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JUUL is the Apple of e-cigarettes, but can the American giant succeed in India?

JUUL is the Apple of e-cigarettes, but can the American giant succeed in India?

JUUL is the Apple of e-cigarettes, but can the American giant succeed in India?
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By Ishana Aggarwal  Jun 26, 2019 11:02:07 AM IST (Updated)

While e-cigarettes and vapes have been growing in popularity in recent years, it is the general consensus of users that nothing has been as phenomenal as JUUL.

E-cigarette giant JUUL has announced plans to launch its products in India by late 2019. According to a Reuters report, the company even began hiring new executives in January, hoping to open an Indian subsidiary soon. A rational next step in expanding the brand’s growing reach, the company’s plan to launch in India comes as no surprise since the country with 106 million adult smokers presents a highly lucrative potential market for e-cigarettes.

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E-cigarettes were originally developed as a viable alternative to cigarettes to help smokers quit, reducing the risk of lung disease and cancer. However, in addition to achieving this objective, e-cigarettes did something else – they enabled non-smokers, especially the youth, to get hooked on to the highly addictive chemical, nicotine. The market for these products has been estimated at $15.6 million in India and is expected to grow swiftly at an alarming rate of 60 percent per annum, according to a Euromonitor International report.
While JUUL has not officially launched in India, it has already found a rapidly expanding market in the youth of cities such as New Delhi and Mumbai.
“JUUL has become a social statement, especially in Delhi,” said Gurprasad, owner of Vape Wali Shop, a store that retails e-cigarette products. The youth in Delhi are extremely attracted to the reputation associated with the JUUL brand, he said. On one website, the JUUL device is priced at Rs 4190, and Gurprasad believes that owning a JUUL is nothing short of a status symbol.
The product is being sold in vape stores all across the capital from Greater Kailash to Model Town and remains a common sight in upscale nightclubs and bars. A number of online retailers have joined the game as well with websites such as VapeStop and LiteJoy shipping the product to India.
The JUUL revolution in the US
While e-cigarettes and vapes have been growing in popularity in recent years, it is the general consensus of users that nothing has been as phenomenal as JUUL. The JUUL brand is valued at $16 billion – more than the GDP of Mozambique. In fact, the JUUL brand has completely overtaken the e-cigarette market, possessing a 72 percent market share in 2018.
Data show that about one in ten Americans between the ages of 18 and 21 have used JUUL at least once in their lives in 2018. Compare this to the meagre 2.6 per cent of US population that vaped in 2013, before the advent of JUUL.
While the sensational product can be spotted in the hands of American high-school and college students most commonly, it has found an audience everywhere, with even Hollywood celebrities such as Game of Thrones’ fame Sophie Turner sporting JUUL in Instagram posts. This e-cigarette has preserved its reputation as the trendiest alternative to smoking for years.
A perfectly designed addiction 
It won’t be wrong to say that JUUL has done to vaping what Gutenberg’s printing press did to the practice of reading – it has revolutionised vaping in the United States. Why?
The primary reason behind JUUL’s success lies in its superior design and functioning. With its tech-based aesthetic, futuristic charm, and discreet appearance, JUUL appeals to a younger generation in a manner that no other vape has been able to replicate. It looks more like a flash drive with its slim, metallic body and angular edges. Funnily enough, it can be charged by simply plugging it into its charger that fits in the USB ports of most laptops and gadgets.
The device works when the metallic battery heats up a cartridge (colloquially known as a ‘pod’) containing a liquid mixture of nicotine salts and other solvents to create flavoured vapours that deliver nicotine. Its design renders it discreet and convenient – it doesn’t leave behind any lingering scent and it is small enough to be concealed easily. Further, it is available in a wide array of highly addictive flavours such as mango, cucumber and mint.
Additionally, the youth in our country have been brought up on aggressive anti-smoking campaigns, well aware of the health risks associated with smoking cigarettes. Many believe that JUUL is a healthier alternative, adding to its increasing popularity
“With the increased pace of life in India, the stress we face has only increased. While many people end up smoking cigarettes to cope with that stress, cigarettes can have a multitude of adverse effects. I believe that JUUL is a better alternative that provides similar benefits without the risk of diseases like cancer,” said Manav*, a 20-year-old student in Delhi.
