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All of The News Stations and Commercial Talk Radio and All of Sports TV stations Across America Can't Broadcast or Show any Marlboro or Tobacco Products.... They are band from Advertising Marlboro... However this does not include the Patcnews ~ The Patriot Conservative News Tea Party Network; We can can This because I'm not under contact with the Gov. however all the News Networks stations who supports obama can't air or show Marlboro or Tobacco Products....

you can read More about this Report on Thw Wall Street  The Wall Street Journal - http://www.wsj.org









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
E-cigarette retail sales
Juul’s share

E-cigarette

Cigarette
120%

 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 


Mr. Willard wooed Juul for more than a year. Altria first tried to buy the entire company in late 2017 or early 2018 with an informal offer of as much as $8 billion, according to people familiar with the matter. That approach, previously unreported, was rebuffed. Mr. Willard eventually sweetened the offer and settled for a minority stake. He also agreed to put Juul coupons on packs of Marlboros, giving his own consumers an incentive to try Juul.
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.


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 .

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.

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.

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

Appeared in the March 23, 2019, print edition as 'The Vape Invader.'





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