After a series of news about the deaths and diseases linked to vaping, the San Francisco-based e-cigar manufacturer Juul Labs is facing backlash.
Altria, which injected more than $12 billion investment to Juul, is trying to salvage whatever value remains on it.
Last month, Federal prosecutors in California were targeting Juul Labs with links to illnesses and death of teens using the product. This news dragged the image of the company, leading to a massive back out of investors. Moreover, retailers such as Walmart have reportedly pulled out sales of e-cigs, shutting its doors to Juul products.
Altria is also affected by the Juul news as it owns about 35 percent of the company’s stake. The negative news brought worries to Altria investors, as prosecutor investigations roll out. Despite this news, the company firmly believes that the e-cigs market is still worth to invest in.
Altria also had talks with Philip Morris International regarding its newest product, iQOS, which is a heat-not-burn product.
“Altria may still invest aggressively in a national rollout of iQOS in 2020. This would surely be the right move for the long term, but could weigh on 2020 earnings per share growth, which may be close to 3-5% growth than its 7-9% long-term target,” said Altria in a statement.
Demand On Overseas Market
Altria is also looking at possibilities of expanding e-cigs sales overseas as demand increases. The iQOS has recently received its regulatory approval for production, hence, Philip Morris can start rolling out the products anytime soon.
The e-cigs market in the United States is undeniably huge, with almost 10.8 million adults using vaping devices. More than half of these users are under 35 years old. For Asia, the market is also at its peak, as more smokers turn to vape as an alternative to tobacco smoking.