Troubled e-cigarette maker Juul Labs is planning to pull out of several international markets, particularly in Europe and Asia.
The e-cigarette manufacturer will pull out of several European and Asian countries, as well as lay off additional workers after it already reduced its workforce by one-third. This is part of what the company's year-long effort to turn its business around.
Juul may stop selling in 11 international markets, including Italy, Germany, Russia, Indonesia and the Philippines. Juul said those markets "have not provided the kind of return necessary given the cost to continue investing in the market."
In the first quarter of this year, 90% of the company’s sales came from the US, Canada and the UK.
Planned layoffs
The market exits will be accompanied by layoffs but Juul has not announced any particular number of job cuts. However, Juul said the layoffs will amount to a "significant reduction in global force."
Currently, the firm has around 2,200 employees and a Wall Street Journal report indicates that Juul plans to reduce its workforce by about 1,200 jobs.
A Juul spokesperson has issued a statement saying: "No final decisions have been made and we will continue to go through our evaluation process."
In an email sent to staff by Juul chief executive officer (CEO) Kevin Crosthwaite said: "We're still in the exploratory stages of this reduction, so we don't have any details to share about the expected number of impacted employees, or the functions and countries that will be impacted."
Crosthwaite argued that the layoffs "will allow Juul Labs to continue to invest in science and evidence capabilities, access control technologies and future products in our core markets that make up a vast majority of our business."
He said: “While those investments will not provide short-term revenue, they will help us earn trust and build a company for the long term.”
"Throughout this year and against a difficult external environment, we have continued to carefully evaluate how we allocate resources against initiatives that create long-term value and control our future in an evolving category lacking in trust," he added.
Other issues faced by Juul
Juul have faced various issues in the past months. Government initiatives in countries like Malaysia and the Philippines to heavily tax vaping products have caused problems for the company.
E-cigaretes are also being perceived as a dangerous alternative to cigarettes.
In 2019, stopped selling several of its flavored e-cigarettes in the US after US President Donald Trump announced that the US Food and Drug Administration (FDA) will issue guidance which would effectively remove all flavors from the market, including mint and menthol.
Crosthwaite said he is hoping that the initiative could help them build trust in the vaping industry.
“We must reset the vapor category by earning the trust of society and working cooperatively with regulators, policymakers, and stakeholders to combat underage use while providing an alternative to adult smokers,” the Juul CEO added.
Additionally, a potential deal with Altria, owner of the Marlboro brand, was blocked by the Federal Trade Commission (FTC) in April. In December 2018, Altria acquired a 35% stake in Juul for $12.8 billion, raising the startup’s valuation to $38 billion.
Since then, the company's value has deteriorated.
In July, Juul submitted a Premarket Tobacco Product Application with the FDA in order to continue marketing and selling its vaping products in the US.
