The popular electronic cigarette startup disrupting Big Tobacco’s cigarette trade in the U.S. is raising $1.2 billion for a global launch.
JUUL Labs., which manufacturers the JUUL vape pen, currently only offers their device in America and Israel. The new round of financing to expand their reach into global markets will put the company at a valuation of roughly $15 billion, reports Bloomberg.
JUUL devices are light and slim, resembling the feel of a cigarette, and deliver a large concentration of nicotine. The devices are solely intended for adult smokers trying to quit combustible tobacco, and judging by their explosive growth are proving popular with their intended audience.
Data from Nielsen shows JUUL accounts from roughly 68 percent of sales in the e-cigarette retail market, aiding a drop in sales for combustible cigarettes, which remain the number one cause of preventable death worldwide. (RELATED: JUUL Launches Campaign Aimed At Educating Teens And Parents To ‘Combat Underage Use’)
“JUUL’s success underscores the potential for disruptive technology to undermine U.S. tobacco’s reliable business algorithm,” said Pamela Kaufman, an analyst for Morgan Stanley, according to Bloomberg.
Critics of JUUL say the products are proving addictive with kids and will create a new generation of smokers. Vaping advocates agree the products should be kept out of the hands of underage users, however, data on teen use simply does not justify the hysteria.
A large amount of teens are experimenting with e-cigarettes, but teen smoking is declining to historic lows. Renowned tobacco researchers Dr. Konstantinos Farsalinos of the Onassis Cardiac Surgery Centre in Greece and Dr. Riccardo Polosa of the University of Catania in Italy recently found regular use of electronic cigarettes is “rare” among youths who do not smoke.
A 2017 survey from the Centers for Disease Control and Prevention showed after a rapid increase in youth vaping between 2011 and 2015, the number of middle school and high school students who use a vaping device dropped from 3 million to 2.2 million in 2016. CDC data released in June shows no increase in teen vaping in 2017 and continued declines in teen use of combustible cigarettes.
The adult smoking rate in the U.S. is also resting at an all-time low, dropping significantly since 2016, which experts credit in-part to alternative smoking technologies. The smoking rate fell from nearly 16 percent of adults in 2016 to 13.9 percent in 2017, according to the latest findings of the CDC’s National Center for Health Statistics annual survey.
Despite the media panic, the popularity of JUUL is causing a significant disruption of big tobacco’s cigarette sales. An analysis of Nielsen data by researchers at Citi argues a sharp acceleration in sales for JUUL in the fourth quarter of 2017 is directly responsible for a six percent decline in U.S. cigarette volumes in the first quarter of 2018.
Public health advocates say efforts to spread misinformation on alternative smoking options that minimize their benefits simply deny smokers less harmful options while tacitly encouraging them to keep using a more dangerous product.
Tobacco’s impact on health is determined by the delivery method, which in the case of cigarettes is combustion. This is why smokeless tobacco products and e-cigarettes significantly reduce the health risks associated with smoking.
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