Marlboro man into the sunset

All big tobacco companies face the same basic dilemma. The traditional gasper remains hugely profitable, but due to its unfortunate habit of killing off the customer base and an increasing amount of regulatory intervention, it is in structural decline, especially in developed markets. Altria’s market-leading Marlboro brand is a huge moneyspinner, but back in December 2018 it decided to dip a substantial toe into the new frontier of ecigarettes and vaping with the purchase of 35% of Juul for a punchy $12.8bn.

To say that this has proved to be an excellent investment decision would be something of an exaggeration. Juul’s marketing was successful in gaining market share, but it didn’t endear itself to regulators when it became apparent that much of its success was in the teenage market.

Its compact size makes it easy to conceal, and its sweet flavours, low vapour output and subtle scent rapidly made it the puff of choice in the back row of the classroom.

The lawsuits have been flying like confetti. Last year the company paid $438.5m to settle claims into its marketing and sales practices aimed at teenagers and minors, and a further $1.2bn to settle about 10,000 lawsuits claiming the company as a major cause for the youth vaping epidemic in the US. In June 2022 the Food & Drug Administration ordered Juul to remove all of its products from the US market, a decision that the company has appealed. As a result of all the chaos, by the end of the year Altria had written its stake down to $250m, and it must have wished it had stuck to the Marlboros.