- Tobacco company Altria is in talks to take a minority stake in vaping startup Juul Labs, the Wall Street Journal reported.
- Investing in Juul could give Altria new products to sell, as smoking declines in popularity.
- US regulators have been cracking down on both smoking and e-cigs as they seek to curb tobacco use.
The most iconic U.S. cigarette company is reportedly seeking to make an investment in a vaping startup, a sign of how the tobacco industry is changing.
Altria, which makes cigarettes like Marlboro and Parliament, is in talk to take a “significant” minority stake in the Silicon Valley e-cig company Juul Labs, the Wall Street Journal reported on Wednesday. The Journal said any deal could be weeks away. Juul was recently valued at $US16 billion.
While about 34 million adults still smoke cigarettes in the US, the number has been in decline for years. Vaping is far less popular, but gaining, with 6.9 million adults using e-cigs.
Altria’s stock has declined 16% in November, after the US Food and Drug Administration moved to ban menthol cigarettes, saying they’re a common on-ramp for new smokers because they mask the harshness of cigarettes. The FDA also imposed new rules on vaping, designed to stop kids from getting hooked.
The menthol ban and smoking decline are likely sending Altria in search of new products to sell its customers, according to WSJ. The company does make its own e-cigs as well.
Vaping has taken off in recent years, in part on the hope that the devices, which deliver nicotine and flavours to a user’s lungs, would help smokers quit and prove to be a healthier alternative to combustible cigarettes. But data released by the US government earlier in November showed a big uptick in teenage e-cig use, leading to the FDA crackdown.
And while there’s some limited data to suggest that vaping can help adult smokers quit, e-cig use comes with risks of its own.
- Read more:
- See how Juul turned teens into influencers and threw buzzy parties to fuel its rise as Silicon Valley’s favourite e-cig company
- $US15 billion startup Juul used ‘relaxation, freedom, and sex appeal’ to market its creme-brulee-flavored e-cigs on Twitter and Instagram – but its success has come at a big cost
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.