JUUL labs is a three year old electronic cigarette tech that provides an alternative for smokers.
It accounts for more than 50% of the electronic cigarette market and boasted a year-over-year sales growth of nearly 800% in 2017. JUUL forecasts revenue of USD 3.4 Billion in the year 2019, triple the amount of what it has generated in 2018. The Company’s market is beginning to span overseas and qualifies itself as a serious threat to the cigarette industry.
According to Nielsen Holdings, U.S cigarette volumes shrunk by 6% in the first quarter, crediting the difference to JUUL labs. Tobacco giant Altria Group, Inc. (NYSE: MO) recently acquired a 35% stake in JUUL for USD 12.8 Billion in December 2018.
Howard Willard, Altria’s Chief Executive Officer plans to get an in-depth analysis of the Company’s financial performance later in the year. “We are excited about JUUL’s domestic growth and international prospects,” he says. “JUUL’s 2018 growth was quite remarkable.” JUUL anticipates their international market to rise up to 26% of its sales by the end of 2019. They expect their 2019 sales growth of about 160% by the end of 2019. Despite JUUL’s successes, Altria Group Inc.’s growth has been stagnant at less than one percent over the past two years.
New research has shown that Tobacco powerhouses are investing in uprising electronic cigarette brands to slow down Tobacco use. CNBC’s Jim Cramer watched the long standing tobacco sector get obliterated as Wall Street sentiment on the space turned starkly negative. “Investors realized, practically overnight, that the tobacco industry is facing an existential threat from its vaporizer competitors, led by JUUL labs,” Cramer said.
It’s apparent in a generation of millenials, tobacco use is on the decline and electronic cigarette use is on the rise. JUUL has succeeded in generating epidemic levels of use among the youth because of its addictive nicotine substance, questionable marketing practices, cunning use of social media and sleek packaging that resembles a USB memory stick. The Company’s potency among the youth has raised concern of widespread underage use. Despite so, JUUL continues to see exponential sales growth year after year and may be the future of smoking.