NJOY Expects Competitive Advantage in Fully Compliant US Market

Market
Mar.07.2023
Altria bought NJOY for $2.75 billion in cash. Altria believes the US market will be strictly regulated, and NJOY's PMTA-approved products will be competitive with their sales capabilities.

On the evening of March 6th, Altria announced that it will acquire e-cigarette company NJOY for about $2.75 billion in cash. Altria predicts that the future US market will be fully compliant, and the FDA will clear the market of non-compliant and products without PMTA, leading to low growth. With NJOY's products being PMTA-approved and Altria's extensive sales capabilities in the US market, NJOY is expected to show competitiveness at that time.

 

According to Altria, on the evening of March 6th, Altria announced that it will acquire the electronic cigarette company NJOY for approximately 2.75 billion U.S. dollars in cash.

 

In the announcement, Altria stated that electronic cigarettes are the largest category of smokeless products in the United States, generating $7 billion in retail sales in 2022, accounting for more than 50% of all smokeless products. However, the majority of electronic cigarettes on the market do not have PMTA (US electronic cigarette product market authorization).

 

Altria assumes that when the FDA resolves a large number of pending PMTA applications and rejects non-compliant manufacturers and products that have not submitted PMTA for sale in the future few years, the total US electronic cigarette market volume will slowly increase at a single-digit compound annual growth rate over the next decade.

 

Meanwhile, NJOY's six products have already obtained PMTA in 2022, accounting for 1/4 of the number of PMTA approvals. (Related reading: FDA approved 20 electronic cigarette products in 2022, all from BAT, JT, and NJOY)

The NJOY products approved by PMTA are:

  1. NJOY ACE e-vapor device;
  2. NJOY ACE POD, rich tobacco flavor, 5.0% nicotine concentration;
  3. NJOY ACE POD, classic tobacco flavor, 5.0% nicotine concentration;
  4. NJOY ACE POD, classic tobacco flavor, 2.4% nicotine concentration;
  5. NJOY DAILY EXTRA, rich tobacco flavor, 6.0% nicotine concentration;
  6. NJOY DAILY, rich tobacco flavor, 4.5% nicotine concentration.

NJOY ACE (tobacco flavor) is the leading brand of NJOY, which is sold in 33,000 retail stores in the United States and accounts for 85% of NJOY's shipments in 2022. Among tobacco-flavored electronic cigarettes, ACE's market share is the highest at 40%, making it the market leader.

 

However, due to NJOY's limited sales team and ACE's limited brand recognition and distribution, ACE's brand awareness is low, accounting for only 3% of the market share.

 

On the other hand, Altria has a huge retail coverage, serving over 200,000 US retail stores and decades of experience supporting tobacco product retail. Altria believes that NJOY's FDA-authorized products will be more widely promoted with its help, benefiting all tobacco and alcohol users (ATCs) in the United States.

 

In addition, Altria mentioned that NJOY has a solid partnership with Smoore International. Altria stated in its forward-looking and warning statement that it will continue to maintain NJOY's partnership with Smoore.

 

Altria stated that to prevent minors from using electronic cigarettes, it will propose raising the minimum age for purchasing tobacco products to 21 and propose updating the definition of tobacco products in the US Food, Drug, and Cosmetic Act to include all nicotine-containing products, including synthetic nicotine products.

 

At the same time, it will provide incentives for retailers to implement age verification technology in over 137,000 US retail stores and implement age and identity verification solutions for 33,000 US retail stores in digital retail applications.

 

Reference:

[1] ALTRIA ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE NJOY HOLDINGS, INC.

Related Reading:

[1] In response to Altria's exit from equity and termination of the agreement, JUUL is expected to have more strategic freedom.

[2] ALTRIA acquires the third largest e-cigarette company in the United States, NJOY, for $2.75 billion.

 

 


 

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