Irene Kim: You've heard of Juul.
It's the highest-selling
and fastest-growing e-cigarette on the market.
In 2017, it generated $224 million in revenue.
In 2018?
$1 billion.
And, as of February 2019,
the company was expecting
to triple its revenue.
Juul briefly made its founders billionaires,
created a new verb, and
resurrected the United States'
once dying e-cigarette market.
But what was once Silicon Valley's $38 billion darling
now faces Congressional investigations,
criticism by the Food and Drug Administration,
and potential bans in entire countries, including the US.
But how did a product designed to help
adult smokers quit
become the face of the youth vaping crisis?
And what exactly is next for Juul?
Since launching in June 2015
with a party in New York City
and a youth-oriented media campaign,
Juul has dominated the e-cigarette market.
How did it get so popular in the first place?
It starts with the design.
Because Juul marketed itself
as a way for adult smokers to quit,
its product couldn't remind people of a cigarette.
So Juuls ended up looking more like something
you'd stick in a computer
than something you'd smoke.
With its sleek design,
it was much more discreet
than a traditional e-cigarette.
But its discreet look also made it easy for young users
to hide their Juuls from parents and teachers.
And its nicotine pods came in tasty flavors
like mango, cool mint, fruit medley, and crème brûlée.
Juul quickly became popular with young consumers.
At some point, "Juuling" even became a verb.
For many, "Juuling" became synonymous with vaping.
And soon, memes about "Juuling"
were seemingly everywhere
Chidum Okeke: I began seeing
a lot of Juul-related tweets
about two years ago, which was, like, in 2017,
when I was a senior in high school.
Kim: Chidum Okeke doesn't use a Juul,
but his tweets about using Juuls have gone a bit viral.
Okeke: It was basically saying how, like, it's August,
like, we're about to go back to school.
Hell is about to arrive.
Milly that rock, hit that Juul.
And then, next thing you know,
I had 100,000 likes and retweets
just because it was, like, so relatable.
Like, it was the cool thing, right?
It was in.
Kim: Juuls became a growing part
of young people's social identities.
Researchers at Tobacco Control
found that most Juul-related Instagram posts
reinforce "a characteristic of cultural or social identity."
And while Juul says its products
are marketed to adult smokers,
a study published by JAMA Pediatrics
found that most of Juul's Twitter
followers are underage.
Juul's early social-media presence
and marketing strategy
would later come back to haunt it,
but we'll get to that in a bit.
In the meantime, Juul's sales numbers
only continued to explode.
By 2017, it had claimed over a third
of the e-cigarette market,
generating $224 million in revenue.
By November of that year,
Juul was the best-selling e-cigarette on the market.
However, as Juul's business continued to grow,
so did the scrutiny on it.
In the fall of 2017, teen vaping
became a national story.
News outlets across the country
reported that high-school students
were using Juuls in class or on school property.
Amid the outrage, the FDA
launched an undercover crackdown
of Juul sales to minors.
The FDA called it
the "largest coordinated enforcement effort"
in agency history
and issued more than 1,300 warning letters
and fines to retailers for illegally selling Juuls
and other e-cigarette products to minors.
Later that August,
the agency surprised Juul at its headquarters
to seize thousands of pages of documents,
which revealed the FDA was officially investigating
whether Juul marketed its products to teens.
And in response to reports of a 78% increase in vaping
among American high-school students,
the FDA announced plans to curb
flavored-e-cigarette sales.
Around this time, the Federal Trading Commission
also began investigating
whether Juul marketed its products to minors.
But despite the controversies,
Juul's sales continued to rise.
In fact, Juul was bigger than ever.
Altria, the parent company of multiple big tobacco brands,
purchased a 35% stake in Juul for $12.8 billion,
which valued Juul at $38 billion
and made Juul's cofounders billionaires.
The company hit $1 billion in revenue that same year,
continuing its seemingly unstoppable growth.
However, things were about to get a lot worse.
In April 2019, Democrats in the US Senate
launched an investigation into Juul's social media
and advertising practices
along with its billion-dollar deal with Altria.
Just two months later,
the US House of Representatives
announced its own investigation into Juul.
Meanwhile, Juul Labs CEO Kevin Burns
publicly apologized in a CNBC documentary
to parents of teens who are addicted to Juul products.
Kevin Burns: First of all, I'd tell them that I'm sorry
that their child's using the product.
It's not intended for them.
Kim: Things snowballed in late July,
when the first reports
of vaping-related lung illness emerged.
Erin Brodwin: So, there've been thousands
of vaping-related illnesses
related to e-cigarettes in recent months.
The reason Juul is implicated or involved in these illnesses
is because several of the case reports
involve people saying that they used Juuls
when they got sick.
The problem with that is that Juuls,
as, you know, the most dominant
and most popular e-cigarette on the market,
there are a lot of counterfeit products
that are labeled Juul when in fact they actually are not.
So, in addition to that,
people, rather than saying that they're vaping,
they actually use the word Juul as a verb
and say that they're "Juuling."
They could have been using a different device
and then just, you know, said they were "Juuling,"
and what, you know, CDC investigators write down
is they were using a Juul.
Kim: Juul's popularity began to work against it.
By being synonymous with vaping,
it finds itself embroiled in a multitude
of different vaping-related incidents.
In response, the company has attempted
to be proactive about addressing
the controversies around vaping.
In August, Juul's CEO publicly asked nonsmokers
not to use Juul, telling CBS:
Burns: Don't vape. Don't use Juul.
