Juul Announces 650 Layoffs and Cuts $1 Billion in Costs

On November 12 local time, U.S. vaping giant Juul confirmed it would lay off about 16% of its workforce, or 650 employees, to cut $1 billion in costs and respond to current regulatory pressure on the vaping industry. On October 29 this year, Juul had already announced that it would cut 500 jobs before the end of the year.

According to foreign media reports, the layoffs account for 16% of Juul’s total workforce of 4,051 employees. Previously, the fast-growing startup had been hiring about 300 new employees per month.

Juul will reduce marketing spending. In September, the company announced that it had suspended all product advertising in the United States. On Tuesday, Juul officials said the remaining marketing team after the layoffs would focus on direct advertising aimed at adult smokers.

“As the vapor e-cigarette category undergoes a reset, this restructuring will help Juul focus on reducing underage vaping, investing in scientific research, creating new technology, and securing authorization to operate in the United States and around the world,” said Juul’s new CEO, K.C. Crosthwaite.

Juul had previously been criticized for allegedly encouraging unhealthy habits among teenagers in pursuit of profit, and the company is now preparing to reshape its image. In September, it replaced CEO Kevin Burns with Crosthwaite, a veteran tobacco industry executive.

Crosthwaite previously worked at Altria, a tobacco industry giant that held a 35% stake in Juul at the end of last year. Since joining Juul, he has already reshuffled management and planned the layoffs.

He is trying to position Juul as a responsible company. Last week, Juul said it would stop selling mint-flavored nicotine vaping products after two studies showed that mint nicotine e-cigarettes were the most popular flavor among U.S. high school students.

Juul also removed other sweet-flavored e-cigarettes from its website. About a year earlier, the company had already pulled sweet-flavored e-cigarettes from convenience stores, discount stores, and other retailers.

In September, the Trump administration announced plans to ban the sale of flavored e-cigarettes. Juul and all other vaping companies must submit applications to the Food and Drug Administration by May 2020 in order to keep their products on the market.

In October, Altria, best known for producing Marlboro cigarettes, wrote down its Juul investment by $4.5 billion, effectively cutting Juul’s valuation by one-third to $24 billion.

In the past, e-cigarette manufacturers claimed in advertising that vaping was healthier than traditional tobacco, but now the public has found that this is not necessarily the case. According to research by the U.S. Centers for Disease Control and Prevention, more than 1,300 cases of lung disease linked to vaping had been confirmed across nearly every part of the United States, and more than 20 patients had died. This alarming news has also prompted many consumers to give up vaping in recent months.