JUUL

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JUUL Labs
Private
Predecessor PAX Labs
Founded July 2017; 15 months ago (July 2017)[1]
Headquarters San Francisco, California, United States[2]
Area served
United States[3]
Canada[4]
Key people
Kevin Burns (CEO)[2]
Products Electronic cigarettes
Revenue $1.1 billion[5] (2018)
Owner PAX Labs (2015-2017)
Independent (2017-present)
Number of employees
800[6] (2018)
Website juul.com

JUUL Labs (/ˈl/ JOOL, like "jewel"[7]) is an electronic cigarette company which spun off from PAX Labs in 2017.[1] The JUUL e-cigarette was introduced by PAX Labs in 2015.[8] It is a type of e-cigarette that uses nicotine salts that exist in leaf-based tobacco for its key ingredient.[8]

The JUUL became the most popular e-cigarette in the United States at the end of 2017 and has a market share of 72% as of September 2018.[9][10][11] Its widespread use by youth has triggered multiple investigations by the U.S. Food and Drug Administration.[12]

History[edit]

JUUL, the electronic cigarette, was introduced by PAX Labs on June 1, 2015.[8] In July 2017, JUUL was spun out of PAX Labs as an independent company.[1] Tyler Goldman, former CEO of PAX Labs, was named CEO of JUUL after the spin-off.[2] It was announced on December 11, 2017 that Goldman "intends to pursue new entrepreneurial opportunities" and was replaced by Kevin Burns.[2] James Monsees is Chief Product Officer[13] and board member at JUUL.[2] Adam Bowen is Chief Technology Officer[13] and board member at JUUL.[2] Other board members include Nicholas Pritzker, whose family owned chewing tobacco giant Conwood,[12] Riaz Valani, and Hoyoung Huh.[2]

As the popularity of the JUUL e-cigarette has taken off, the company has grown quickly, from employing 200 people in September 2017[6] to 400 in May 2018[14] to over 800 by September 2018.[6]

As of July 2018, the JUUL e-cigarette is made in Shenzhen, China, like many other e-cigarettes,[15] while the pods are made in the United States.[16]

Founders[edit]

JUUL Labs was co-founded by two former cigarette smokers, Adam Bowen and James Monsees.[14] They first created a company called Ploom while they were product-design grad students at Stanford University, and later created the Pax vaporizer device for cannabis and loose-leaf tobacco before founding JUUL.[14] As of August 2018, Bowen is Chief Technology Officer of JUUL and Monsees is Chief Product Officer.[13]

Design[edit]

JUUL vaporizer
JUUL vaporizer

The JUUL is a type of e-cigarette that uses nicotine salts that exist in leaf-based tobacco for its key ingredient.[8] They received a US patent for their nicotine salt preparation in 2015.[17] The nicotine salts are said to create an experience more like smoking than other e-cigarettes on the market.[18] Each cartridge (called a JUULpod) contains about the same amount of nicotine as one pack of cigarettes[19] and delivers approximately 200 hits.[20] The amount of nicotine in each cartridge—5 percent, or 59 mg/ml[21]—is substantially more than the majority of e-cigarettes on the market.[1] In August 2018, JUUL introduced pods in 3 percent strengths for its mint and Virginia tobacco [22]Each cartridge contains propylene glycol, glycerin, flavorings, and nicotine salts.[23] JUUL pods come in eight flavors,[24] of which mango is the most popular.[25] A JUUL starter kit sells for about $49.99.[26] The JUUL e-cigarette is shaped like a USB flash drive[19] and recharges using a magnetic USB deck.[20] JUUL attempts to deliver a nicotine peak in five minutes, similar to a traditional cigarette.[27]

Joel Johnson of co.design described the nicotine intake as "eye-widening" and its aesthetics as "demure".[28] Upon initial release Ben Radding of Men's Fitness called JUUL the "iPhone of E-cigs", but said that it required "getting used to."[27] The comparison to the iPhone and other Apple products has been made by many other commentators.[24][25] Pharmacologist James Pauly, a specialist in nicotine, notes that JUUL delivers more nicotine than other e-cigarettes, and that the salts also possibly reduce the harshness, making it relatively easy for a new smoker, such as a teenager, to suck in more nicotine than they are aware of.[7]

Investors[edit]

Current JUUL investors include Tiger Global Management, mutual fund firm Fidelity Investments, and Tao Capital.[29] In June 2018, JUUL reportedly raised $1.2 billion in a financing round that valued the company at more than $16 billion.[30]

Usage[edit]

