Juul received heavy investment of $12.8 billion from Altria and it’s a all cash deal. Altria is famous worldwide for its Marlboro cigarettes brand.
Altria now controls “35% stakes” in the online E-cigarette manufacturer and supplier Juul besides its one of the World’s largest producer and marketer of the tobacco and traditional cigarettes products.
This massive investment raised Juul’s market valuation to $38 billion.
E-cigarette startup is the most popular brand in the United States with 75% market share however it just a three year old company.
Juul at present employs 1500 people. Altria therefor announced the $2 billion bonus to the E-cigarette maker.
It will get distributed between its employees on the basis of factors like number of shares they own, how long they working with Juul etc.
This article Emailed on, Friday, December 21, 2018 to our Newsletter subscribers at 7 Am IST.
Juul apply patented tech “to extract nicotine salt from the nicotine leaf to use in its e-cigarettes”. To attract teens, Juul introduced several fruit based flavors like strawberry, Mango, Cool cucumber etc.
US Foods and Drugs Administration (FDA) criticized the Juul’s practice of “marketing its products”.
As a result, FDA planning to propose new regulations to control the Juul’s product as its popularity among teens increased exponentially in 2017.
Meanwhile, Juul’s agreement with Altria helps them to get the access of Altria’s customer database.
As per the agreement, Altria will not be able to purchase or sell more than 35% of Juul’s shares within the time period of 6 years.
Why so much love for Juul?
Traditional combustible cigarettes and its nicotine addiction are more hazardous to older aged customers.To provide the same experience, Altria eventually finds out an alternative.
Tobacco market is shrinking year on year.The new options with emerging technology helps tobacco companies at least to sail through the business transition.
Altria will market the Juul’s product alongside its traditional tobacco and cigarettes products in its 240000 retail stores.
Juul criticized for its partnership move with traditional cigarette maker Altria.
Juul marketed itself as an alternate option for traditional cigarettes for several times
especially to attract new and existing customers.
The market size of E-cigarette is around $8.5 billion. Approximately $2.35 billion worth E-Cigarettes sold out in the US alone in 2016.
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