Altria Group Inc. CEO Billy Gifford listed Njoy’s premarket tobacco product application (PMTA) status, its responsible approach to marketing and its popularity with adult smokers and vapers as reasons why Altria wanted to acquire the Scottsdale, Arizona-based company.
Gifford spoke on a Monday morning call following the Richmond, Virginia-based tobacco company announcing that it entered into a definitive agreement to acquire Njoy Holdings Inc. for approximately $2.75 billion and exchanged its entire minority economic investment in e-cigarette maker Juul Labs Inc. for a non-exclusive, irrevocable global license to some of Juul’s heated tobacco intellectual property.
Njoy’s Ace is the only pod-based e-vapor product with marketing granted orders (MGOs) from the U.S. Food and Drug Administration (FDA).
Altria also owns oral tobacco brands Copenhagen and On, and is working on bringing heated tobacco stick product Ploom with Marlboro-branded consumables to market in the United States through its partnership with Japan Tobacco. Gifford said this month Altria will reveal more on a new heated tobacco capsule technology, too.
“We believe this smoke-free portfolio, combined with the significant cash flows from our leading U.S. combustible brands, and substantial internal capabilities, positions us well to achieve our vision to responsibly lead the transition of adult smokers to a smoke-free future,” Gifford said.
Why Altria Believes in Njoy
The U.S. vapor segment will undergo a multi-year transition, Gifford said, as the FDA makes determinations on the PMTA submissions and exercises enforcement actions against non-compliers. Over the next 10 years, Altria estimates that total U.S. vapor volumes will grow at a low-single-digit compounded annual growth rates; however, there are reasons Njoy is worth investing in, according to Altria:
- The Njoy Ace device has MGOs for its device, Rich Tobacco (5%) pods and Classic Tobacco pods (2.4% and 5%). PMTAs remain pending for competitor Vuse Alto, from R.J. Reynolds Vapor, and Juul’s marketing denial order (MDO) is under review by the FDA.
- Altria’s adult tobacco consumer research shows that adult smokers and vapers who tried Njoy “definitely would buy it” at a rate equal to or more than its competitors Juul and Vuse Alto. It only has about 3% of retail share and is in about 33,000 stores, excluding vape shops, but Gifford said Altria’s resources can benefit the brand. While Njoy has about 50 salespeople, Altria has a sales force of more than 1,600 employees across the country and services more than 200,000 U.S. retail stores, he said.
- Njoy has taken a responsible approach to marketing its product, according to Altria. It was not among the top brands chosen by middle and high school e-cigarette users in the 2022 National Youth Tobacco Survey.
Juul’s Response
The return of Altria’s equity stake and termination of underlying agreements affords Juul full strategic freedom, no longer limiting Juul from pursuing other strategic opportunities and partnerships, the San Francisco-based company said in a statement on its website.
“We are free to take advantage of a range of options to maximize the value of our company while we continue to advance our leading product technology and innovation pipeline,” Juul said.
Juul’s goal is to still transition adult smokers away from combustible cigarettes and said it will take a methodical approach to resolve issues from its past, engage constructively with stakeholders and lead with innovation and science.
The FDA issued MDOs in June for the Juul device and four types of Juulpods, but later stayed the decision.
“And it’s our innovation and science that drive our path forward and harm-reduction opportunity. While our appeal of FDA’s now-stayed MDO remains pending, we remain as confident in our science and evidence to support the continued marketing of Juul products. We also continue to pursue future applications for new products to accelerate our mission and progress for the adult smoker, public health and an end to combustible cigarettes,” Juul said.