If JUUL manages to overcome the legal hurdles that currently obstruct its entry into the Indian markets, its highly addictive design is likely to garner significant popularity with the Indian youth.
Legal hurdles to JUUL’s India entry
Shortly after JUUL announced its plans to launch in India in January 2019, India’s Health Secretary, Preeti Sudan, wrote a letter to the federal commerce secretary in February that could seriously hurt the company’s aspirations. Her letter said that necessary measures should be taken to prevent the entry of e-cigarette products in India. “Novel products such as JUUL are harmful and addictive and could potentially undermine our tobacco control efforts,” she wrote. Identifying the serious risk it poses to youth, Sudan wrote that “the young generation would be particularly vulnerable to such products”.
“Instead of banning e-cigarettes, the government should first ban cigarettes and gutka if it is so concerned about public health. Tobacco products are certainly more harmful than vapes,” said vape store owner Gurprasad.
The most significant obstacle to JUUL’s entry into Indian markets is, perhaps, the cloud of uncertainty that shrouds the legal status of vaping products in our country. The primary source of this confusion is a discord between the health ministry and the trade ministry. In August 2018, the health ministry said that these devices pose a “great health risk to the public at large” and asked states to halt the production and sale of e-cigarettes. Currently, at least twelve states including Punjab, Maharashtra, Karnataka, Kerala, Bihar and Uttar Pradesh have imposed an e-cigarette ban.
However, in April this year, the trade ministry announced that there is no legal basis to stop the import of e-cigarettes in India. Following this announcement, on June 17, PTI reported that The Drugs Technical Advisory Board of India has approved a proposal to classify e-cigarettes as ‘drugs’, banning their sale and imports.
“If this report is to be believed, then the central government has the power to impose a complete ban on the import and sale of e-cigarettes under Section 26 of the Drugs and Cosmetics Act,” said Krishna Sarma, Managing Partner at the Corporate Law Group. Disagreeing with the potential ban, Sarma noted that while e-cigarettes contain the addictive chemical nicotine and are not the safest alternative, they are still less harmful than cigarettes. In addition to nicotine, cigarettes also contain carcinogenic substances like tar, thereby making them far more toxic as compared to vapes.
The import game
Ostensibly, the companies benefitting the most from these regulatory uncertainties are leading cigarette manufacturers in India, ITC and Godfrey Phillips. Banning the import and sale of e-cigarettes, especially the JUUL, saves these companies from the looming threat of disruptive competition.
So, how does the JUUL presently enter Indian markets, given the murky waters that surround its legal status? According to a source intimately aware of the matter, vaping products such as the JUUL are imported disguised as 'devices' and do not enter Indian customs under the category of e-cigarettes. This loophole allows for the import of JUUL, giving it an easy entry to vaping stores scattered across New Delhi and Mumbai, the source told CNBC TV-18, requesting anonymity.
Still more barriers
Another impediment to JUUL’s plans of taking over the Indian cigarette market lies in its cost. While using JUUL is financially comparable to smoking in the US, in India it is almost five times as expensive. For this reason, JUUL is unlikely to replace cigarettes for the masses, though it will find a niche market in urban centres.
Finally, the health risks associated with vaping also invite polarising reactions with contradicting research and studies published frequently. Some studies, including one by the American Journal of Respiratory and Critical Care Medicine, say that a single session of vaping delivers more nicotine that smoking a cigarette and increases the risk of lung diseases including bronchitis and asthma. On the other end of the spectrum, other research, including a study conducted by Public Health England states that e-cigarettes are 95 percent safer than tobacco products and do not pose any major health risks to individuals.
The future of JUUL in India
So, what’s the truth about JUUL? Is it a viable alternative to cigarettes that will help millions of adult smokers kick the habit for good, shielding them from cancer? Or, is it a gateway device to smoking that will get millions of children hooked onto nicotine? Is it an illegal drug that causes lung disease? Or, is it a legal product that is safe for health?
The debate around these questions will eventually decide the public policy and consumer sentiment that will end up shaping the future of JUUL in India.
*Name has been changed upon request.
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