Tobacco giant Altria Group, Inc. (NYSE: MO) on Thursday said it took a USD 4.5 Billion hit from its investment in electronic cigarette maker Juul Labs Inc. amid proposed U.S. bans on e-cigarette flavors and regulatory crackdowns abroad.
Altria also said it expects the Federal Trade Commission’s request for additional information into its Juul investment to be resolved in first-quarter of 2020.
The maker of Marlboro cigarettes bought a 35% stake in its e-cigarette rival for USD 12.8 Billion last year, hoping to compensate for declining sales of traditional tobacco products.
But Juul now faces the possibility of its products being yanked from the market over concerns that the company is marketing to minors with its flavored e-cigarette pods, fueling a youth vaping epidemic.
Earlier this month, Juul suspended the sale of its sweet flavors, mango, crème, fruit and cucumber, which have enticed underage smokers. Three other flavors — mint, menthol and tobacco — will continue to be sold online and in retail outlets while the U.S. Food and Drug Administration conducts a review of its products.
According to the Center for Disease Control and Prevention (CDCP), 1,604 cases of lung injury, including 34 deaths, have been linked to e-cigarettes or vaping. The agency says is has not identified the cause or causes of the lung injuries in these cases, and the only commonality among all cases is that patients report the use of e-cigarette or vaping products.
Both the FDA and CDCP say they are working together to investigate the outbreak of lung illnesses. Individual states are also completing their own investigations.