💨 Altria’s new Juul

Tuesday, March 7, 2023 by Robinhood Snacks |
Altria switches vape loyalty (Eugene Gologursky/Getty Images)

Altria switches vape loyalty (Eugene Gologursky/Getty Images)

Altria switches vape loyalty (Eugene Gologursky/Getty Images)

Altria switches vape loyalty (Eugene Gologursky/Getty Images)

Yesterday’s Market Moves
Dow Jones
33,431 (+0.12%)
S&P 500
4,048 (+0.07%)
Nasdaq
11,675 (-0.11%)
Bitcoin
$22,434 (+0.05%)

Hey Snackers,

A new study suggests that flamingos choose their cliques based on personalities, with aggressive flamingos likely to have more friends. We see a hit-movie opportunity: “Fla-Mean-Girls.”

Stocks barely budged yesterday, but the Dow ticked up for its fourth green day. This week, investors have eyes on Fed Chair Powell’s testimony to Congress (today) and the February jobs report on Friday for clues about interest-rate moves.

Puff

Hitting the vape again Marlboro maker Altria is taking another puff of the e-cig market. After pulling out of its disastrous Juul investment, Altria announced it’s buying vaping startup NJOY for $2.7B+. After its Juul experience, it might seem surprising that Altria’s still splurging billions on e-cigs.

  • Mango-flavored mayhem: In 2018, Altria invested $12.8B for a 35% stake in Juul. But after regulators ordered Juul off US shelves, that stake is worth just $250M.
  • NJOY’ing an advantage: NJOY is one of the few e-cig makers whose vapes have FDA clearance (market leaders Juul and Vuse are still struggling for a regulatory greenlight).
  • Bluepuff: Altria agreed to pay an extra $500M for NJOY if the FDA authorizes more of its products (like: a new vape that uses Bluetooth to authenticate smokers).

Menthol pod envy… As smokers trade cigs for vapes and other alternatives, tobacco giants have tried to stay competitive with puffable tech — especially since the FDA and the Biden admin plan to slash nicotine in traditional cigarettes. Philip Morris International (the cig juggernaut behind Parliament and Marlboro outside the US) has invested heavily in “smoke-free” alts like IQOS heated tobacco devices, which’ve fueled its growth in Europe and Asia. Meanwhile, Altria’s developing an IQOS rival.

  • Now this… NJOY is America’s third most popular e-cig brand, but lags behind competitors like Juul and the Reynolds-owned Vuse. Still, there’s a reason Altria wants it.
THE TAKEAWAY

Pick your friends based on their enemies… Juul and NJOY are both vape makers, but with one major difference: regulators don’t hate NJOY. Juul created a lot of enemies as kids got hooked on its fruit-flavored vapes. Altria’s CEO explained NJOY’s appeal: “This is an authorized product versus a pending product. There are no litigation challenges. The youth usage is minimal.” Altria hopes to gain a foothold in the e-cig market without making too many enemies.

GO(NE)

Do not pass go… Amazon said it’ll close eight of its futuristic Amazon Go convenience stores next month. The company launched its first cashier-less location in 2018, with reported plans to open thousands more. Now Amazon’ll shutter Go stores in NYC, Seattle, and San Francisco, leaving only about 20 open.

  • Panshopticon: Go stores use cameras to track customers as they pull chips and cold brews from shelves. The system automatically adds items to shoppers' digital carts.
  • Just walk away: Amazon used its Go locations as showcases for its “Just Walk Out” tech, which it’s licensed to other retailers like airport news staple Hudson. But its sparse customer page suggests adoption may’ve been limited.

Amazon Go-ing back online… While Amazon said it remains committed to Go, the closure is just the latest step away from its brick-and-mortar push. Last year the biz said it would close 68 physical Amazon Books, Amazon 4-Star, and Amazon Pop Up locations. And last month it said it’s ditching a bunch of Amazon Fresh grocery stores. One possible reason: Amazon suggested it had yet to land on a formula for IRL-store success. Despite its $13B+ purchase of Whole Foods in 2017, Amazon's brick-and-mortar biz represents only 3% of its revenue.

THE TAKEAWAY

Convenience has its (physical) limits... Amazon redefined online shopping by crushing competitors with convenience (think: Prime, next-day delivery) but has struggled to transfer that success to the physical realm. Efforts to streamline grocery trips through splashy tech (picture: palm scans for payment and smart shopping carts) haven't connected with shoppers. They might actually find it more convenient to pull out their physical card than onboard to Amazon’s techy systems.

What else we’re Snackin’

  • Teslow: Tesla cut the prices of its two most expensive models (the S and X) in the US. Elon’s baby has been on a discounting streak since January to rev up demand in the competitive EV market.
  • Swipe: Grindr stock popped after the LGBTQ+ dating app reported higher quarterly revenue and guided for 25% annual sales growth, saying it’ll focus on boosting paid features (think: read receipts, extra swipes).
  • iConn: Foxconn, aka: the company that assembles most iPhones, said its February sales fell 12% from last year as demand for electronics weakens. But Apple’s largest supplier said its China operations were recovering.
  • Shuttergate: Struggling crypto mega bank Silvergate shut down its flagship payments network, which many crypto companies relied on to transfer $$ instantly. Now they’ll need to find alts in a crypto-wary environment.
  • Hired: The US hospitality biz is expanding fast, making up for pandemic-era cuts. As the tech industry continues to shed employees, demand for bartenders, servers, and hotel staff has kept unemployment low.

Snack Fact of the Day

Nearly 60% of US households own an air fryer

Tuesday

  • US Fed Chair Powell testifies before Senate
  • Earnings expected from Squarespace, CrowdStrike, Stitch Fix, Dole, and Dick’s Sporting Goods

Authors of this Snacks own shares: of Amazon, Apple, and Tesla

ID: 2775747

Correction: An earlier version of this newsletter misstated that Tesla cut the prices of its S and Y models. It actually cut the prices of its S and X models.