Carreras Limited is watching the developments surrounding Juul Labs Inc as the US Food and Drug Administration (FDA) on June 23 denied the company from continuing to sell its e-cigarettes and four pods and issued marketing denial orders (MDOs) preventing it from marketing the sale of its products.

Juul is an e-cigarette company founded by Adam Bowen and James Monsees in May 2015. It was acquired by the Altria Group, the world’s largest producers and marketers of tobacco and cigarette products, in December 2018 for US$12.8 billion. At the time, Juul held a 72 per cent market share in the e-cigarette market in the United States of America (USA). The Altria Group controls Phillip Morris International, which produces Marlboro cigarettes.

However, since then the value of Juul on Altria’s balance sheet has been marked down to US$1.7 billion at the start of 2022 with the market share now reduced to 41 per cent. Juul was able to appeal to a three-member panel of the US Appeals Court for the District of Columbia to stay the MDO. The court on July 5 said that there are scientific issues unique to Juul’s application which warrants additional review. It also pointed out that insufficient and conflicting data in Juul’s application to sell Virginia tobacco-flavoured pods at nicotine concentrations of 5 per cent and 3 per cent and menthol-flavoured pods at nicotine concentrations of 5 per cent and 3 per cent.

This is not the first time Juul has tangled with the FDA. It pulled certain flavoured products in 2018 from the market. Juul reached an agreement with the Center for Environmental Health in October 2019 surrounding its youth advertising practices due to the increased cases of vaping by youth in the USA. Juul has also faced numerous lawsuits over the years surrounding a litany of issues.

When approached on that matter, managing director of Carreras Raoul Glynn said, “Providing an alternative product with potentially reduced risk makes sense for consumers in Jamaica and the Caribbean. However, any interaction or marketing specifically to minors is not compliant with the current nor the future regulatory framework. Our company is proud of its commitment to comply with balanced regulations as this is simply the Carreras way.”

Carreras is a 50.40 per cent subsidiary of the British American Tobacco (BAT) and distributes cigarettes in Jamaica. BAT grew its new categories segment revenue by 51 per cent to £2.05 billion ($398.81 billion) and added an additional 4.8 million consumers to reach 18.3 million consumers. New categories includes Vapour, tobacco heating products (THP) and modern oral products. Unlike the traditional combustible products, the new categories segment is still unprofitable with BAT reducing losses by nearly £100 million. Vuse, its number one vaping brand by value share, achieved profitability in the United States market in the second half of 2021. The conglomerate aims to achieve £5 billion in revenue and profitability by 2025 with 50 million consumers by 2030. New categories only made up eight per cent of BAT’s £25.7 billion in revenue achieved for its 2021 financial year ending December 31.

“We have another huge innovation scheduled for the next few months and then we are ready for vaping. Jamaicans are already consuming such products and Carreras will seek to actively participate in that market, which also complements the rest of our portfolio,” Glynn explained in June following the company’s launch of its Craven A Super King Size earlier in the year.

Local ministries and agencies are likely paying keen attention to the development in the US given the efforts by domestic players to introduce vaping products to consumers in the near future. Minister of Health and Wellness Dr Christopher Tufton tabled the Tobacco Control Act (2020) in Parliament in December 2020 as Jamaica aims to become compliant with World Health Organization (WHO) Framework Convention on Tobacco Control, of which it is a member. Carreras has provided its input on the Bill which is being debated by a joint select committee. The Bill includes a ban on the sale of tobacco in public places and places limitations on advertisement, promotion and sponsorship by tobacco companies.

The Government of Jamaica (GOJ) collected $7.33 billion in special and general consumption taxes from Carreras which earned $15.75 billion in revenue and $4.07 billion in net profit for its 2022 financial year. The GOJ has not added any additional excise hikes since March 2015, which Carreras cited as a reason for the decline in its revenue and GOJ tax collection.