Business

Juul names new CEO, suspends all advertising in U.S. — but no change in Canada

Juul's CEO has abruptly stepped down, and the San Francisco-based company will suspend all broadcast, print and digital product advertising in the United States as a crackdown on the vaping industry it dominates intensifies.

Company dominates $6B vaping industry

Juul began as a niche product to help smokers wean themselves off tobacco but has recently become a way for non-smokers to start consuming tobacco in the first place. (Gabby Jones/Bloomberg)

Juul's CEO has abruptly stepped down, and the company will suspend all broadcast, print and digital product advertising in the United States as a crackdown on the vaping industry it dominates intensifies.

The departure of Juul co-founder and CEO Kevin Burns is effective immediately, and the company will halt all digital, print and broadcast advertising in the U.S. as of now, the San Francisco-based company said in a news release Wednesday. But the company is making no such changes in Canada, or anywhere else.

The firm has named veteran tobacco industry executive K.C. Crosthwaite to take over from Burns.

"Juul Labs is a global company, and this announcement impacts the U.S. only," a spokesperson for the company told CBC News on Wednesday.

The company advertises in Canada through various means, and has employed lobbyists to meet with politicians to try to influence policy numerous times in the past year, according to the federal registry of officially recognized lobbyists.

A Juul advertisement is seen at a convenience store in Toronto. (Michael Wilson/CBC)

The company did not immediately reply to a request for comment from CBC News as to why it saw fit to change the way it does business in the U.S., but not in Canada. The company did say, however, that it complies with all "Canadian regulations, and the company is intentionally conservative in its flavour selection, expansion and naming, to avoid the risk of youth appeal."

"Juul Labs Canada never has and never will market to young people," the spokesperson said. "We have never engaged in lifestyle marketing, which is already banned in Canada, and have voluntarily committed to never engage in social media advertising in Canada."

New CEO

Crosthwaite has spent much of his career at Altria, the tobacco giant that owns brands like Marlboro and Virginia Slims, and also owns about one third of Juul after a $13 billion US deal last year.

The company has been under fire in recent months after a spate of lung-related illnesses among people who vape. Juul products account for about three-quarters of all sales in the fast-growing industry.

Originally designed to be a product to help smokers wean themselves off tobacco, vaping and the industry have been criticized for seemingly getting an entirely new generation of people to start consuming tobacco — especially young people.

The company became a hit largely because its tobacco pods had a higher nicotine content than other comparable products, and in the U.S. market the company offers a wider variety of fruit and dessert flavours. In Canada, its product selection is limited but it still offer mint, mango and vanilla flavoured tobacco pods.

According to U.S. government estimates, roughly one in four American teenagers has used some sort of e-cigarette in the previous month. The Food and Drug Administration has warned Juul to stop using deceptive advertising claims in its marketing, a message that seems to have resonated with the company, as it also announced Wednesday it will suspend all broadcast, print and digital product advertising in the U.S., and will stop lobbying the government to implement legislative policies that benefit it.

The outgoing CEO, Burns, made headlines in recent weeks in a stunning TV interview in which he bluntly admitted that non-smokers should not be using his company's product.

Wednesday's moves seem designed to show the company is making an abrupt change in its corporate direction.

The company recently opened its first branded store in Toronto. (Michael Wilson/CBC)

In a news release, Crosthwaite said: "I have long believed in a future where adult smokers overwhelmingly choose alternative products like Juul," he said. "Unfortunately, today that future is at risk due to unacceptable levels of youth usage and eroding public confidence in our industry.

"Against that backdrop, we must strive to work with regulators, policy-makers and other stakeholders, and earn the trust of the societies in which we operate."

Appealing for youth

David Hammond, a public health professor at the University of Waterloo who studies vaping, says that the industry began as one with the potential to be a helpful tool in getting people to stop consuming tobacco, but has become something else.

And one quarter of all U.S. teenagers using e-cigarette despite it being illegal to do so means there is a problem, he says. "You've got to stop advertising these products in places that reach kids. So in Ontario, you literally have posters and product displays on top of the chips and chocolate bars."

Dr. Nicholas Chadi, a pediatrician at CHU Sainte-Justine in Montreal and addiction medicine specialist, says that part of the problem with e-cigarettes such as Juul is how they are subtly made in a way to appeal to young people.

In its statement to CBC News, Juul said that it "never has and never will" market itself to young people, but Chadi says everything about it seems targeted to young people. 

"They come in all sorts of cool flavours and shapes, and they're high tech and you can charge them in any USB port," he said. "So just the device itself is attractive to a young person, and they are discreet. They are fairly affordable."

"It's access. It's how these devices are made and marketed," he said. "It's kind of a perfect storm for these devices to be used or misused by young people."

With files from The Associated Press and Reuters

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