Juul Labs Inc., the fast growing e-cigarette company, has decided to stop selling most of its flavored nicotine liquids at bricks-and-mortar retail stores, according to people familiar with the matter.
The move comes as the Food and Drug Administration is preparing to announce sharp restrictions on the sale of such products, part of an effort by the agency to combat surging use of e-cigarettes by teens and children.
Juul plans to keep menthol- and tobacco-flavored products in stores, and all of its flavored products, including cucumber and mango, will continue to be available for sale on its website, the people said. Juul’s website has age-verification tools barring purchases by those under 21 years old.
The company’s vaporizers, introduced in 2015, have become a teen status symbol and growing problem in U.S. schools. The device, which resembles a USB flash drive, delivers a powerful dose of nicotine from liquid-filled pods. Critics have said the flavors make it more attractive to minors, and analysts say the flavored liquids account for most of Juul’s sales.
While traditional cigarette companies like Marlboro maker Altria Group Inc. also sell flavored e-cigarettes, Juul has leapfrogged them in the market. Juul has captured 75% of the $2.5 billion U.S. e-cigarette retail market, according to a Wells Fargo analysis of Nielsen data. That doesn’t include online sales.
The San Francisco company was valued at $16 billion when it completed a financing round that raised $1.25 billion this summer.
FDA Commissioner Scott Gottlieb plans to restrict the sale of pod-style, flavored e-cigarettes such as Juul’s to retail outlets that either bar minors or have a separate section that children can’t enter, according to a senior agency official. That would effectively stop the sale of flavored e-cigarettes in most convenience stores and gas stations. E-cigarettes in menthol, mint and tobacco flavors will remain on store shelves for now.
Dr. Gottlieb had warned in September that he might yank flavored e-cigarettes off the market altogether. He asked Juul, Altria, British American Tobacco PLC and other major e-cigarette manufacturers to present convincing plans for reducing teen use or risk having their products banned.
All the companies have since met with the commissioner, but Juul hasn’t yet submitted its formal proposal, people familiar with the matter said, and some details of its plan could change before the deadline Monday.
Altria in October said it was voluntarily taking off the market its pod-style e-cigarettes and some of its other flavored vaping products. Altria’s e-cigarettes, sold under the MarkTen and Green Smoke brands, are just a small slice of the U.S. market.
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