JUUL e-cigarette with pods

Using JUUL is popular among teenagers.[31][32] A 2017 study by the Truth Initiative found that 7 percent of teenagers ages 15–17 and 12 percent of young adults ages 18–24 use JUUL[33] Teenagers use the verb "Juuling" to describe their use of JUUL,[12][24] which frequently takes place in bathroom stalls at school.[25][31] Former PAX Labs CEO Goldman said to Fortune in 2016 that "JUUL should not be used by those under the legal age, nor should any nicotine products, as stated by the U.S. Surgeon General."[34] In 2018 Matt Myers, president of Campaign for Tobacco-Free Kids, said the design "misleads about risk" of addiction.[31] The Truth Initiative survey found 63% of teens and young adults do not understand that the JUUL they use always contains nicotine.[33]

Many reasons have been proposed for JUUL's popularity among teenagers. Among these are its ease of concealment, sleek high-tech design, and JUUL pod flavors. JUUL's resemblance to a flash drive makes it easy to conceal,[32] and its low vapor output and subtle scent,[25] which can be passed off as perfume,[25] mean that it can be used discreetly, even in class.[32][5] Similarly, the device's small size allows it to be concealed in clothing or elsewhere; a high school in Newton, Massachusetts discovered a JUUL disguised as a sharpie, for instance.[35] JUUL's sleek and high-tech design, which is often compared to that of the iPhone, is also often cited as a reason for its popularity with young people.[5][14][21] Finally, JUUL's sweet flavors, especially the fruit and crème brûlée ones, are especially attractive to children, according to journalists,[14][25] academics,[32][21] and the U.S. Food and Drug Administration.[36] In response, JUUL renamed some flavors—"cool cucumber" to "cucumber" and "crème brûlée" to "creme"—saying that it “heard the criticism” and “responded by simplifying the names and losing the descriptors.”[12]

Food and Drug Administration investigations[edit]

In April 2018, the Food and Drug Administration (FDA) requested that JUUL Labs turn over documents to "better understand the reportedly high rates of youth use and the particular youth appeal of these products."[37][12] The FDA's request included asking the company to provide documents about the design and marketing of the JUUL, research on the safety of the products, and whether certain features of the device's design appeal to specific age groups.[37] FDA commissioner Dr. Scott Gottlieb expressed concern about how the JUUL can be easily disguised as a USB flash drive and that the JUUL delivers a high amount of nicotine.[37] "We don’t yet fully understand why these products are so popular among youth," Dr. Scott Gottlieb stated.[38] With its youth education strategy, JUUL Labs stated that they would spend $30 million on a campaign to keep JUUL out of the hands of young people in addition to working with the FDA, which they announced in a press release in April 2018.[39] JUUL Labs also announced their support for raising the minimum age for vaping products from 18 to 21.[40] JUUL Labs CEO Kevin Burns said, "we are committed to deterring young people, as well as adults who do not currently smoke from using our products. We cannot be more emphatic on this point: No young person or non-nicotine user should ever try JUUL."[41] The FDA followed up by issuing more than 60 warning letters and fines to stores that were found to be illegally selling JUUL products to minors.[42]

In September 2018, the FDA sent letters to JUUL Labs and the manufacturers of the four other largest e-cigarette brands in the US—R.J. Reynolds' Vuse, Altria's MarkTen, Imperial Brands' blu eCigs, and Japan Tobacco International's Logic—giving them 60 days to lay out their plans to address widespread youth use of their products.[36] If they fail to comply, FDA may "remove some or all of their flavored products that may be contributing to the rise in youth use from the market."[36] FDA also sent over 1,300 warning letters to stores that undercover investigators had found to be selling JUUL and other e-cigarettes to minors,[36] and issued 131 fines ranging from $279 to $11,182.[43] JUUL Labs responded with a statement that "JUUL Labs will work proactively with FDA in response to its request."[44] A JUUL spokeswoman also announced that JUUL has its own patrol of retailers who advertise to youths or who do not enforce age requirements, noting that it had requested the removal of over 5,500 posts from Instagram, 144 posts from Facebook Marketplace, and 33 from Amazon.com.[43] In total, Instagram removed 4,562 of 5,500 posts, Facebook Marketplace removed 45 of 145, and Amazon took down 13 of 33.[43]

The FDA made an unannounced inspection of JUUL headquarters in late September 2018 to gather information on the firm's marketing methods.[45] FDA announced afterwards that it had seized thousands of pages of documents on JUUL Labs' marketing practices.[46] Shares of the three big tobacco companies—Altria, Philip Morris International, and British American Tobacco—rose at the news of the inspection.[46]

Market share[edit]

United States[edit]

Sales of JUUL increased 700% in 2016.[31] As of August 2018, JUUL accounts for over 70 percent of the US e-cigarette market monitored by Nielsen.[9] JUUL's market share in the US has increased by 10 percentage points since April 2018.[47] According to JUUL Labs, 90 percent of JUUL products are purchased at retail stores as of August 2018.[24] JUUL plans to sell their products internationally.[3]

According to Dow Jones VentureSource, JUUL Labs was the sixth-most valuable US startup in July 2018, behind companies like Uber Technologies Inc. and Airbnb Inc.[29] JUUL’s revenue in 2017 was approximately $245 million and projected to be $940 million in 2018,[48] while sales totaled $1.1 billion for the year ending July 2018.[5]

