NUMBER OF VAPING-LINKED LUNG ILLNESS CASES
Cases of vaping-related illnesses have been reported in at least 36 states. The Centers for Disease Control and Prevention (CDC) is looking into at least 380 confirmed cases.
The epidemic has caused numerous lung injuries, killing seven
people so far and sickening hundreds. Researchers say what was once
advertised as a way to get cigarette smokers off their bad habit has
become the first step in causing young addiction.
(Elina Shirazi)
"Once
they try it, the nicotine takes care of the rest, because they're going
to be hooked. So the flavor, the varieties, the design, the social
network, the kind of campaigning, all that, is just to entice young
people to start it or try it," Maziak explained.Joseph Martinez, a sophomore, explained its appeal.
"It helps satiate a little fidget they might have," Martinez said. "It's portable. It's popular, you can do it anywhere, it doesn't produce any smoke, you can hide it from anyone."
About 20,000 vape and smoke shops have popped up across the country over the last several years. Florida ranks as one of the top states selling the products in convenience stores. In party cities like Miami, vape shop owners say business is booming.
"It's a very touristic place, everybody wants to have fun, and when they want to have fun, they want to smoke a little," said Zayra Morales, a manager at the Vape and Smoke Shop in Miami.
About 20,000 vape and smoke shops have popped up across the
country in the past few years. Florida ranks as one of the top states
selling the products in convenience stores. In party cities like Miami,
vape shop owners say business is booming.
(Elina Shirazi)
E-CIGARETTES DAMAGE BLOOD VESSELS EVEN IF DEVICES DON’T CONTAIN NICOTINE, STUDY FINDSWhile many states have passed some sort of law to regulate vaping, many are going after the flavors that appeal to youngsters. New York became the first state in the nation to ban the sale of flavored e-cigarettes. States including Michigan and California have also announced bans. Florida currently has pending legislation to ban flavored e-cigs. Now, even the feds are stepping in.
The Trump administration is working with the Food and Drug Administration to remove all non-tobacco flavors, including mint and menthol, from the national market. After the shelves are cleared, companies may be able to reintroduce their flavors if they submit a formal application and get the green light from the FDA.
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"I think you're depriving the industry from one of the most important recruiting tools for youth by removing flavor," Maziak said. "But as we know from the tobacco industry, it is going to be a complex story."
E-cigarette Basics More People Have Health Issues With E-cigarette They Are More Dangerous Than Marlboro E-cigarettes are devices that heat a liquid into an aerosol that the user inhales. The liquid usually has nicotine and flavoring in it, and other additives. The nicotine in e-cigarettes and regular cigarettes is addictive. E-cigarettes are considered tobacco products because most of them contain nicotine, which comes from tobacco.
Besides nicotine, e-cigarettes can contain harmful and potentially harmful ingredients, including:ultrafine particles that can be inhaled deep into the lungs flavorants such as diacetyl, a chemical linked to serious lung disease volatile organic compounds heavy metals, such as nickel, tin, and lead
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