Juul FDA Pushback

A Juul electronic cigarette starter kit is shown at a smoke shop in New York.

The top market share for electronic cigarette Juul has stabilized in the past month at 73.9 percent, according to Nielsen convenience-store data for the four-week period that ended March 23.

The market share had slipped slightly following the manufacturer’s decision to remove certain flavored products from retail in November.

Meanwhile, the market share for No. 2 Vuse, made by R.J. Reynolds Vapor Co., rose from 13.2 percent to 13.4 percent.

Similar flavored e-cigs have not been pulled from retail by Reynolds Vapor.

By comparison, a year ago Juul was at 68.5 percent market share and Vuse at 12.6 percent.

Juul entered the mainstream retail marketplace in 2015, and is sold in the form of a pen or a USB device.

That design makes it easy to hide, which Dr. Scott Gottlieb, commissioner of the Food and Drug Administration, said has contributed to “an epidemic” of teenage use, albeit based on a small sample size nationally.

Gottlieb said March 9 he planned to step down as FDA commissioner in early April.

Gottlieb recommended Nov. 15 banning or tightening regulations on the sale and marketing of traditional menthol cigarettes, as well as limiting e-cigs to traditional tobacco, mint and menthol.

Juul Labs Inc. announced Nov. 14 it had chosen to remove its creme, cucumber, fruit and mango flavors as part of making a dramatic concession to the FDA.

The company is selling only tobacco, mint and menthol flavors at more than 90,000 convenience stores and vape shops.

The four removed flavors remain available at www.juul.com, but with heightened age-restriction policies and age-21 verification.

The four flavors will return to locations that can meet the potential stricter policies on retail purchases.

Juul’s e-cig dominance attracted a $12.8 billion investment from Altria Group Inc. on Dec. 23 for a 35 percent ownership stake.

A major component of the investment is Altria marketing Juul products through cigarette-pack inserts and mailings to adult smokers via Altria companies’ databases. Juul also will gain access to Altria’s sales support in 230,000 retail locations.

Wells Fargo Securities analyst Bonnie Herzog projected $7 billion in e-cig sales in 2018.

Her 2019 projection is $9 billion in sales.

In the traditional cigarette category, Herzog said industry volume declined by 8.8 percent despite recent price increases by Philip Morris USA, Reynolds and ITG Brands LLC. Another increase of 9 cents per pack went into effect late last month.

Herzog predicted industry volume to decline 4.6 percent in 2019.

Herzog said that for all the buzz about e-cigs, it remains as just the fourth largest tobacco product in terms of having 4 percent of retail sales, compared with 83 percent for traditional cigarettes, 8 percent for chewing and smokeless tobacco and 5 percent for cigars.

Philip Morris held steady in first place at 54.1 percent market share, of which 47.4 percent is the top-selling Marlboro.

Reynolds held steady at 33.8 percent market share, led by 13.3 percent from Newport, 8.7 percent Camel, 6.5 percent Pall Mall and 3.3 percent Natural American Spirit.

ITG remained at 7.2 percent, representing 2.1 percent from Winston and 1.6 percent Kool and 1.6 percent Maverick. ITG has said its market share is closer to 10 percent.

“Wells Fargo (analyst Bonnie Herzog) continues to take the position that sales are not falling as fast as Nielsen data reports, that dual use will maintain cig volumes, etc.,” said David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigs and health studies.

“But I think this position is becoming ever harder to support as more sales data accumulates from multiple sources and even Altria confirms the growth in exclusive vaping.

“There is a pronounced acceleration in the decline of cigarette sales over the past year, and the increase in e-cig sales is a mirror image of the decline in cigarette sales” Sweanor said.

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rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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