The company filed a complaint with the U.S. International Trade Commission (ITC) in early October 2018 over counterfeit products manufactured by companies in the United States and China that JUUL Labs says infringed on its US patents.[49] The complaint seeks to end importation of these products into the US.[49]

International[edit]

In May 2018, JUUL started selling in Israel, which did not regulate e-cigarettes at the time.[50] Israel later banned JUUL in August 2018, citing public health concerns, according to a statement by the Ministry of Health.[51] Prime Minister Benjamin Netanyahu, acting in his capacity as Health Minister,[52] placed a complete ban on JUUL because it delivers nearly three times Israel's recommended amount of 20 mg/ml of nicotine.[51][52] JUUL has appealed the ban to Israel's High Court of Justice.[52]

In July 2018, JUUL announced it would launch in the United Kingdom.[53] In August 2018, JUUL introduced its products into Canada, starting with an online launch before introducing them to vape shops, gas stations, and convenience stores in early September.[4]

Marketing[edit]

JUUL is intensively marketed via Instagram and other social media.[54] Of the $2.2 million JUUL spent on marketing in 2015 and 2016, $1 million went to online marketing, according to data from Kantar Media.[21] JUUL's heavy reliance on social media marketing is unique among major e-cigarette brands in the US—blu and NJOY were initially promoted mainly with television advertising while Vuse and MarkTen relied on promotional expenditures to consumers and retailers—and is touted as a major reason for its success.[12][21] JUUL's use of social media marketing is also relatively inexpensive: to promote Vuse, R. J. Reynolds Vapor Company spent over $16 million on television ads alone in 2015 and 2016, according to Kantar data.[21] A 2018 study found that "JUUL’s social media activities were highly correlated with JUUL retail sales."[21]

JUUL's marketing has been criticized for targeting youth. The themes emphasized in JUUL's marketing, especially freedom, relaxation, and sex appeal;[21] the use of young models and imagery claimed to be appealing to young people;[12][14] and the use of social media "influencers" and affiliates popular among youth are three reasons why some consider JUUL's marketing to be targeting youth.[14][21][55] In 2015, John Schachter, director of state communications for Campaign for Tobacco-Free Kids (CTFK), voiced concern regarding the youth of men and women portrayed in JUUL's advertising, particularly in combination with the design, stating that "We're seeing more and more irresponsible marketing of unregulated products such as e-cigarettes."[56] Similarly, CTFK Vice President of Communications Wilmore stated that JUUL Labs "used the same imagery and themes that tobacco companies have always used to appeal to kids, and they fueled it with social media."[5]

JUUL Labs argues that its marketing is targeted at adult cigarette smokers who are looking to quit.[57] The rectangular design of the JUUL e-cigarette, for example, was chosen to avoid reminding smokers of a cigarette,[14] according to a JUUL executive.[58] In 2018, JUUL implemented a new marketing code to avoid the appearance of targeting youth.[57] Changes brought about by the new code include only showcasing former smokers age 35 or older in ads,[12] no longer featuring models on social media,[57] removing social media accounts that marketed to teenagers, including @Doit4JUUL, which had more followers than the main JUUL account,[14] and adding the label "the alternative for adult smokers" to its packaging and many of its ads.[14]

JUUL's marketing has been the focus of two lawsuits filed against the company since April 2018. The suits, both filed in California, claim that JUUL was deceptively marketed as safe even though a JUUL pod contains as much nicotine as an average pack of cigarettes.[4] According to the first suit, filed in US District Court in April, "the intense dosage of nicotine salts delivered by the Juul products resulted in an increased nicotine addiction, and an increased consumption of nicotine by [plaintiff] Colgate."[55]

Health concerns[edit]

JUUL's health concerns have been debated.[59] Ari Atkins, Pax Labs' R&D engineer, said "We don’t think a lot about addiction here because we’re not trying to design a cessation product at all."[60] He added, "anything about health is not on our mind."[60] In April 2018, FDA Commissioner Dr. Scott Gottlieb stated that the nicotine in JUUL is sufficient to result in addiction.[37] Gottlieb further stated, "In some cases, our kids are trying these products and liking them without even knowing they contain nicotine. And that’s a problem, because as we know the nicotine in these products can rewire an adolescent’s brain, leading to years of addiction."[37]

Concerns about the effect of nicotine delivered by JUUL on the developing adolescent brain have led to a lawsuit against the company. The suit, filed in US District Court in New York in June 2018, alleges that JUUL contains more nicotine than necessary to satisfy an adult smoker, and that use of JUUL by the 15-year old son of the plaintiff made him "heavily addicted to nicotine" causing him to be "anxious, highly irritable and prone to angry outbursts."[55]

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Further reading[edit]

External links[edit]