Asia Smokers Are New Target For Embattled E-Cigarette Maker Juul

Source from:  Bloomberg 09/04/2019

Juul Labs Inc., the e-cigarette pioneer grappling with negative publicity and government crackdowns in the U.S., is setting its sights on Asia, home to half the world’s smokers.

The San Francisco company in recent months has begun selling its vaping devices in South Korea, Indonesia and the Philippines, and is looking into entering more markets in the region. Asia -- with looser tobacco regulations and favorable tax treatments, as well as high cigarette sales volume -- has been a lucrative alternative for tobacco giants suffering from falling smoking rates and slowing growth opportunities in developed countries.

“Given the volume of smokers, we view Asia as a high-priority region for the company,” Ken Bishop, Singapore-based regional head for Juul, said in an interview Aug. 22. “What we see is that smokers are very interested in these products. The consumer demand is super high.”

The shift toward Asia comes as the vaping industry faces widespread attack in America, especially for its appeal among young people. The U.S. Surgeon General has called vaping an “epidemic” and the Food and Drug Administration has been investigating the safety of e-cigarettes after reports of seizures. The pressure is increasing after the Centers for Disease Control and Prevention said Aug. 30 it was investigating more than 200 possible cases of severe lung illness linked to e-cigarette use in 25 states, including one death.

Counting Sticks.
Most of the world's cigarettes are sold in the Asia region.

Juul, one of Silicon Valley’s most valuable privately held companies, has made efforts to address the criticism, saying in November it would stop the sale of some fruit-flavored products in retail stores. Chief Executive Officer Kevin Burns last week urged nonsmokers not to start vaping, saying they weren’t Juul’s target customer.

Juul’s vaping products remain popular as the adoption of e-cigarettes surges. Alternative smoking products are emerging as a crucial part of tobacco companies’ survival strategy. As global demand for traditional smokes fades, Big Tobacco is counting on products that it says can help smokers ease off cigarettes. That’s one reason behind the recent disclosure that Philip Morris International Inc. and Altria Group Inc., which has a 35% stake in Juul, are considering a merger.  Enditem