E-cigarettes: Altria

From 2014 to 2018 Altria sold its own brand of e-cigarettes (also known as electronic nicotine delivery systems, or ENDS) in the United States (US). In December 2018, following controversy over the increasing appeal of e-cigarettes to America’s teenagers,¹ Altria discontinued its e-cigarette products to focus on “more compelling reduced-risk tobacco product opportunities”.²

In December 2018 the tobacco company announced that it had bought a minority stake in e-cigarette market leader JUUL Labs, the company at the centre of national media attention and critical commentary,³⁴⁵ JUUL came under investigation by the US Food and Drug Administration (FDA) into whether it had run advertising.⁶⁷

After several years of controversy, FDA intervention, disappearing profits and increasing litigation and liability,⁸⁹in May 2023, Altria ended its investment in JUUL e-cigarettes (see below).

However, this did not end Altria’s investment in e-cigarettes. In June 2023, it acquired US based e-cigarette company NJOY.¹⁰

Discontinuation of Mark Ten and Green Smoke

In December 2018, Altria announced that it would discontinue its own e-cigarette brands MarkTen and Green Smoke as “we do not see a path to leadership with these particular products and believe that now is the time to refocus our resources”.²

MarkTen

Altria first trialled MarkTen, produced by its subsidiary Nu Mark, in Indiana in August 2013.¹¹ The product was launched nationally in July 2014,¹²¹³ and by January 2018 MarkTen held a reported 11.4% market share of the US e-cigarette market.¹⁴

Through its cooperation agreement with Altria, Philip Morris International (PMI) continued to sell MarkTen under licence in Europe, rebranded as Solaris.¹⁵¹⁶ For more information see E-cigarettes: Philip Morris International

Green Smoke Inc.

In April 2014 Altria acquired e-cigarette company Green Smoke Inc. for nearly US$110 million in cash and $20 million in incentive payments.¹⁷¹⁸ Green Smoke was founded in 2008 and had operations in the U.S. and Israel.¹⁹

Held 35% share in JUUL

Following the discontinuation of its own e-cigarette brands, Altria announced on 20 December 2018 that it had purchased a 35% share of e-cigarette manufacturer JUUL Labs for US$12.8 billion.²⁰

Howard A. Willard III, Altria’s CEO, said of the purchase: “We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in JUUL, a world leader in switching adult smokers”.²⁰ He added: “We strongly believe that working with JUUL to accelerate its mission will have long-term benefits for adult smokers and our shareholders”.²⁰

Matthew Myers, president of the Campaign for Tobacco-Free Kids, has called Altria’s purchase of Juul shares “truly alarming”, adding that it brings together the two companies that have been the most successful in marketing their highly addictive products to children.²¹

An “Independent” Company

Despite Altria’s claim that “JUUL will remain fully independent”, as per the terms of the agreement,²⁰ Altria is seeking approval from the Federal Trade Commission to convert its non-voting shares to gain voting rights.²² If successful, Altria will have the ability to nominate a third of the Board of Directors of JUUL Labs.²³
In addition, the agreement sets out the following:

• JUUL e-cigarettes will be sold alongside Marlboro and other Altria cigarette brands;
• JUUL pack inserts will be added to Altria cigarette products;
• The distribution of JUUL products will be supported by Altria’s logistics services; and
• Altria will support JUUL Labs in its negotiations with the FDA.²⁰

FDA Angered: ‘No Evidence that Public Health Concerns Drove Altria’s Investment’

At the time of purchase, JUUL Labs held a reported 75% share of the US e-cigarette market. It was also at the centre of a controversy relating to teenagers’ use of its products,²⁴ with FDA Commissioner Scott Gottlieb stating that “…youth use of JUUL represents a significant proportion of the overall use of e-cigarette products by children”.²⁵

Altria’s acquisition of JUUL Labs shares clearly angered the FDA. In February 2019 FDA Commissioner Scott Gottlieb demanded a meeting with Altria’s CEO in which “Altria should be prepared to explain how this acquisition affected the full range of representations you made to the FDA and the public regarding your plans to stop marketing e-cigarettes and to address the crisis of youth use of e-cigarettes”.²⁶

Altria, Juul, and Gottlieb met in March 2019 but media reported that Gottlieb had found the meeting “difficult” and had indicated that “he did not come away with any evidence that public health concerns drove Altria’s decision to invest in Juul”.²⁷²⁸

In 2020, Altria was subject to anti-trust proceedings over its investment in JUUL Labs. For details see the Altria page.

Years of controversy followed as youth use increased and JUUL was accused of aggressive marketing to new consumers. In June 2022, the FDA ordered JUUL to remove all its products from the US market.²⁹³⁰

• For more on the history of Altria’s investment see JUUL Labs and the associated FDA Investigation Timeline

In May 2023, Altria announced that it had ended its investment in JUUL e-cigarettes, exchanging its shares for an interest in JUUL’s heated tobacco intellectual property (see Altria).³¹

Acquired NJOY

In March 2023, Altria announced its intention to buy US based e-cigarette company NJOY.³² The acquisition was completed in June 2023.¹⁰

Cooperation Agreement with PMI

From December 2013, Altria held a cooperation agreement with Philip Morris International (PMI), under which Altria gained the right to exclusively sell PMI’s e-cigarettes and heated tobacco products (HTPs) in the US, and PMI the right to exclusively sell Altria’s products outside the US.³³³³ The companies said they would work together on scientific assessments and regulatory authorisations of these products.³³ On 30 April 2019 the FDA approved the sale of PMI’s IQOS heated tobacco products in the US.³⁴ However, this was held up by legal challenges. For details see Heated Tobacco Products.

• For more on Altria’s HTP interests see Altria 

TobaccoTactics Resources

• Altria
• E-cigarettes
• JUUL Labs
• FDA Investigation Timeline
• E-cigarettes: Philip Morris International
• E-cigarettes: British American Tobacco
• E-cigarettes: Imperial Tobacco
• E-cigarettes: Japan Tobacco International

References