JUUL operates in eight countries and holds around a 30% share in the total US e-vapor market. The company is said to be facing criticism for the increased vaping addiction among high school students.
Through this collaboration, JUUL will get access to Altria’s retail shelf space, allowing its products to be displayed alongside Altria’s combustible cigarettes. JUUL can also reach more customers through cigarette pack inserts and mailings to adult smokers using Altria’s databases. The e-cigarette firm will also benefit from Altria’s vast logistics, distribution and sales resources.
While Altria will operate in the e-vapor market only through JUUL, the Marlboro-maker also has a commercialization agreement in place with Philip Morris International for its heated tobacco product IQOS.
Deal Alert: Altria Group buys mammoth stake in Canadian cannabis giant Cronos Group
Traditional cigarette sales are said to be declining which is cited as one of the main reasons for cigarette companies trying to diversify into non-combustible products. Altria recently invested $1.8 billion in cannabis company Cronos Group Inc. (CRON).
Altria also announced a cost reduction program aimed at delivering around $500 million to $600 million in annualized cost savings by 2019-end. This program will include reductions in third-party expenses and headcount.
Altria reaffirmed its adjusted EPS guidance for full-year 2018 in a range of $3.95 to $4.03, representing a growth rate of 16.5% to 19%. Although the company plans to provide full-year 2019 earnings guidance in January, it currently estimates adjusted EPS for 2019 to be slightly below the low end of its long-term adjusted EPS growth expectation of 7-9%, due to the debt associated with the JUUL and Cronos investments.
Altria’s stock was down 3.4% in morning trade on Thursday.