Juul Labs Inc. will eliminate 650 jobs and freeze hiring, part of a plan to cut US$1 billion in costs as it pulls back on marketing and tries to get its vaping device cleared for sale by U.S. health regulators.
The San Francisco-based e-cigarette company has become a target of government regulators attempting to stem an epidemic of new, young nicotine users who have flocked to the sleek device despite in many cases never having used cigarettes.
Juul, facing an existential threat to its business, has responded by changing CEOs, limiting its marketing and lobbying, and stopping sales of flavours like mint and mango that are most popular with youth.
Juul plans to cut US$1 billion in costs next year, according to a statement from the company on Tuesday. That includes 650 jobs, or 15 per cent of its workforce. It’s also pausing hiring after bringing on about 300 people a month on average in 2019. Employees will get separation packages, according to the company.
Along with the job cuts, Juul has already stopped its broadcast, print and digital ads and says it’s focused on marketing to current adult smokers.
“As the vapor category undergoes a necessary reset, this reorganization will help Juul Labs focus on reducing underage use, investing in scientific research, and creating new technologies while earnings a license to operate in the U.S. and around the world,” said Chief Executive Officer K.C. Crosthwaite, in the statement.
News of the cost cuts was reported earlier by Axios.
As Juul reboots, federal regulators are weighing curbs on flavored e-cigarette products. On Monday, President Donald Trump said that he had invited industry groups and medical professionals to a meeting at the White House to talk about ways to reduce underage vaping while preserving jobs in the growing business.
In September, Health and Human Services Secretary Alex Azar had indicated that all flavors except tobacco could be temporarily removed from the market. But in recent weeks, there have been signs that any new federal restrictions won’t be that stringent. Last week, Juul said it would stop selling mint-flavored nicotine products in the U.S.
Juul said it will add resources to its product team and try and find ways of reducing youth use. The company declined to say what its total expenses were expected to be in 2019.