Juul vaping boom doused, as e-cigarette maker cuts 500 jobs

E-cigarette maker Juul will cut 500 jobs as it braces for a US clampdown on teenage vaping.

US authorities are clamping down on e-cigarettes. Picture: AFP

Juul Labs plans to cut roughly 500 jobs by the end of the year, according to people familiar with the matter, reversing the embattled e-cigarette maker’s rapid staff growth as the company braces for a proposed ban on flavours that make up more than 80 per cent of its US sales.

The number of positions to be eliminated isn’t final and could range from 10 per cent to 15 per cent of the workforce, the people said.

The cuts are part of a broader reorganisation aimed at mending the company’s damaged relationship with regulators. Besides the job cuts, Juul will trim its marketing budget, among other expenses, and invest in new ways to reduce underage vaping.

The e-cigarette market is undergoing “a necessary reset,” the company’s new chief executive, KC Crosthwaite, said in a statement. Juul’s focus, he said, is on “earning a license to operate in the US and around the world.”

READ MORE:

Deaths spark alarm over US teenage vaping epidemic

Australia’s burning questions on vaping risks

Juul this year has added an average of 300 employees a month, and its staff has swelled to a little over 4000 employees. It enacted a hiring freeze in September shortly before Mr Crosthwaite took over.

Mr Crosthwaite left the tobacco giant Altria Group to take the helm of the start-up in September. Among his top priorities are investing in scientific research for submission to the Food and Drug Administration and other regulators and exploring new technologies including a Bluetooth-connected device that could help curb underage use of its products, the company said.

Blamed for a rise in teenage vaping, Juul is the subject of several federal investigations, including a criminal probe by prosecutors. By May, the company must submit for FDA review any products it wants to remain on the US market beyond that point.

When Mr Crosthwaite was named to the top job, Juul suspended broadcast, print and digital ads for its US products. Juul also said it wouldn’t lobby against the FDA’s plan to curb teenage vaping by ordering all e-cigarettes off the market except those formulated to taste like tobacco. His first big hire was Joe Murillo, who headed regulatory affairs for Altria.

The company previously tried to win over Washington by flooding the White House with lobbyists and other advocates. But that strategy backfired because it appeared that the start-up was bypassing the FDA.

Juul’s sales have fallen since the Centres for Disease Control and Prevention in September warned the public to stop using all vaping products, including e-cigarettes, as it investigated an outbreak of vaping-related lung illnesses. The agency has since narrowed that warning, advising people not to vape THC, the psychoactive ingredient in cannabis. Juul’s products haven’t been linked to the vaping-related lung illnesses.

Mr Crosthwaite’s predecessor, Kevin Burns, pushed aggressively to expand overseas as the company came under pressure in the US The company now will take “a more methodical approach,” one of the people familiar with the matter said.

Mr Crosthwaite is combining several technical teams into one team now known as Product. Juul’s co-founders, James Monsees and Adam Bowen, who previously held the titles of chief product officer and chief technology officer, respectively, will join a new office called the founder’s office, where they will advise Mr Crosthwaite on a variety of subjects, one of the people familiar with the matter said.

Wall Street Journal