12.8 billion dollars was how much Altria spent for a 35% stake in Juul.
36.5 billion dollars was the valuation of July at the time.
To compare that valuation, lets look at big tobacco.
Phillip Morris has a market cap of 157 billion dollars.
Revenue in 2021 was 31.4 billion.
Profit was 9 billion.
British America Tobacco has a market cap of 95 billion.
Revenue in 2021 was 35.3 billion.
Profit was 9.3 billion.
Altria has a market cap of 77 billion dollars.
Revenue in 2021 was 26 billion.
Profit was 2.4 billion.
What we can see from that is despite tobacco being a pretty unethical industry, because of their products, they are high revenue, well valued and have solid profit margins.
Juul however is a product people think or at least thought was the future.
When they sold 35% of the company in 2018, the valuation was 36.5 billion, when revenue for that year was reported at 1.3 billion.
A valuation 28x reported revenue.
The reason for that is growth of industries.
867 billion is the expected revenue for the global tobacco market in 2022.
22.5 billion is the revenue for e-cigarettes.
While vapes/e-cigs are still much smaller, the growth rate in revenue is different, where e-cigs are growing at a rate of 4% a year, versus tobacco only growing at 2%.
There’s also the reality that for America, tobacco is declining.
43% of adults smoked in 1965.
13% is that number today.
Comparing that, vapes have expanded to one in twenty American’s vaping actively and growth with people under 30 growing 1800% in the last decade.
First up, personal opinion.
I’ve actually never smoked tobacco or vaped, the same way I’ve never drank, smoked marijuana or done any drug.
I think vaping and tobacco are both really immoral things and one of the only industries I’d refuse to ever buy a single share of stock in.
Second, what should be done on a policy level.
On April 1st of 1970, Richard Nixon signed a ban on tobacco ads for TV and radio.
Before that, tobacco was actually the biggest advertiser in the United States, where everyone from I Love Lucy to the Flinstones did ads for it.
Today, 37% of teenagers are vaping and vapes are actually for the most part legal to advertise, with some regulation.
My feeling is we don’t need a ban on vapes, because while terrible for people, they are still better over cigarettes. My gut feeling is vape brands like Juul’s will just need to be treated like cigarettes, where a ban on ads happen and more campaigns hit to show people how bad they are. Also, very likely taxes on tobacco products should apply to vapes.
Vaping and tobacco are both big markets and sadly they’ll both grow on a global level. That said, it’s literal poison being sold to people and while a ban probably wouldn’t be good policy, we should work to reduce use heavily.
