Vuse gains market share benefit from FDA regulatory shadow over Juul | Local

The shadow of a potential banning of Juul Labs Inc.’s electronic-cigarettes product from US retail shelves has accelerated the market-share gains of RJ Reynolds Vapor Co.’s Vuse brand.

Vuse’s market share rose from 35.5 to 37.4%, compared with Juul declining from 32.9% to 30.7%, according to the latest Nielsen analysis of convenience-store data that covers the four-week period ending July 16.

Meanwhile, No. 3 NJoy rose from 2.9% to 3% while Fontem Ventures’ blu eCigs was unchanged at 1.7%.

It is the second Nielsen report since the Food and Drug Administration announced June 23 that Juul Labs is required to remove all e-cigarette products from US shelves.

However, the US Court of Appeals for the DC Circuit granted Juul Labs an emergency administrative stay of enforcement on June 24.

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Goldman Sachs analyst Bonnie Herzog wrote in her Tuesday note to investors that Juul’s market share decline occurred in part “following confusion around the FDA’s marketing denial order against Juul.”

Juul still maintains a 34.4% to 31.8% market-share lead over the previous 52 weeks.

The FDA rejected Juul’s pre-market tobacco-product applications, saying they “lacked sufficient evidence regarding the toxicological profile of the products to demonstrate that marketing of the products would be appropriate for the protection of the public health.”

The FDA ordered that Juul “must stop selling and distributing these products. In addition, those currently on the US market must be removed, or risk enforcement action.”

Joe Murillo, Juul Labs’ chief regulatory officer, said in response to the federal judge’s stay order that the company is “seeking the ability to continuously offer our products to adult smokers throughout our appeal with the court and science- and evidence-based engagement with our regulator.”

According to Barclays, Nielsen largely covers the big chains. For the smaller chains, the group extrapolates trends, which is why trend changes don’t appear immediately in Nielsen.

Nielsen determined that Vuse recaptured the top market share in its April 23 report for the first time since November 2017.

As recently as May 2019, Juul held a 74.6% US e-cig market share. That’s when a series of regulatory actions led to product-reduction concessions by Juul Labs.

Even as e-cigarettes are showing positive month-over-month and year-over-year revenue gains, Nielsen finds the category still represents just 7% of the US nicotine market.

That’s compared with 77.2% for traditional cigarettes and 10.7% for smokeless products, such as moist snuff and snus.

Juul’s four-week dollar sales in the latest report have dropped from a 50.2% increase in the Aug. 10, 2019, report to a 16.9% decline in the latest report.

By comparison, Reynolds’ Vuse was up 42% in the latest report, while NJoy was down 9.3% and blu eCigs down 28.1%.

Another factor is that e-cigarette sales overall have slumped since February 2020, when the FDA implemented its latest round of heightened regulations on the products.

Those restrictions foremost required manufacturers of cartridge-based e-cigarettes, such as Juul Labs, Reynolds Vapor, NJoy and Fontem, to stop making, distributing and selling “unauthorized flavorings” in February 2021, or risk enforcement actions.

Traditional cigarettes

Industry analysts said the 3.2% dollar sales decline year over year for traditional cigarettes in the latest Nielson report primarily reflects how inflation, particularly involving higher gas and energy prices, is leading more smokers toward lower-cost options.

Manufacturers have been able to offset some of the recent declines through a series of per-pack list-price increases in recent months. The list price is what wholesalers pay manufacturers for their traditional cigarette products.

The increase typically is passed on to customers at retail.

Altogether, Reynolds has raised its list price by 88 cents over the last nine months for many of its top brands, as well as a combined $1.45 since January 2020.

Philip Morris USA’s traditional cigarette dollar sales were down 4% year over year, while Reynolds was down 2.8% and ITG Brands LLC is up 0.6%.

As of July 16, Philip Morris’ top market share was at 51.4%, with top-selling Marlboro representing 45.7% of overall market share.

RJ Reynolds Tobacco Co. was at 34.6%, with No. 2 Newport at 14%, No. 3 Camel at 8.4%, No. 4 Pall Mall at 4.8% and No. 5 Natural American Spirit at 4.1%.

ITG rose from 7.8% to 7.9%, although ITG has said its market share is closer to 10%. Its Winston brand is No. 6 at 1.9%, while Kool and Maverick are tied at No. 7 at 1.7%.

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