In yet another retrenchment from international markets, Juul is planning to significantly shrink its European presence and stop selling in Austria, Belgium, Portugal, France, and Spain, BuzzFeed News has learned.
The e-cigarette maker will leave France at the end of the year and pull out of the other countries in July, according to an employee familiar with the matter who spoke on condition of anonymity because they were not authorized to speak to the media.
The decision, which some parts of the company learned about this week, means that hundreds of employees in the affected countries will be laid off. Earlier this week, the Wall Street Journal reported that the once-high-flying San Francisco–based startup is planning to cut about one-third of its 3,000-person workforce.
Once Juul stops selling in those five countries, its presence in Europe will be limited to Czechia, Germany, Ireland, Italy, Poland, Switzerland, and Ukraine, as well as Russia and the United Kingdom, two of its biggest markets globally.
Juul’s reasons for leaving the countries are mixed, according to the employee. Spain and France had relatively high sales compared to most European markets, but not high enough to justify the staff needed or the trouble from local regulators. Austria, Belgium, and Portugal were considered too small to continue investing in. The cuts are not related to the coronavirus pandemic, the employee said.
A Juul spokesperson did not immediately return a request for comment.
Juul has also hit the brakes on expanding into markets outside of Europe over the last several months, postponing a launch in New Zealand and stopping sales in Indonesia. The company has also considered leaving South Korea and was blocked from China and India. In February, Juul forced out a pair of top executives who were overseeing the company’s European and South Asian markets and scaled back its Singapore office.
In 2019, sales in Europe and the Middle East generated approximately $107 million, falling far short of that department’s roughly $600 million goal, BuzzFeed News previously reported.
The European Union has strict e-cigarette regulations that have made the region a challenge for Juul and other manufacturers, experts say. The nicotine limit for e-cigarettes in Europe is 20 milligrams per milliliter of fluid; in the US, where there is no legally mandated cap, Juul pods can contain up to 59 milligrams of nicotine per milliliter.
As a likely result of that difference, “no EU country has experienced the rise in popularity of e-cigarettes among youth that has been observed in the US,” said Filippos Filippidis, a public health researcher at Imperial College London, by email. Due to restrictions that make it harder to manipulate vaping devices there, he noted, Europe was also seemingly spared by the epidemic of lung illnesses linked to vaping THC that struck the US last year.
When the EU’s regulations first took effect in 2016, Juul was not yet on the market, and most e-cigarette brands fell below the limit anyway. Then Juul, which was spun out of Pax Labs in 2017, came along with the innovation of e-liquids filled with nicotine salts, which made it easier to inhale higher concentrations of nicotine vapor.
While Juul has been accused of helping kick-start the teen vaping crisis, the company has said it never intended to do so and that its stated mission is to help adult smokers quit conventional cigarettes.
To what extent it has actually done so is “a critically important policy question,” David Hammond, a University of Waterloo professor who studies international tobacco control policies, told BuzzFeed News. “And as far as I’m aware, we don’t have that answer yet.”
Juul is betting much of its future on the US, where it and other e-cigarette makers must gain clearance from the FDA to keep selling. A May deadline to submit applications was pushed back to September due to the coronavirus pandemic.
Juul and its largest shareholder, tobacco giant Altria, are also contending with an antitrust lawsuit. Last month, the Federal Trade Commission alleged that Altria’s roughly one-third stake in Juul eliminated competition in the e-cigarette market. That deal, which cost Altria nearly $13 billion in late 2018, valued Juul at $38 billion. Altria has since cut that valuation to $12 billion.