The Crown Juul of the Tobacco Industry
“Juuling.” This word has become commonplace among youths in the U.S.. But what is a Juul, why has it become such a sensation, and why is the startup now valued at $15 billion?
In 2007, Pax Labs Inc, originally named Ploom, was founded by two Stanford graduates who wanted to reinvent the smoking experience, especially within the e-cigarette market. Yet, it wasn’t until 2015 that Pax Labs introduced the Juul, their new sleek aluminum e-cigarette. Pax Labs insisted that the Juul was a new alternative to smoking and would help those who wanted to quit. The Juul would provide a viable solution to cigarettes because it replicates the sensation of smoking. Yet, Pax Labs faced the challenge of many competitors within the e-cigarette market such as Altria, Philip Morrison International, and British American Tobacco. Another disadvantage that Pax Labs faced was an initial lack of funding. There is still some controversy to investing in the e-cigarette market, because it remains an ethical issue to many, who see Juuls being purchased by a young demographic. To further dissuade investors, the negative impacts of Juuling aren’t available yet, as research is still under way. However, the company still managed to raise $650 million in funding in July 2018.
The Juul was first available for consumer use in June 2015, and most people credit its current success to its sleek design. Juuls allow consumers to draw smoke easily by activating its heat source. The Juul holds almost twice the nicotine strength of any other e-cigarette as it has a 5% nicotine level compared to its competitors, which only have 3%. Thus, a single Juul pod contains the same amount of nicotine as a pack of cigarettes, meaning it is the equivalent of 200 puffs and takes the average person 4-5 days to use up. The Juul pod is a liquid that contains salts and organic acids from tobacco leaves, and the pod can be replaced once the liquid is empty.
The Juul has been popular in America, especially among youth. This could be due to the fact that tobacco companies have a long history of marketing towards youth: they know that once people become addicted to nicotine, they are likely to be long-term customers. Similarly, flavored tobacco Juul pods such as menthol, fruit, and mango were likely created to target the youth market. Juuls are also discrete and easy to hide from sources of authority, such as parents, teachers and professors. Also, the accessibility of charging a Juul through a USB port has modernized the e-cigarette to adapt to current technological norms. In 2017, Juuls controlled half of the e-cigarette market and now hold 68% of the market, highlighting an 18% increase in popularity. It stands firmly ahead of its e-cigarette competitors.
In late 2018, Juuls were introduced to the British market, and the big question is whether Juul will be as successful among young people in the UK as it is in America. Smoking cigarettes is still a social act among young people in the UK, but will the introduction of Juuls prompt people to start socially “Juuling” instead of socially smoking? One disadvantage Juuls face in the UK is nicotine restrictions. To be able to sell this e-cigarette, nicotine levels were decreased to 1.7% from 5%. This begs the question of whether the nicotine cap will affect Juul sales in Europe. Yet, there seems to be more of a chance of success of Juuls fulfilling their original aim in Europe, as smoking cigarettes is a lot more prominent and thus quitting is also much more prominent than in the U.S. This means that Juul users in the UK are more likely to be actually curbing a cigarette addiction. However, there is a chance that the trend in America, of a majority-youth demographic of Juul users, also travels across the Atlantic to the UK. Still, this doesn’t mean quitters of cigarettes won’t be entertained by the idea of Juuls.
The legality of Juuls has recently brought a lot of opposition from health regulators. The FDA, upon recent complaints, are looking into the e-cigarette market to review health approvals, but due to the complexity of e-cigarettes and how hard it is to investigate long-term problems, their findings won’t be realised until 2022. This allows the e-cigarette market to evolve faster than regulations, since by the time regulations are realised, they will be based on older e-cigarette models and thus be essentially outdated. The FDA wants to crack down on Juuls due to its popularity among minors, yet, Pax Labs has agreed to work with them to help advance the Juul market to a higher age level. Also within the U.S., Juul faces potential American tariffs as their products are made in China. Rather than face this issue, they have circumvented regulations by moving more of the manufacturing to the U.S.
As Juuls are a new product to the e-cigarette market, their impact worldwide is still in the workings. However, also due to their novelty and the lack of understanding of the negative impacts of Juuls, they has already been banned in Israel, just a month after they reached the Israeli markets in May 2018. The Israeli government stated there were grave public health risks and banned the Juul for its extreme nicotine levels, as Israel is an associated state to the EU and therefore cannot have anything more than 2% nicotine in e-cigarettes. This current ban means that imports and exports or even the possession of a Juul is not allowed in Israel, leaving room for a high manufacturing and importing of cigarettes. Thus, Israel has banned a popular alternative to smoking, leaving quitters with little choice. Pax Labs stated that this was a “misguided decision” and are fighting to have the ban lifted by petitioning the High Court of Israel, claiming they have no findings to declare such a decision. It is unclear whether other governments will take a similar stance, but seeing that there is still a novelty to the Juul, there is a large chance that many countries will follow Israel’s ruling to some extent, or even imitate the U.S. by reviewing the impacts of the Juul and whether it is truly a viable alternative to smoking.
Due to the novelty of Juul, the company is facing many legal battles within the US and globally. Yet, they also have many other battles to wage, including staying ahead in the market and staying relevant with current trends. For this reason, Juul has announced the creation of a new model that will have a Bluetooth function. This function will allow the Juul to be connected to an app on a phone that will highlight a smoker’s resilience to smoking, and help them quit more efficiently. However, since many ‘Juulers’ are of a young demographic starting to smoke rather than quitting, it is unclear whether the introduction of this Bluetooth app will increase popularity or will erode the Juul as an early 21st Century trend.