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JUUL is the leading product in the US e-cigarette market. It relies on the patent of self-developed nicotine salt (the form of nicotine in tobacco leaves) to solve the pain points of traditional e-cigarettes. The reduction of cigarette experience is high, and the tobacco, mango, cream, and other rich flavors are designed. Portable, concealed, and taste-providing experience, combined with the initial efficient social media marketing, successfully opened the young consumer electronics consumer market, creating phenomena-level electronic smoke explosion products. At present, JUUL products are sold in 8 countries including the United States, Canada, and the United Kingdom, and continue to actively expand the international market.
Altria Group, the world's largest cigarette giant, is the parent company of Philip Morris USA and Philip Morris International. It owns the well-known cigarette brands “Marlboro” and “Bai Le Men”, and the head brand of heating non-burning tobacco products, IQOS, etc., December 2018 Acquired a 35% stake in JUUL for $12.8 billion, with a JUUL valuation of $38 billion. After JUUL's financing and independent operation, Altria Group promised to participate in the e-cigarette field only through JUUL within 6 years, while sharing about 230,000 retail outlet sales networks, and providing assistance in the field of youth e-cigarette prevention measures, supervision, and government affairs.
According to the Altria Group's disclosure data, JUUL has occupied 30% of the US e-cigarette market by the end of 2018, and the offline retail store market is far ahead. JUUL's market share has expanded rapidly. According to Nielsen data, JUUL e-cigarettes have a fast market share in the US offline retail stores, from 13.6% in early 2017. It increased to nearly 75% at the end of 2018 and increased by about 4.5 times in two years.
The JUUL nicotine salt patent brings a subversive experience, the traditional cigarette experience has a high degree of reduction, and the high concentration of nicotine makes the product highly addictive. JUUL successfully developed the patent for nicotine salt technology to solve the problem of excessive irritation of the throat when the traditional e-cigarette uses "free base nicotine" smoke oil, and the user's blood absorbs the unpleasant pain points of nicotine. Through the "nicotine salt", the throat irritation is reduced, and the cigarette is hit. The throat sensation (the stimulation of the throat after the smoke inhalation, the most important effect is the concentration of nicotine) is not much different, and the blood absorption nicotine level is close to the traditional cigarette, thus providing the same satisfaction as the traditional cigarette. JUUL's original products, the nicotine content of a single cigarette, reached 5%, equivalent to the nicotine content of a pack of 20 cigarettes, effectively meeting the nicotine needs of traditional smokers.
JUUL nicotine delivery capacity is more similar to traditional cigarettes.
JUUL products are loved by young people and revenues are growing rapidly.
JUUL focuses on healthy tobacco replacement and targets 1 billion adult smokers worldwide. The trend of global tobacco control is that the electronic cigarette is healthier than traditional cigarettes. It does not contain harmful substances such as tar, carbon monoxide and heavy metals. It does not produce second-hand smoke or soot. By providing the equivalent nicotine content of traditional cigarettes, it can satisfy users to find more healthy traditional cigarettes. Alternative needs. JUUL surveyed tens of thousands of users in the UK in July 2018 and found that 49.5% of users switched to JUUL and stopped smoking. Only 0.3% of users were non-smokers.
The JUUL looks like a USB flash drive. It has a design sense and a simple operation. It is very popular among young people. JUUL caters to young people's pursuit of fashion and portability. The space aluminum body design pursues post-modern electronic style. The appearance of the product is similar to the extended version of the U disk. The smoke bomb is made into a refined "perfume-like" form, which is designed by plug-in design. It can be used by inserting a tobacco rod. After smoking, the smoke has a light residue and is concealed. It is sought after by young people. The Truth Initiative study found that the probability of a minor becoming a JUUL user is 16 times that of a 25-34-year-old adult. According to the US Youth Tobacco Survey data, from 2017 to 2018, the proportion of high school students using electronic cigarettes increased by 75%. JUUL has a sense of design and is concealed.
Comparison of the ratio of JUUL to traditional cigarettes in all age groups from 15 to 34 years old in the United States
The JUUL Starter Kit is rich in flavor and low selling price lowers the threshold for young people to buy. The JUUL Starter Kit includes a tobacco rod, a magnetic charging socket, and four different flavors of cigarettes (5% nicotine). The flavors of the cigarettes include the traditional cigarette flavors of “tobacco, mint” and the new tastes of young people like “mango, cream”. To help entry users find the right flavor.
