Juul to halt sales of most fla­vored e-cig­a­rettes.

The Mercury News - - Front Page - By Drew Arm­strong, Anna Ed­ney and Olivia Za­leski Bloomberg News

Juul’s move to dis­con­tinue sell­ing a ma­jor­ity of its fla­vored e-cig­a­rettes is ex­pected to af­fect 45per­cent of its in-store re­tail sales. Tobacco and men­thol-fla­vored Juuls will still be avail­able in stores.

Juul Labs, the maker of a hot-sell­ing va­p­ing de­vice that is in­creas­ingly pop­u­lar with teens, will stop sell­ing most fla­vored e-cig­a­rettes in re­tail stores, ac­cord­ing to a per­son fa­mil­iar with the mat­ter.

The de­ci­sion fol­lows word that U.S. health of­fi­cials are pre­par­ing to step up ef­forts to cur­tail un­der­age use of e-cig­a­rettes. On Thurs­day, a se­nior of­fi­cial at the Food and Drug Ad­min­is­tra­tion said the agency plans to re­strict sales of many fruit- and dessert­fla­vored nico­tine pods to adult-only stores.

The new curbs will ap­ply only to car­tridge-style de­vices, such as Juul, ac­cord­ing to the FDA of­fi­cial. The Juul de­vice has be­come pop­u­lar with young peo­ple in part be­cause its small size and re­sem­blance to a USB drive make it easy to con­ceal.

Juul’s move is ex­pected to af­fect 45 per­cent of its in-store re­tail sales, ac­cord­ing to the per­son fa­mil­iar with the com­pany’s plans. Tobacco and men­thol-fla­vored Juuls will still be avail­able in stores.

Un­der the FDA’s planned re­stric­tions, on­line sales will be al­lowed, but only by re­tail­ers who ver­ify the buyer’s age, just as al­co­hol can be sold on the web as long as there’s some­one 21 or older to sign for the pack­age, said the agency of­fi­cial. The reg­u­la­tions, which are ex­pected to be an­nounced next week, will take ef­fect in the com­ing months.

E-cig­a­rettes have cre­ated a para­dox for the FDA and the com­pa­nies that make them: They need to be at­trac­tive enough to lure tra­di­tional smok­ers to switch, but not so en­tic­ing that they cre­ate an en­tirely new class of nico­tine users.

Ac­tion on e-cig­a­rettes would par­al­lel moves the FDA has al­ready made to ban dessert fla­vors in tra­di­tional cig­a­rettes. The agency has also been ex­am­in­ing re­strict­ing men­thol fla­vors in cig­a­rettes. Re­duc­ing or elim­i­nat­ing men­thol fla­vor in tra­di­tional cig­a­rettes would be a sep­a­rate reg­u­la­tory ac­tion from the e-cig­a­rette pro­posal, said the se­nior FDA of­fi­cial.

“I am fairly con­fi­dent there will be a le­gal chal­lenge,” said Lyle Beck­with, se­nior vice pres­i­dent of gov­ern­ment re­la­tions at the Na­tional As­so­ci­a­tion of Con­ve­nience Stores. He said there’s no data he knows of show­ing that vape shops do a bet­ter job of age ver­i­fi­ca­tion than con­ve­nience stores.

Spokes­men for the FDA and Juul de­clined to com­ment. Plans for the new reg­u­la­tions were re­ported Thurs­day by the Wash­ing­ton Post.

Shares of Al­tria Group Inc., which has its own e-cig­a­rette brands and makes Marl­boro cig­a­rettes, fell less than 1 per­cent at 1:07 p.m. in New York. Bri­tish Amer­i­can Tobacco fell less than 1 per­cent in Lon­don. Im­pe­rial Brands Plc gained 2.1 per­cent.

“Any ac­tion that slows down the growth tra­jec­tory of Juul will be a pos­i­tive for tobacco sen­ti­ment,” Jef­feries In­ter­na­tional Ltd. an­a­lyst Owen Ben­nett wrote in a note. He added that it will have a lim­ited im­pact on the

ma­jor tobacco com­pa­nies, as the vape mar­ket is a “tiny part” of their sales.

But re­stric­tions on men­thol fla­vor in cig­a­rettes that could come later would im­pact tobacco com­pa­nies’ sales neg­a­tively.

The FDA has talked for months about ways to re­duce youth use, cit­ing ris­ing con­cern that e-cig­a­rettes are cre­at­ing a new class of nico­tine users, rather than pri­mar­ily help­ing peo­ple tran­si­tion off reg­u­lar cig­a­rettes. The FDA has called youth use of the de­vices an epi­demic and said it would con­sider sig­nif­i­cant ac­tion to stop

it. Va­p­ing surged 77 per­cent among high schoolage chil­dren and about 50 per­cent among mid­dleschool­ers in 2018, ac­cord­ing to pre­lim­i­nary gov­ern­ment data.

As al­ter­na­tives surge, the U.S. adult smok­ing rate plunged to 14 per­cent in 2017, the low­est mea­sure on record and down 67 per­cent from 1965, ac­cord­ing to the Cen­ters for Dis­ease Con­trol and Pre­ven­tion. About 10 per­cent of adults 18 to 24 years old lit up in 2017, down from 13 per­cent the year ear­lier.

Juul’s de­vice ac­counts for al­most one in three eci­garette sales as of the

end of 2017, ac­cord­ing to the U.S. Cen­ters for Dis­ease Con­trol and Pre­ven­tion. The San Fran­cis­cobased startup is backed by high-pro­file in­vestors, in­clud­ing Tiger Global Man­age­ment and Tao Cap­i­tal Part­ners. Fundrais­ing ne­go­ti­a­tions this year pegged a $15 bil­lion valu­a­tion on the busi­ness, mak­ing its founders worth more than $800 mil­lion each.

Tobacco ac­tivists said the FDA should im­pose even greater re­stric­tions, in­clud­ing ban­ning on­line sales. “It’s not enough,” said Mered­ith Berk­man, co-founder of Par­ents Against Va­p­ing E-Cig­a­rettes. “There has to be a com­plete ban on fla­vors every­where.”



Col­or­ful nico­tine-filled pods, pic­tured on the right, are in­serted into the Juul e-cig­a­rette, which ed­u­ca­tors say looks de­cep­tively like a flash drive, mak­ing it harder to iden­tify.

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