Altria to Discontinue its E-Cigs as it Invests in Cannabis Firm

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As cigarette sales keep declining, the tobacco giant’s market value has dropped by 13% over the past 12 months. Additionally, Altria’s own e-cigarette brands, MarkTen and Green Smoke, have only captured a small slice of the market. Hence last Friday, Altria announced that it will be discontinuing these devices and also its Verve nicotine gum.

The tobacco company added that it would instead invest 1.8 billion in Canadian cannabis company Cronos Group Inc., which is the fourth most valuable publicly listed marijuana company, with a total valuation of about $1.9 billion.


Attempting to strike a deal with Juul Labs

Another report published last week by The New York Times, disclosed that Juul Labs and Altria are in talks, and that if a deal is struck, the tobacco giant will get a chunk of the three-year-old vaping company, which this summer was valued at approximately $16 billion.

However, this deal is uncertain, as Juul Labs must be aware that striking a deal with a tobacco company would taint the company’s image and lead to a loss of credibility on their part. In fact, last week The Wall Street Journal reported that current and former Juul employees are displeased by the ongoing talks, as they feel that a deal with Altria would betray Juul’s stated mission; helping addicted cigarette smokers switch to less harmful products.

It has been “an exceedingly challenging year as growth from e-cigarettes, and Juul in particular, seem to finally be weighing on cigarette consumption,” said Cowen analyst Vivien Azer, explaining why the tobacco giant is keen in investing in the San Francisco start up.


Refocusing its resources

On the other hand, Altria CEO Howard Willard explained that investing further in their own e-cigarette brands would be a waste of resources. “We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources,” said Mr. Willard in a news release, whilst emphasizing that the company is still committed to investing in safer alternatives.

from vapingpost.com


Post time: Dec-14-2018
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