JUUL has policy control risks and takes multiple actions to reduce marketing efforts. The FDA (United States Food and Drug Administration) believes that JUUL is more attractive to minors. JUUL has actively closed Facebook and Instagram platform accounts at the end of 2018. Twitter accounts are no longer used for product promotion, and Youtube prohibits users under the age of 21 from watching. JUUL took the initiative to withdraw cigarettes from non-traditional cigarettes other than tobacco, menthol, and mint and set an online age limit (over 21 years old).
JUUL started its US market and accelerated its international business. JUUL continues to expand internationally. It covers 7 countries including Germany, France, Britain, Switzerland, Canada, Russia and Israel, and plans to enter the Korean market in recent times. The total number of JUUL distribution stores in Italy and Germany totaled more than 2,000, and the sales of Canadian stores quickly surpassed British American Tobacco's Vype to become the first category. According to Bloomberg data, JUUL's 2019 revenue is expected to come from non-US customers.
Canadian electronic cigarette store sales ratio (horizontal axis unit: week)
JUUL's revenue has grown rapidly, and Q4 in 2018 has been heavily influenced by FDA regulations. According to Bloomberg, JUUL's revenue from 2017 to 2018 is about 200 million US dollars and 1.3 billion US dollars respectively. It is estimated that revenue in 2019 will reach 3.4 billion US dollars, an increase of about 160%. According to JUUL data, Q4 revenue in 2018 was $424 million, a decrease of 2.5% from the previous month, an adjusted loss of $70.4 million; and a net profit of $12.4 million in 2018. About 90% of JUUL's sales come from offline convenience stores, of which 45% to 55% of sales come from JUUL cartridges. JUUL's 2018 Q4 results are mainly influenced by some popular flavors of smoke bombs from convenience stores.
Young users get access to JUUL product channels to offline convenience stores.
According to whether it is necessary to manually add smoke oil, electronic cigarettes are divided into an open system and closed system electronic cigarette. When using the open system electronic cigarette, the user manually adds the smoke oil, the amount of smoke is larger, the suction experience is better, and the trend culture is added. Closed system electronic cigarette, smoke bomb pre-injection of smoke oil, no need to manually add, can be used directly, more convenient and easy to use lower threshold.
The international new tobacco market is vast, and the North American market currently dominates. According to estimates by Altria Group, the global new tobacco market in 2018 is about $23 billion, of which the North American market is about $6 billion, which is the most important market for e-cigarettes; the new tobacco market outside North America is $17 billion.
International e-cigarette market (unit: billion US dollars)
The FDA attaches great importance to the harm of e-cigarette products to young people. Some young consumers mistakenly believe that e-cigarettes do not contain addictive substances such as nicotine, and the proportion of users who use e-cigarettes for smoking cessation purposes is small. According to an annual national survey of more than 40,000 students at the University of Michigan 2016 study, most teen e-cigarette users believe that flavored products do not contain nicotine, and only 5% to 10% of respondents said they use e-cigarettes. The most common reason for quitting smoking is out of curiosity. The second reason is the excellent taste of the seasoning products.
JUUL smoking gear is only suitable for JUUL cartridges, and the nicotine salt and flavoring patents create a unique taste that increases user loyalty. According to Altria Group consumer research data, nearly 50% of adult tobacco consumers who have tried JUUL said that JUUL is their first continuous use of electronic cigarette products. According to the ALCS E-vapor Conversion Study, JUUL's consumer satisfaction and loyalty are comparable to those of Apple's products, and it is comparable to many world-renowned brands.
JUUL caters to the policy and takes into account consumer demand. The launch of the cartridge includes 5%, 3%, and 1.5% (1.5% of the cartridges are not sold in the US market). JUUL CEO Kevin Burns expressed the hope that different nicotine-intensity cartridges can help Adult smokers explore the right products.
From the above data, it can be seen that JUUL's share in the market is getting heavier and heavier, and it is gradually accepted and relied on by most people. It is believed that it can get better and better in the battle against traditional cigarettes.