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Juul Labs Inc., a start-up that manufactures electronic cigarettes, raises $ 1.2 billion in a $ 15-billion financing round, officials said.
Juul plans to use the influx of money to expand internationally. Outside of the United States, Juul's flagship pen is currently only available in Israel and the San Francisco-based company wants to expand distribution, said one of the people who asked not to to be identified. Juul's current shareholders include Tiger Global Management and mutual fund company Fidelity Investments, according to publicly available information. With the new funds, the company will be worth more than $ 16 billion. Juul refused to comment on the funding.
Since its launch in 2015, Juul has enjoyed tremendous success. Sprayers appreciate the flat, rectangular design of the product, the understated size and the powerful pre-filled nicotine pods. Sucking a Juul creates a sensation similar to smoking a cigarette. Last month, Juul had captured 68% of the US electronic cigarette market, according to a compilation of Nielsen data in a Juul investor presentation as seen by Bloomberg. The growth of the company has made it a positive point in a struggling industry. Since January 2017, the share of cigarettes in the tobacco and vaping market has decreased by almost 4 percentage points. Juul's popularity jumped by 3.5 percentage points over the same period.
"Juul's success underscores the potential of a disruptive technology to undermine the reliable commercial algorithm of American tobacco," writes Pamela Kaufman, an analyst at Morgan Stanley.
This year alone, tobacco giant Philip Morris International Inc. saw its shares plummet by 23%. Its competitor British American Tobacco Plc and Japan Tobacco Inc. lost 24% and 15%, respectively. According to Nielsen, many tobacco giants have launched their own vaping products, but these have been slower.
Juul's mission is to help addicted smokers by offering them a better alternative to tar cigarettes. Proponents say that vaporized tobacco is less harmful than burnt tobacco. But Juul has become a controversial investment because vaping is a popular activity among teenagers, triggering a craze in many high schools. A study conducted in 2017 in the American Journal of Medicine found that young non-smoking adults were four times more likely to start smoking traditional tar cigarettes after 18 months of vaping. Juul says you must be 21 to buy his product and that he does not sell to teens. The company also announced that she had promised $ 30 million to combat the use of minors. In April, the US Food and Drug Administration said that she had asked Juul to disclose documents related to her marketing strategy to determine if the company was advertising to teens. The FDA has also asked Juul to provide research on the potential health consequences of vaping.
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