Breaking: Juul CEO Kevin Burns resigns, all US ads suspended

On the evening of September 25, according to the Wall Street Journal, Kevin Burns, the CEO of the American e-cigarette brand Juul, announced his resignation, with Altria executive K.C. Crosthwaite taking over.
 
At the end of 2018, Altria announced an investment of $12.8 billion in Juul, acquiring a 35% stake. However, since Juul faced scrutiny from the FDA and various state regulators in April of this year, Altria's market value has dropped by $30 billion, equivalent to Juul's valuation. The CEO's departure may also be related to recent U.S. regulations on e-cigarettes.

Crosthwaite previously served as Altria's Chief Growth Officer, overseeing the company's expansion into tobacco products.

In January 2018, Kevin Burns replaced Tyler Goldman as Juul's new CEO.

Kevin Burns had been a partner at TPG Capital for over 12 years. TPG Capital is one of the largest private equity investment firms globally, focusing on leveraged buyouts, growth capital, and restructuring investments in distressed companies. He holds a bachelor's degree in mechanical and metallurgical engineering from the University of Connecticut and an MBA from the Wharton School of the University of Pennsylvania.

Burns' departure may be linked to recent regulatory challenges Juul has faced in the U.S. Juul has been criticized for allegedly marketing e-cigarettes to minors, and states like Michigan, San Francisco, and New York have announced bans on flavored e-cigarettes. The Trump administration has also announced plans to work with the FDA to implement e-cigarette bans.

Juul faces challenges including a criminal investigation by California federal prosecutors and concerns about the safety of e-cigarettes, prompting Massachusetts to impose a temporary ban on all e-cigarette products on Tuesday.

Juul Labs stated in a press release that Crosthwaite will continue to conduct a comprehensive review of the company's business practices and policies to ensure alignment with its goal of being a responsible leader in the e-cigarette industry.

Juul Labs also announced today that it will suspend all advertising for its products across broadcast, print, and digital media in the U.S. Furthermore, the company will not lobby the Trump administration regarding the upcoming policy to remove flavored e-cigarettes from the market. Instead, Juul Labs will comply with the final policy once it takes effect.

Juul was founded by Adam Bowen and James Monsees in 2007, who also started the e-cigarette company Ploom while pursuing their master's degrees at Stanford University. Eight years later, around 2015, they sold the brand to Japan Tobacco.

Around the same time, they launched a USB-shaped e-cigarette named Juul, which quickly became a leader in the U.S. e-cigarette market, with its market share skyrocketing from 13.6% in early 2017 to 75%.

Below is the full official statement from JUUL:

JUUL Labs today announced that KC Crosthwaite will join the company immediately as CEO. Co-founders James Monsees, Adam Bowen, and Kevin Burns jointly announced this news.

New CEO KC Crosthwaite brings over twenty years of global operations, management, stakeholder, and regulatory engagement experience. As Altria Group Inc.'s Chief Growth Officer, he was responsible for the company's expansion into combustible cigarette alternatives and played a key role in the commercial and regulatory work related to the launch of IQOS in the U.S. He also served as an observer on the JUUL Labs board.

In his new role, Crosthwaite and the entire JUUL Labs leadership team will continue to conduct a comprehensive review of the company's practices and policies to ensure alignment with its responsible leadership goals in the industry. JUUL Labs announced immediately that the company will:

Suspend all broadcast, print, and digital product advertising in the U.S.

Not lobby the government regarding its guidance draft and commit to fully supporting and complying with the final policy when effective.

Crosthwaite commented on this announcement, saying: "I have long believed that the vast majority of adult smokers will choose alternatives like JUUL. Since its inception, this has been the company's mission, and we have made significant progress in this direction. Unfortunately, due to the unacceptable youth usage rates and the declining public trust in our industry, the future is at risk today. In this context, we must work to build trust with regulators, policymakers, and other stakeholders in the communities where we operate. This includes inviting open dialogue, listening to others, and responding to their concerns."

Burns stated: "Working at JUUL Labs has always been an honor, and I still believe that the company's mission to eliminate combustible cigarettes is crucial. I am proud of the team's efforts to guide the industry in taking the urgent actions needed to address the issue of youth usage of these products, which are intended solely for adult smokers. Since joining JUUL Labs, I have been working tirelessly to help transform a small company into a global enterprise, so I felt it was the right time to resign a few weeks ago. I am glad someone is taking over who is well-suited for the next phase of the company's journey."

Under Burns' leadership, JUUL Labs provided alternatives for millions of adult smokers worldwide and took proactive steps to combat youth smoking. During Burns' tenure, JUUL Labs grew from a company with fewer than 300 employees operating in the U.S. to a company with thousands of employees operating in 20 countries worldwide. Burns implemented industry-leading manufacturing and quality control standards.

Burns also oversaw the implementation of industry-leading actions to combat youth usage of vaping products. JUUL Labs strongly advocated for the Tobacco 21 (T21) law, ceased selling non-tobacco and non-menthol JUULpods to all its traditional retail partners, enhanced its online age verification, and terminated its Facebook and Instagram accounts in the U.S., committing to remove inappropriate social media content generated by others on those platforms. The company also intensified efforts to combat illegal and potentially dangerous counterfeit and compatible products. Recently, JUUL Labs began deploying technology in retail stores that automatically restricts the sale of JUUL products until government-issued IDs are electronically scanned to verify age and ID validity.

Monsees and Bowen stated: "Kevin transformed our startup into a global business, and we are deeply grateful for his commitment and passion for our mission. KC has long understood the potential of combustible cigarette alternatives and the need to combat youth usage, and we look forward to having him lead our team at this critical juncture."