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Altria-Juul Labs deal: why did it occur and what does it mean for the US nicotine delivery product market

Tobacco control, 2020-12, Vol.29 (e1), p.e171-e174 [Peer Reviewed Journal]

Author(s) (or their employer(s)) 2020. Re-use permitted under CC BY-NC. No commercial re-use. See rights and permissions. Published by BMJ. ;2020 Author(s) (or their employer(s)) 2020. Re-use permitted under CC BY-NC. No commercial re-use. See rights and permissions. Published by BMJ. This is an open access article distributed in accordance with the Creative Commons Attribution Non Commercial (CC BY-NC 4.0) license, which permits others to distribute, remix, adapt, build upon this work non-commercially, and license their derivative works on different terms, provided the original work is properly cited, appropriate credit is given, any changes made indicated, and the use is non-commercial. See: http://creativecommons.org/licenses/by-nc/4.0/ . Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;Author(s) (or their employer(s)) 2020. Re-use permitted under CC BY-NC. No commercial re-use. See rights and permissions. Published by BMJ. 2020 ;ISSN: 0964-4563 ;EISSN: 1468-3318 ;DOI: 10.1136/tobaccocontrol-2019-055081 ;PMID: 31484802

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  • Title:
    Altria-Juul Labs deal: why did it occur and what does it mean for the US nicotine delivery product market
  • Author: Levy, David T ; Sweanor, David ; Sanchez-Romero, Luz Maria ; O'Connor, Richard ; Goniewicz, Maciej Lukasz ; Borland, Ron
  • Subjects: Acquisitions & mergers ; Business ; Cigarette industry ; Cigarette smoking ; Cigarettes ; Competition ; Consumer products ; Consumers ; Corporate profits ; Divestitures ; Economics ; Electronic cigarettes ; Incentives ; Market segmentation ; Markets ; Nicotine ; Product testing ; Profitability ; Profits ; Public health ; Smoking ; Special Communication ; Tobacco ; Vaping ; Young adults
  • Is Part Of: Tobacco control, 2020-12, Vol.29 (e1), p.e171-e174
  • Description: [...]Altria dropped its MarkTen e-cigarette brand.2 Juul Labs’ motivations for the deal with Altria Juul Labs has clear motivations for the merger. Besides the direct gain to Juul Labs’ owners from the acquisition price,1 they can also benefit in the legal and regulatory sphere. [...]Altria has recently gained permission from the FDA to market Phillip Morris International (PMI’s) heated-tobacco product, iQOS, which is also likely to compete with vaping products for a share of the nicotine delivery market. [...]increased Juul sales are likely to at least partially reduce Altria’s profitability from cigarettes and iQOS. With steeper declines in their sales, Altria and the other two major US cigarette companies, British American Tobacco (BAT) and Imperial, have experienced a steep drop in their stock prices since July 2017,16 when the FDA announced its plan to encourage the use of safer nicotine delivery products instead of cigarettes.17 The per cent reduction in stock prices far exceeds that of general consumer products or for the overall market, and is occurring despite ongoing high profits.16 18 19 Previous to the growth of the vaping industry, Altria had a lucrative and secure cigarette business model where they could afford complacency and fail to innovate. The future impact of the deal on the US cigarette and alternative nicotine delivery market From a public health perspective, the impact of the deal will depend on whether it leads to increased cigarette use (eg, through increased initiation or less cessation) or less cigarette use (eg, as a means of cessation or initiation into e-cigarette or no use rather than cigarettes) than would have occurred in the absence of e-cigarettes.21 Independent (ie, non-cigarette) firms have greater incentives than cigarette companies to encourage smokers to switch entirely to vaping, and have played a key role in developing a product that better substitutes for cigarettes.4 At the same time, Juul has been associated with increased vaping by youth and young adults.22–24 The future public health impact of the Altria-Juul Labs deal is difficult to predict, but will likely depend how the deal affects market competition and
  • Publisher: England: BMJ Publishing Group LTD
  • Language: English
  • Identifier: ISSN: 0964-4563
    EISSN: 1468-3318
    DOI: 10.1136/tobaccocontrol-2019-055081
    PMID: 31484802
  • Source: BMJ Open Access Journals
    AUTh Library subscriptions: ProQuest Central
    Alma/SFX Local Collection
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