Juul Labs moving HQ from San Francisco to D.C.

Henrico's Altria Group holds 35% stake in e-cigarette manufacturer

Published May 5, 2020 by Richard Foster

E-cigarette manufacturer Juul Labs Inc. is moving its company headquarters from San Francisco to Washington, D.C., a fact first reported Tuesday by the Wall Street Journal. Henrico County-based Altria Group Inc. holds a 35% stake in Juul, which is cutting about 900 jobs from its 3,000-person global workforce, including about 25% of its U.S. employees, as part of the move.

In a statement released Tuesday, Altria Group CEO William F. “Billy” Gifford Jr. said, “Outside looking in, we feel like the overhead had gotten a bit ahead of itself and it’s unfortunate it’s in the middle of this COVID crisis, but we certainly believe the reduction in overhead and that type of spending is a smart move to make.”

Former Altria Chief Growth Officer K.C. Crosthwaite was appointed as CEO of Juul in September 2019, immediately cutting about 650 jobs and reducing Juul’s spending by $1 billion. At the time, the controversial e-cigarette manufacturer was under fire by schools, parents and public health advocates who charged that the company was largely to blame for an epidemic of teen nicotine addiction via Juul’s popular vaping devices and flavored nicotine-infused liquid pods.

Altria invested $12.8 billion in late 2018 to obtain a 35% stake in Juul, but Altria took $8 billion in writedowns on the investment in 2019. Originally valued at $38 billion, Juul saw its valuation by Altria fall to $12 billion in March. Juul saw revenues of $2 billion and losses of about $1 billion in 2019.

The Federal Trade Commission filed an antitrust complaint against the two companies last month, on April 1, alleging that Altria and Juul cut a secret deal in fall 2018 that Altria would exit the vaping market. Altria said publicly it was no longer manufacturing its own e-cigarette products due to public health concerns about teens vaping. The companies are also facing a class-action lawsuit filed on April 7 by a Juul customer in California, alleging that the companies have overcharged customers as a result of the deal outlined in the antitrust complaint.

“For several years, Altria and JUUL were competitors in the market for closed-system e-cigarettes. By the end of 2018, Altria orchestrated its exit from the e-cigarette market and became JUUL’s largest investor,” said Ian Conner, the FTC’s director of the Bureau of Competition, in a statement. “Altria and JUUL turned from competitors to collaborators by eliminating competition and sharing in JUUL’s profits.”

One of the world’s largest manufacturers of cigarettes and tobacco products, Altria also holds equity stakes in Anheuser-Busch InBev SA/NV and Cronos Group Inc., a Canadian cannabis company.

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