Tobacco giant Altria invests nearly $13 billion in Juul

Tobacco giant Altria announced Thursday that it is investing $12.8 billion in startup e-cigarette company Juul Labs.

The move gives Altria a 35 percent stake in Juul and an opening into a market where it has struggled to gain traction. It also opens both companies up to new rounds of criticism, as Juul has consistently marketed itself as an alternative to Big Tobacco. The company has said its mission is to help wean adult smokers off traditional cigarettes.

“We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US. We were skeptical as well,” Juul CEO Kevin Burns said in a statement Thursday. “But over the course of the last several months we were convinced by actions, not words, that in fact this partnership could help accelerate our success switching adult smokers.”

{mosads}Juul accounts for about 75 percent of the e-cigarette market. Earlier this month, amid speculation of a significant investment in Juul, Altria said it would stop selling its e-cigarette products.

“We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in JUUL, a world leader in switching adult smokers,” Howard Willard, Altria’s Chairman and CEO said in a statement Thursday. “We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction.”

As part of the deal, Altria agreed to display Juul pods on the same shelf with its traditional Marlboro cigarettes. Juul flavored products will continue to be online only.

Altria’s investment could help Juul navigate the regulatory issues that the tobacco company has faced for decades. Juul has been ramping up its lobbying efforts recently amid federal pressure.

The federal government has been grappling with a massive surge in teen vaping, and Juul has come under intense criticism for its role in what the U.S. surgeon general this week declared an “epidemic.”

The Food and Drug Administration (FDA) has proposed a crackdown on e-cigarette products. The agency launched a major push to stop e-cigarette sales to minors, accusing manufacturers and retailers of contributing to an “epidemic” of use among kids and teenagers.

The culmination of the agency’s efforts came when the FDA said it plans to essentially restrict the sales of most flavored e-cigarettes — popular among young people — to age-limited, in-person locations.

Matthew Myers, president of the Campaign for Tobacco-Free Kids, was swift in his condemnation of the deal, saying “public health is the loser.”

“The Altria-Juul deal shows how far the tobacco industry will go to maximize profits and sell as many products as possible, including cigarettes,” Myers said in a statement. “The FDA and other policymakers must be equally aggressive in working to reduce tobacco use and save lives.”

He added that Juul “has lost all credibility in claiming that it cares about public health. There is no longer any question that Juul has been the driving force behind the skyrocketing youth e-cigarette epidemic that has teens and families across the country struggling to deal with nicotine addiction.”