• by Steve Ellwanger , March 6, 2023

It’s back to the future for tobacco giant Altria Group as it makes its fourth attempt to gain an enduring share of the e-cigarette market with the planned acquisition of the NJOY product portfolio.

Altria said today that it will pay a hefty $2.75 billion—and and potentially another $500 million—for NJOY Holdings Inc.

“We appreciate management’s desire to participate in the $7 billion [vaping] category, though we question the multiple paid—which we view as rich for such a small brand,” analysts at TD Cowen noted.

Given the NJOY deal and Altria’s dismal history with Juul Labs Inc., Altria is prepared to invest more than twice that $7 billion for a meaningful foothold in e-cigarettes.

In 2018, Altria paid $12.8 billion for a 35% stake in Juul. But given the costs of lawsuits accusing Juul of targeting youths for its vape devices and the impact litigation has had on Juul’s market share, Altria recently wrote down the value of its investment to $250 million.

Last week, Altria swapped its take in Juul for intellectual property rights to some of Juul’s heated-tobacco prototypes.

NJOY has an edge in e-cigarettes because it has received six of the 23 Premarket Tobacco Product Applications (PMTA) issued thus far by the U.S. Food and Drug Administration.

PMTAs apply to vape products that were already on the market before the FDA was given the authority to regulate them in 2016.

The purpose of requiring PMTAs is to ensure that devices like e-cigarettes, or vapes, are a safer alternative than cigarettes but do not introduce a new generation to possible nicotine dependence.

In addition to its investment in Juul, Altria also acquired vape marketer Green Smoke Inc. and launched its own brand called MarkTen—neither of which were successful in the company’s walkup to the Juul investment.

The additional $500 million that Altria might pay as part of the NJOY deal is contingent on FDA approval of two NJOY Ace menthol pods and two additional Ace variants.

In the two-week period ended Feb. 11, British American Tobacco’s VUSE was the leading e-cigarette brand, with a 41.4% dollar share of the U.S. market in channels tracked by NielsenIQ.

In second place was Juul with 26.5%, and then NJOY with 2.7%—down from 8.2% in October of 2019.