Juul Pays $ 40 Million to Rebuild His Reputation. Does it work?

Juul Labs has arrived an establishment of $ 40 million with North Carolina Attorney General Josh Stein this week, agreeing to limit its sales and marketing practices to curb the minor use of its powerful e-cigarettes.

The establishment is also part of a “continuous effort to reset our society and its relationship with our stakeholders ”and“ gain trust through action, ”as a Juul spokesman said in a statement. In other words: Juul is trying to do it has tarnished his reputation as a company that he has nurtured an epidemic of youth vaping, and is willing to pay $ 40 million to do so.
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But is it too late?

Juul “has developed a brand identity and a style that is sustainable,” says Dr. Robert Jackler, a tobacco marketing researcher at Stanford University who was destined to be an expert witness for the state in the Carolina trial. of the North before the establishment. “It doesn’t matter what Juul did – and it did a lot of things in the face of the regulatory attention march and public scrutiny,” he says, “it’s too tarnished by a brand” to turn away from that.

Juul was conceived as a cigarette alternative for adult smokers. E-cigarettes provide nicotine but are generally considered less dangerous than traditional cigarettes, making them a potentially useful tool for adults looking to quit smoking. But by the time Juul moved away, around 2017, he was popular with another demographic: teenagers. In 2019, 27.5% of U.S. high school students had vape in the last 30 days. Many experts blamed Juul, with its elegant devices and techies and attractive flavors like mango.

Stein — and many others — have argued that the company’s marketing is aimed at teenagers, an accusation that Juul has repeatedly denied. Among other claims, Stein’s complaint note that Juul launched in 2015 with a bright and colorful advertising campaign that many compare to youth-friendly cigarette marketing; working with influencers; and offers free samples at fashion launch parties. He also claimed that Juul minimized the amount of nicotine in his pills, causing some consumers to become accidentally addicted.

Juul’s activity has been more restricted in recent years, following vocal criticism from lawmakers, regulators and health groups. From 2018 to 2019, it is discontinued popular flavors like mango and mint, it shuts down its American social media pages and stopped most of the advertising. It is also implemented new age verification practices and, in 2020, it moved its headquarters from San Francisco to Washington, DC, in an apparent effort to leave behind Silicon Valley’s “fast moving and breaking things” culture. Juul’s corporate website now looks “like an AARP website,” lined with images of senior clients, says Chris Allieri, founder of New York-based public relations firm Mulberry & Astor who previously worked with the anti-smoking Truth Initiative.

While Juul still controls about half of the e-cigarette market, tobacco company Altria — which in 2018 he paid $ 12.8 billion for a 35% stake in Juul-ha he cut the rating of its stake to about $ 1.5 billion. The Federal Trade Commission sustain that investment has violated antitrust law and is currently seeking to evict it.

The North Carolina establishment codifies some policies that Juul voluntarily adopted under pressure from regulators, such as not advertising on social media or near schools. Under the agreement – through which Juul did not admit any wrongdoing – Juul is also prohibited from trading anyone in the state under the age of 21, in accordance with recent legislation which has raised the minimum age for buying tobacco from 18 to 21. You can also sell only your products back to the bank at retailers in North Carolina that identify buyers and pay secret buyers to try these practices. . The $ 40 million will help fund vaping cessation and prevention programs, as well as e-cigarette-focused research.

It’s a deal for a rich society like Juul, Allieri argues. “It hasn’t been a bad day for them,” Allieri says. “It’s all part of the business.” Now they think they can turn the page with this “appearing to take responsibility for their actions.

What they can actually do is another story. The first wrong steps of Juul’s marketing, the popularity among teenagers and the relationship with Big Tobacco could make it hard to always find yourself as a responsible company, says Allieri. JUul was “operating very blatantly in terms of its own marketing tactics,” he says, but it also pays for “the tracking and error and business practices of tobacco companies over the years.”

Traditional tobacco companies have been harshly criticized for marketing their youth. In an establishment of the 90s known as Master Settlement Agreement, the country’s largest tobacco companies have agreed to pay billions of dollars to the United States after minimizing risks to the health and addictive properties of cigarettes. They also agreed to stop marketing to teenagers. From 2020, less than 5% of high school students in the United States reported smoking cigarettes on a regular basis, compared to 28.5% in 1999, the year after the Master Settlement Agreement.

There is a rumor of that deal at Juul’s establishment, which could be the first of many. States including Massachusetts, New York, California and Hawaii have also been cited in Juul’s case, and a group of 39 attorneys general of the State began investigating the company’s marketing practices in 2020. Hundreds of complaints from customers and school districts were also consolidated before a judge in California; trials are set to begin in 2022.

But Juul’s biggest test could happen outside of court. The U.S. Food and Drug Administration is currently reviewing the requests that Juul and other e-cigarette manufacturers have submitted to stay on the market, and decisions are scheduled for September. If Juul cannot demonstrate that it provides a net benefit to public health — that its benefits for adult smokers outweigh issues such as adolescent dependence and recreational use — it could be completely eliminated from the U.S. market. .

Then, of course, there is the public opinion test. The company’s revenues have dropped dramatically in 2020, fueled by a mix of public scrutiny, the discontinuation of flavored products, the coronavirus pandemic and the consequences of a dramatic vaping-related outbreak of lung disease (which was ultimately linked to THC products, not nicotine). Its revenues in the third quarter of 2020 are around $ 360 million, compared to $ 745 million in the second quarter of 2019. Overall, Allieri says, consumers are “quick to shock and quick to forget.” . But when asked to think of another company that has pulled a Juul-scale rehabilitation test, says Allieri, no one immediately comes to mind.

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