E-Cig Company Juul Planning Retail Stores
E-cigarette maker Juul Labs, which is the dominant player in that field with about a 75% U.S. market share, is mulling plans for its own retail shops.
Juul sells its wares at about 100,000 stores nationwide, especially convenience stores and gas stations, but none under its own banner.
Setting up its own stores would give Juul data that could be used to pump up sales at other retailers, the Wall Street Journal reports. It would also test the idea that some customers might prefer shopping in a Juul-branded store, and give the company more control over distribution of its products.
Juul is considering Houston and Dallas for its first stores, though no final decision has been made on exactly where or how many locations there would be, CNBC reports, citing anonymous sources. The company also plans to open a store in South Korea.
As a purveyor of e-cigarettes, Juul attracts considerable criticism. According to the anti-tobacco nonprofit Truth Initiative, for example, Juul product use rose last year because of growth among young people.
"Over the past year, those surveys found that 56% of youth and young adults who ever used Juul or an e-cigarette reported that they were younger than 18 when they first tried the device and nearly half — 47% — said that they tried it because their friends used it," Truth Initiative said.
Critics of e-cigarettes, including the Food and Drug Administration, are especially keen on stopping the use of most flavored e-cigarettes. Earlier this year, the FDA released a regulatory proposal for various tobacco products, including e-cigarettes — which the agency refers to as “electronic nicotine delivery systems" — and flavored cigars. The regulations would ban all flavors for the devices except tobacco, mint and menthol, which are similar to existing standard cigarette flavors. The sweet and fruity flavors in e-cigarettes are seen as particularly appealing to teens.
To be on the right side of federal regulations when they are finalized, the posited Juul retail stores would sell only tobacco, mint and menthol flavors, the WSJ reports. Also, no one under 21 would be allowed in the stores.
Last year, Juul voluntarily quit selling its sweet and fruity flavors, such as mango, creme and cucumber, in retail stores. The company still sells all of those flavors on its website.
Other retailers have also shied away from sweet and fruity flavored e-cigs. Walmart has stopped selling fruit- and dessert-flavored e-cigarettes all together. The retail giant will also increase the minimum age to buy tobacco products to 21 starting July 1.
The pushback against e-cigs already seems to be having an impact on San Francisco-based Juul's growth, along with the entire vaping sector.
According to tobacco giant Altria (formerly Philip Morris), which is looking to make a $12.8B investment for a 35% stake in Juul, the sale of nicotine cartridges — 1 milliliter refills for e-cigarettes — was up 3% quarter over quarter during Q1 2019, compared with a 9% quarterly increase for Q4 2018.