Kim: Burns even brought up that the
long-term health effects of vaping remain unknown.
A majority of the vaping-related
lung illness cases
have been linked back to black-market products
containing THC,
the psychoactive ingredient in cannabis.
However, some of the cases do involve people
who said they used nicotine-only products,
and still others said they used both nicotine
and marijuana products.
All this has made figuring out
the cause behind the outbreaks very difficult.
By September, the CDC and FDA
reported that there were 530 cases
of illness related to vaping.
Although neither organization
has been able to find a clear culprit,
Juul continues to fall under scrutiny.
And the company's global expansion
has come to a
screeching halt.
In the US, President Donald Trump recently announced
his intention to ban flavored e-cigarettes.
Donald Trump: People are dying with vaping.
Kim: Amidst these crackdowns,
the FDA issued the company an official warning
for its marketing practices.
There's a growing concern over what medical experts
are calling the "youth nicotine epidemic."
Brodwin: I've talked to several experts about this,
and most people in public health agree
that the people in Juul's advertisements
from 2016 and 2017,
I believe, looked underage.
I think the very first error that Juul made in judgment
was creating these advertisements
that clearly include people who look very, very young,
advertising its devices as cool,
using taglines like, quote, unquote, "smoking evolved,"
picturing them on flashy, very colorful backgrounds.
And then at events, giving them away either for free
or for, you know, a dollar or $2.
Because, right there, you have the potential
to create a desire among young people
who maybe otherwise would
never have thought about smoking,
vaping, or using an addictive drug like nicotine.
You suddenly have this opportunity for them
to be interested in this new, novel,
seemingly cool, very discreet product.
Kim: When asked if its early marketing
targeted underage users or nonsmokers,
Juul told Business Insider that,
"We have never marketed to youth and we never will. ...
Nonetheless, we recognize
how that campaign was perceived. ...
Our recent marketing efforts exclusively featured
adult smokers who shared their personal experiences
about switching to Juul products
from combustible cigarettes."
Because of the controversy
over Juul's marketing practices
and the growing wave of vaping-related illnesses,
Burns stepped down in late September and was replaced
with longtime tobacco executive K.C. Crosthwaite.
Juul announced plans to suspend
advertising in the US,
as well as some lobbying efforts.
But for some, that wasn't enough.
In October 2019, school districts across the US
launched lawsuits against Juul.
Brodwin: They're saying that Juul created
what they call a, quote, unquote, "public nuisance"
by having its devices not only be distracting
for young people on school campuses
but also potentially endangering
their health and safety.
Kim: The company says that the lawsuits have no merit.
So, what's next?
Brodwin: Juul is going to have two big things
that it needs to prove.
First, it's going to have to prove
that it did not intentionally or unintentionally
hook an entire generation of young people
on nicotine who otherwise would not have smoked
or interacted with nicotine, an addictive drug, in any way.
It's also going to have to prove
that its devices could help
hundreds of thousands of adults
who smoke quit smoking and start vaping instead.
Kim: And don't forget, Juul is owned by Altria.
It's one of the world's biggest tobacco companies,
with brands that are more than 170 years old
and a reputation for resilience.
It's not likely to let its billion-dollar investment
and 35% stake in Juul go up in smoke.
Juul spent $3 million in the first half of 2019
lobbying Congress and federal regulators.
And there's a reason Juul replaced its CEO.
While former CEO Burns worked as
chief operating officer
for yogurt-maker Chobani,
his replacement comes from Altria.
Crosthwaite's years of experience in Big Tobacco
means he's used to working with regulators,
which will come in handy
now that Juul has to submit
its products for FDA regulation,
something it's hasn't done until now.
Brodwin: Thanks to some legislation
that was put in place several years ago and then delayed,
Juul was able to get its products on the market
without any sort of FDA sign-off required.
Kim: Now, Juul will need to get FDA approval by 2022
to stay on the market.
But will the company avoid even harsher regulations,
like Trump's potential ban on flavored pods?
Brodwin: My opinion on this is, and this is my opinion,
so take it with a grain of salt,
but I don't think wide-scale bans
on flavored e-cigarettes
are going to succeed, at least on a national level.
If they do, it could spell kind of
the destruction of the e-cigarette industry.
Kim: Many analysts say it isn't likely
that there will be enough support
to pass a nationwide ban.
At the very least, a nationwide ban
isn't likely to happen for a few years,
according to analysts at Stifel.
A ban could also hurt more people than it helps.
Public health professionals say that a widespread ban
could create an unregulated black market,
which could be much more dangerous.
The answer could be regulation,
both from the government
and from companies themselves.
Which is something Juul is already doing.
Back in 2018, it kept 55 new flavors it had designed
off the market.
Flavors like mimosa,
strawberry limoncello, Thai tea,
and spicy watermelon.
Although all 55 were registered with the FDA,
the controversy surrounding Juul
and underage use reportedly
made the company hesitate.
In November 2018, Juul restricted sales
of its flavored pods to its website.
And in August 2019, the company announced
that it had developed a new system
meant to prevent sales to minors
and pledged $100 million to help retailers install it.
Later, in October, Juul withdrew support
of an initiative in San Francisco
to overturn the city's ban on e-cigarette sales,
the same ban it previously spent
$11 million lobbying against.
A few weeks later, Juul suspended all sales
of its fruit-flavored pods.
But whether any of this will be enough
to help Juul turn things around, only time will tell.
What do you think is next for Juul?
Let us know in the comments below.