Electronic cigarette brand JUUL announced layoffs of several hundred employees on Thursday, as it copes with lawsuits, government bans, and fierce competition from other e-cigarette brands. JUUL stated that it received new funding to maintain operations, including a challenging plan to challenge the FDA's ban on its products. According to sources, the layoffs include 400 employees, which is part of JUUL's plan to cut its operational budget by 30% to 40%, with details kept anonymous. The new funding reportedly comes from two early JUUL investors: Nicholas Pritzker from Hyatt Hotels and private equity expert Riaz Valani from San Francisco. In recent weeks, analysts speculated that JUUL may soon declare bankruptcy or sell itself to another company. However, Thursday's announcement delayed the next steps in this direction. A JUUL spokesperson stated in an email that "this investment will enable JUUL Labs to maintain business operations, advance its appeal of the FDA's premarket tobacco product application decisions, and support product innovation and scientific research." Five years ago, JUUL became the leading brand in the US e-cigarette market due to the popularity of flavors like mango, mint, and crème brûlée. However, the company's rise was driven by the use of teenagers, some of whom became addicted to JUUL's high-nicotine pods. Strong opposition to teenage e-cigarette use led to a series of government actions forcing the company to gradually exit the market. Since 2019, JUUL has abandoned all US advertising and discontinued most flavors. The biggest blow came in June when the FDA denied the company's application to keep its products on the market as an alternative to adult smoking, putting JUUL's future in uncertainty. The FDA stated that JUUL did not adequately address key issues regarding possible chemical leaks from its device. During JUUL's appeal, the FDA temporarily suspended its initial decision. Another setback occurred in September when the company's largest investor, tobacco giant Altria, announced plans to re-enter the e-cigarette market. After acquiring nearly $13 billion worth of JUUL's shares, Altria withdrew its own e-cigarette from the market in 2018. But with JUUL's declining prospects, the investment has lost more than 95% of its value, leading Altria to exit its non-compete agreement. This decision means that JUUL will soon be forced to compete with Altria, the maker of Marlboro, and long-time rival Vuse from Reynolds American for retail shelf space. Vuse recently surpassed JUUL to become the leading e-cigarette brand in the US. JUUL's share of this $5.5 billion retail market has dropped from a peak of 75% a few years ago to around 33%. While JUUL is no longer popular among US youths, the company remains a target for politicians in Washington and across the US seeking to crack down on teenage e-cigarette use. In September, JUUL announced it will pay $440 million to settle investigations into its marketing practices and contribution to the surge in adolescent e-cigarette use across nearly 30 states. But the company still faces nine independent lawsuits from other states. Thousands of individual lawsuits brought by individuals and families have been consolidated in a California federal court.
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