‘Smoking’ the competition

Big Tobacco has been walking around with a whacking great target on its back ever since the medical fraternity first suggested that puffing away on 40 gaspers a day may not be the best possible thing for your health.

While litigation has failed to kill it off — and it has continued to print money in the intervening period — it is looking increasingly nervous at the approach of the disrupters, who have created a product that dishes up the nicotine fix without, they say, the downside of early and painful death.

The big players have been investing heavily in next-generation products, but they have been roundly outplayed by the arrival of Juul, which has captured 70% of the US vaping market since it launched in 2015. It has now started to roll out into other markets, including the UK and Israel.

Juul’s success is based on a combination of sleek design, a strong social media presence, celebrity endorsers and the fact that at 5% nicotine concentration, its pods deliver a kick like a particularly ornery mule.

The firm has got the classic start-up backstory: two Stanford graduates scratching around with no loot while designing the prototypes; it’s now got backing from the likes of Tiger Capital, which led the latest fund-raising round that valued the company at $15bn.

Sales have multiplied eight times in the past year, and it may not be a complete coincidence that British American Tobacco’s share price has dropped 21% since the start of the year. There are concerns that its marketing is attracting hordes of underage smokers, but it’s certainly not slowing down.

The disrupters have a product that dishes up the nicotine fix without, they say, the downside of early and painful death