Domain Daily: Up in Smoke

The Dose

  • FDA E-Cigarette Ban

  • White House Plans Nicotine Limits

  • Obamas Move to Audible

Juul E-Cigarettes Banned by the FDA

Following a two-year review, the Food and Drug Administration has banned the sale of Juul's e-cigarettes.

The Point: Juul stopped selling fruity flavors that were popular with teens in 2019. Since then, the vaping company has been trying to show the FDA that its product doesn't target the under-18 demographic. But, based on this order, Juul Labs could not satisfy the regulator. This is a big blow to Altria. The cigarette maker bought a 35% stake in Juul Labs for $12.8 billion in 2018. Back then, Juul Labs was worth more than $38 billion. That's since plunged to less than $5 billion. Now with the ban, that valuation may go much lower.

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Biden Administration Seeks to Limit Nicotine in Cigarettes

When it rains, it pours. On Tuesday, the Biden White House said it would develop a policy requiring the tobacco industry to reduce the nicotine in cigarettes.

The Point: That's another significant blow to Altria and competitors like Philip Morris. Theoretically, lower nicotine levels should make cigarettes less addictive. In doing so, Altria, Philip Morris, and others would likely see demand for their products plummet. However, there could be an unintended consequence. That is, existing users may end up buying (and smoking) more cigarettes to get their fix. In that way, this decision could be good for sales in the short term, even if it does cut into their long-term growth.

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Obamas Ink Deal With Audible

The former first couple ended their podcasting deal with Spotify in April. On Tuesday, they announced that Higher Ground productions will move to Amazon's Audible service.

The Point: It's a big get for Amazon and Audible. Audible is known chiefly for audiobooks, but the Obamas are joining to build out the company's podcast offering. There's no question why Audible targeted the Obamas. There's really no bigger fish in the sea. But why the couple moved to Audible raises some questions. They reportedly left Spotify over a dispute about distribution. However, unlike Spotify, Audible keeps much of its content behind a $7.95 per month paywall. And Audible's share of the podcasting market is about half of Spotify's. Audible accounted for 10% of podcast market share in the U.S. (based on 2020 figures) compared to Spotify's 25%. The transition won't take place for several months. It wouldn't be a surprise to learn that Audible plans to let non-paying subscribers access the Obamas' content.

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