For many years, use of tobacco products has been declining across the globe. Smoking has fallen out of fashion everywhere. In business, top managers are expected to be healthy, to have their lives together, and a cigarette addiction conveys the exact opposite. But because of the substantial progress made in this area, governments have become increasingly concerned about the dramatic rise in teen nicotine addiction. That trend has reignited because of e-cigarettes. While the cigarette industry in the United States brings in almost 100 billion USD a year, vaping products bring in roughly 7.8 billion, which is not bad for such a young market player. Moreover, Euromonitor predicts that cigarette sales will fall by 13% by 2026, whereas those of vaping products will increase by 22%. And because e-cigarettes have brought about such a dramatic rise in smoking rates among young people, it has been the direct target of regulators around the world. Recently, the Food and Drug Administration (FDA) of the United States banned sales of Juul, the largest producer of vaping products in the United States
The Crown Juul
Juul was once riding high. Started at Stanford, the e-cigarette giant captured almost 70% of the US e-cigarette market in just its third year in part due to its sleek design and also its flavours. But after dominating the market for several years, parents across the country started to complain that their kids, often in middle school, were becoming addicted to Juul because of its sweetly flavoured nicotine pods, which includes flavours like mango, cucumber, and crème. After the pushback, Juul agreed in 2019 to suspend all print, broadcast, and digital advertising to avoid exposing children. In April, the company agreed to pay the State of Washington 22.5 million USD to settle claims that it intentionally targeted teenagers with its products and deceived users about their addictiveness. Overall, Juul’s market share has dropped dramatically as more players entered the market and the company faced pushback as being the largest purveyor of such goods. Even though the company is not riding as high as it once did, the FDA banning its sales is a step that will have reverberations throughout the tobacco industry, which is investing heavily in e-cigarette products as the future of the industry.
Although a court has issued a stay on the FDA’s decision – a temporary block on the decision’s effect while the issue can play out in the courts – there is reason to believe that the FDA’s order is a massive impediment for the future of tobacco in the United States. Curiously, the FDA did not cite underage abuse in its decision to ban Juul from the market. Instead, the agency said Juul had not provided sufficient evidence that its product prevents leaching of chemicals from the device to the nicotine vapor that users inhale. This seems that this is a hurdle that the company may never be able to clear. To the media, Juul is claiming that it is the victim of a witch hunt; in filing for the stay, the company argued that the FDA was motivated by political forces that sought to blame the company for the youth vaping crisis, even though they have many competitors with significant market shares. But no matter how you look at it, this crisis only happened after Juul laid the foundation and profited for years off teen nicotine addiction. The business world is now serenading them with the world’s smallest violin.
The cigarette industry in the United States brought in about $99 billion in revenue last year, compared to $7.8 billion for vaping products like Juul, according to Euromonitor, a data research firm. But sales of tobacco are declining: Euromonitor estimates that cigarette sales will fall by about 13 percent through 2026, while vaping products are expected to grow by about 22 percent. Altria, the tobacco giant that took a 35-percent stake in Juul in 2018, reported that its sales fell slightly last year, according to regulatory filings.
A federal appeals court on Friday granted a temporary reprieve to Juul Labs that will allow it to keep its e-cigarettes on the market, pending further court review of a decision just a day earlier by the Food and Drug Administration to ban sales of the company’s products.
The United States Court of Appeals for the District of Columbia issued a temporary stay that had been sought by Juul. The brief order by the appeals court cautioned that the stay was “ should not be construed in any way as a ruling on the merits.”
The stay involves the F.D.A.’s order on Thursday, when the agency said Juul had to stop selling its products because it had provided conflicting and insufficient data that prevented the F.D.A. from assessing the potential health risks of its products.
What’s the next step for Juul?
It will be up to the appeals court to decide whether Juul should continue to be allowed to sell its products while the company pursues its appeal of the F.D.A.’s decision. The court gave Juul until Monday at noon to file an additional motion, and it gave the F.D.A. until July 7 to file a motion in response.
In its emergency filing for a stay, Juul argued that the F.D.A.’s decision to ban sales was motivated by political forces that sought to blame the company for the youth vaping crisis. The F.D.A. issued the ruling against Juul “after immense political pressure from Congress,” the filing reads, “even though several of its competitors now have a larger market share and much higher underage-use rates.”
Read More on Smoking, Vaping and E-Cigarettes
A Blow to Juul: The Food and Drug Administration ordered Juul to stop selling e-cigarettes on the U.S. market, though a federal appeals court granted a temporary reprieve.
Nicotine Levels: Aiming to reduce the toll of smoking, the F.D.A. is planning to require tobacco companies to slash the amount of nicotine in cigarettes.
Menthol Ban: The F.D.A. has proposed a plan to ban sales of menthol cigarettes, a measure experts say may save hundreds of thousands of lives, especially among Black smokers.
‘Smoking Is Back’: Cigarettes, still the No. 1 cause of preventable death in the United States, are making a comeback with a younger crowd.
Vaping Loophole: A crackdown on flavored e-cigarettes was meant to curtail teenage vaping, but sales are rising due to synthetic nicotine.
However, the F.D.A. did not cite underage use in its decision to ban Juul from the market. Rather, the agency said Juul had not provided sufficient evidence that its product prevents leaching of chemicals from the device to the nicotine vapor that users inhale.
Will Juul users still be able to buy the company’s pods and e-cigarettes?
As long as the stay is in force, consumers will be able to buy Juul cartridges and its tobacco and menthol-flavored pods. The F.D.A. had warned that retailers selling Juul products would be subject to enforcement action at some point but not while a stay is in place.
In its court filing, Juul pointed out that the agency’s decision had “already had its intended effect,” indicating that some retailers had stopped selling Juul products.
Will I still be able to buy other e-cigarette products?
The F.D.A. is not seeking a blanket ban on all vape products. As part of its new regulatory authority over so-called electronic nicotine delivery systems, or ENDS, the agency has been reviewing applications for millions of products. It has already granted approval to 23 of them, including products made by R. J. Reynolds, NJoy and Logic. (Applications for a million other products have been denied.)
As part of its review, the agency must consider whether a product is a viable alternative to combustible tobacco that can help cigarette smokers quit, and that the benefits to public health outweigh the harm.
What are the best-selling e-cigarettes still on the market?
According to data from Nielsen, the top-selling vaping brand in the U.S. over the past 12 weeks was a Vuse product, which earned $414 million in sales and had 33.4 percent of the overall e-cigarette market. A close second was Juul, with a 33-percent market share. None of the other brands came close to these two companies; the next best-sellling brand, NJoy Ace, accounted for just 2.4 percent of the market.
How does the tobacco industry stack up against vaping?
The cigarette industry in the United States brought in about $99 billion in revenue last year, compared to $7.8 billion for vaping products like Juul, according to Euromonitor, a data research firm. But sales of tobacco are declining: Euromonitor estimates that cigarette sales will fall by about 13 percent through 2026, while vaping products are expected to grow by about 22 percent. Altria, the tobacco giant that took a 35-percent stake in Juul in 2018, reported that its sales fell slightly last year, according to regulatory filings.
There are an estimated 30 million smokers of traditional cigarettes in the U.S., a number that has been in decline for decades.