Juul Labs, the makers of the Juul e-cigarette that is popular among teens for its discreet design and addictive flavors of nicotine juice, is raising $1.2 billion to hopes of hooking a new generation to a maybe kinda slightly healthier version of smoking.
The fundraising effort, reported by Bloomberg, would value the company at $15 billion. Juul, which has already managed to capture a huge portion of the e-cigarette market in the United States despite launching just three years ago, would reportedly use the money to reach overseas markets in hopes of getting more people to suck down the nicotine-packed pods.
Juul’s fortunes have been considerably better than the rest of the tobacco industry. Bloomberg pointed out many of the industry giants have been slumping: Philip Morris has seen share prices dip 23 percent, British American Tobacco is down 24 percent, and Japan Tobacco is down 15 percent.
That’s in large part because cigarettes—long the target of surprisingly effective public ad campaigns that warn of the dangers of smoking—have fallen out of favor. Bloomberg reported cigarettes’ share of the smoking market has dropped four percent in the last year.
Where cigarettes have failed, vaping and e-cigarettes have succeeded. Juul’s market share is up 3.5 percent in the same period as cigarettes’ decline, and is up 700 percent in revenue from last year, according to Axios. Much of that success is with teens and young adults, who have taken to Juul so much that puffing on the e-cigarette is referred to as “juuling.” A 2017 study found one in four people under 24 recognized Juul, and 10 percent had tried it at least once.
That familiarity stems from a couple of different factors. As the Public Health Law Center pointed out, the product comes offers an “IT product design.” Essentially, the thing looks cool and functions like tech gear rather than something designed for a smoker. It’s easy to hide, the hits taste good because of the flavored juices, and the vapor smells good. Oh, and it very well may be addictive once they start using it.
Juul uses disposable pods that hold nicotine juices. That juice is heated by the device, which creates the vapor that the user inhales. In those pods is essentially the same amount of nicotine found in a pack of cigarettes. With a nicotine concentration of 59 mg/mL per pod, Juul pods offer nearly double the punch that many other vaping products provide.
Nicotine is an addictive substance, and exposing anyone—especially an adolescent who is still developing—to it in such a highly concentrated fashion is probably a bad idea. The 2014 Surgeon General’s Report found that nicotine has a negative impact on brain development and is associated with lasting cognitive and behavioral impairments, including harmful effects on the ability to concentrate, memorize, and learn.
Of course, these issues aren’t restricted to Juul but are present for e-cigarettes of all kinds. A study published in the American Journal of Respiratory and Critical Care, also suggested adolescents who use e-cigarettes are twice as likely to suffer respiratory symptoms—a persistent cough, bronchitis, congestion, and phlegm, among other ailments— as those who don’t. It’s also not clear that taking up an e-cigarette actually helps cut back on smoking cigarettes. A 2017 study from the American Academy of Pediatrics found there’s some evidence to suggest teens who vape are more likely to take up smoking cigarettes.
For all those reasons, some investors have been hesitant to touch Juul—clearly the most successful company to come out of the e-cigarette boom. The Information reported earlier this month that a number of venture capital investors have opted to stay away from the company because of ethical concerns. But the company looks like it’s going to make a lot of money, and that’s undoubtedly reason enough for some to ease their ethics to make some bucks.
Those who decide to back Juul will have plenty of questions to account for in the company’s near-term prospects. While e-cigarettes are a growing industry—Wells Fargo projects the market will hit $5.5 billion this year—regulation looms. The Food and Drug Administration has already cracked down on sales of Juul devices to minors and has requested a number of documents from the company to determine if it is marketing its products to kids.