Business Case Studies & Business Publications

Juul Labs: Guilty by Association?

Wicks, Andrew C., ...

Case

Juul Labs: Guilty by Association?

Wicks, Andrew C.; Wang, Yuhan; Pak, Sally; Botha, Helet; Mead, Jenny

E-0471 | Published February 11, 2021 | 5 pages Case

Collection: Darden School of Business

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The protagonist, the CEO of Juul Labs (Juul), an e-cigarette company founded to help smokers quit cigarettes, is trying to negotiate a merger with Philip Morris International (PMI), the behemoth tobacco company, in the face of bad press about e-cigarettes and Juul in particular. If Juul and PMI merge, Juul would have access to PMI's wide distribution network, a necessity for expanding into international developed markets. Although intended for adults, Juul had become popular with teens, especially middle and high schoolers, causing a spike in youth nicotine addiction. As a result, Juul and other e-cigarette brands faced heavy scrutiny and legislative regulation from government agencies. Juul had modified its marketing strategy and complied with government orders in an attempt to reduce the accessibility and popularity of Juuls to minors, but still faced public and governmental criticism that threatened to jettison the merger. As an ex-smoker, the protagonist strongly supports e-cigarettes as a means to end cigarette use, and thus believes in Juul's purpose. Yet there is no denying that e-cigarette use (particularly the use of flavored e-cigarettes) has led many teens to vape. Because of the attacks from legislators and the media, however, PMI had reservations about doing business with Juul. But despite its efforts to address the problem—including support of raising the legal nicotine use age from 18 to 21—the protagonist wonders if the company had done enough. What other changes could be enacted at Juul? Did taking part in the battle against teen nicotine addiction make up for the fact that Juul practically initiated this particular nicotine epidemic? What other efforts could could prove Juul's intention to help adult cigarette smokers and to redeem Juul's reputation in the eyes of both the public and the government? Finally, was there any way to salvage Juul's pending merger with PMI?