U.S. Juul E-Cigarette Receives Investment from Marlboro’s Parent Company

U.S. Juul E-Cigarette Receives Investment from Marlboro’s Parent Company. As the traditional cigarette market shrinks, tobacco companies are forced to seek more avenues to save their business performance.

Multiple media outlets report that Altria, the American tobacco company, will invest $12.8 billion in e-cigarette company Juul, acquiring a 35% stake in the company. CNBC reported that this deal is expected to be announced before the market opens on Thursday.

Altria owns the world’s best-selling cigarette brand, Marlboro, while Juul is the most popular e-cigarette in the U.S., holding a 70% market share. Juul products are sold in Canada, the UK, Israel, and Russia, with plans to expand into Europe and Asia.
Juul, resembling a USB drive, is very popular

Juul is valued at approximately $38 billion, having doubled in value compared to a few months ago, surpassing SpaceX, which recently raised $50 million and is valued at $30.5 billion, and is more than three times the valuation of Pinterest, which plans to go public next year (valued at $12 billion).

As the cigarette market shrinks, the established tobacco company Altria is eager to find new growth opportunities. Since the beginning of this year, Altria's stock price has dropped nearly 30%, slightly less than the overall decline in the tobacco industry.

This year, Altria and the tobacco industry have seen significant stock price declines.

The rapidly expanding Juul perfectly meets Altria's needs. The Wall Street Journal cited sources stating that Juul has a gross margin of 75%, far exceeding that of traditional tobacco companies, with annual revenue expected to reach $2 billion. Following the news of the investment in Juul, Altria's stock price rose by 1% overnight.
Earlier this month, Altria also invested $1.8 billion in Canadian cannabis company Cronos, marking traditional tobacco companies' expectations for cannabis legalization.

Juul, the e-cigarette producer, is currently under close scrutiny from the U.S. FDA, as e-cigarettes seem to be becoming a substitute for cigarettes among teenagers. According to data released by the FDA, one in five high school students in the U.S. now uses e-cigarettes, a 78% increase from last year; the number of middle school students using e-cigarettes has reached 3.6 million.

Media reports also indicate that this deal will allow Juul to enter Altria's convenience store shelves and gain access to related marketing resources.