Vaping company Juul cuts 400 jobs amid growing setbacks

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Struggling vaping company Juul Labs on Thursday announced hundreds of layoffs as the company resists lawsuits, government bans and growing competition for its e-cigarettes.

Juul said it secured new funding to stay in business and continue operations, which includes tough plans by the Food and Drug Administration to ban its products.

The layoffs include 400 employees and are part of a cost-savings plan to immediately cut Juul’s operating budget by 30% to 40%, according to a person familiar with the plan who spoke on condition of anonymity to discuss its details. . The new cash injection came from Juul’s two early investors: Nicholas Pritzker, head of Hyatt Hotels, and Riaz Valani, a San Francisco-based private equity specialist, according to the same person.

For weeks, industry analysts have speculated that Juul could soon declare bankruptcy or sell itself to another company. Thursday’s announcement appears to have at least delayed any move in that direction.

“This investment will allow Juul Labs to maintain commercial operations, continue to advance its administrative remedy against the FDA’s marketing denial order, and support product innovation and the science generation,” wrote a gatekeeper. -word of the company in an e-mail.

The Wall Street Journal first reported the news Thursday morning.

Juul rose to the top of the US vaping market five years ago thanks to the popularity of flavors like mango, mint and crème brûlée. But the rise of the San Francisco company has been fueled by use among teenagers, some of whom have become addicted to Juul’s high-nicotine pods.

The backlash against teen vaping sparked a series of government actions that forced the company into retreat. Since 2019, Juul has dropped all US advertising and dropped most of its flavors.

The hardest blow came in June when the The Food and Drug Administration has rejected the company’s request to keep its product on the market. as an alternative to smoking for adults, throwing its future into uncertainty. The FDA said Juul failed to adequately answer key questions about the potential for chemical leaks from its device. The FDA temporarily suspended its initial decision while Juul files an appeal.

Another setback came in September when the company’s biggest investor, tobacco giant Altria, announced plans to take over its own e-cigarette competition.

Altria pulled its own e-cigarettes from the market in 2018 after taking a nearly $13 billion stake in Juul. But this investment has lost more than 95% of its value as Juul’s prospects faded, giving Altria the option to end its non-compete agreement.

The move means Juul could soon be forced to battle for space on retail store shelves with Marlboro maker Altria, as well as longtime rivals like Reynolds American’s Vuse, which recently overtook Juul to become America’s leading vaping brand.

Juul’s share of the $5.5 billion retail market has fallen to around 33% from 75% several years ago.

Although Juul is no longer popular with American teens, the company remains a target for politicians in Washington and across the country seeking to crack down on youth vaping.

In September, Juul announced that it would pay $440 million to settle an investigation by nearly three dozen states about its marketing practices and their contribution to the surge in underage vaping. Juul still faces nine separate lawsuits from other states. And thousands of personal lawsuits brought by individuals and families have been consolidated in federal district court in California.

Matthew Perrone, The Associated Press

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