WSJ News Exclusive | FDA to Order Juul E-Cigarettes off U.S. Market

Uncertainty has clouded Juul since it landed in the FDA’s sights four years ago, when its fruity flavors and hip marketing were blamed for fueling a surge of underage vaping. The company since then has been trying to regain the trust of regulators and the public. It limited its marketing and in 2019 stopped selling sweet and fruity flavors. Juul’s sales have tumbled in recent years.

The FDA has been conducting a review of U.S. vaping products, weighing their popularity with young people against their potential benefits as less harmful alternatives for adult cigarette smokers. All U.S. e-cigarette manufacturers in 2020 were required to submit their products for FDA review to stay on the market.

The FDA in 2020 barred the sale of all sweet and fruity e-cigarette cartridges and hasn’t yet allowed any to come back on the market. The agency has cleared the way for Juul’s biggest rivals, Reynolds American Inc. and NJOY Holdings Inc., to keep tobacco-flavored e-cigarettes on the market. Industry observers had expected Juul to receive similar clearance.

Juul had no immediate comment. The company could pursue an appeal through the FDA, challenge the decision in court or file a revised application for its products.

Juul surged to the top of the U.S. e-cigarette market in 2018, but it has lost some ground to other brands more recently. It slipped to second place behind Reynolds’ Vuse brand in the 12 weeks ended June 4, according to an analysis of Nielsen data by Goldman Sachs analyst Bonnie Herzog.

Last year, Juul reported a net loss of $259 million and an 11% decline in sales to $1.3 billion, according to a disclosure the company made to employees. The U.S. represents nearly all of Juul’s revenue, though its products are also available in Canada, the U.K., Italy, France and the Philippines.

The FDA is separately moving forward on a plan to mandate the elimination of nearly all nicotine in cigarettes, a policy that would upend the $95 billion U.S. cigarette industry and, health officials say, prompt millions of people to quit smoking or switch to alternatives such as e-cigarettes. That rule will take years to implement and tobacco companies could sue to fight it.

An FDA order against Juul would be a blow for Marlboro maker

Altria Group Inc.,

which in 2018 paid $12.8 billion for a 35% stake in Juul. The deal valued Juul at about $35 billion. Since then, Juul’s value has plummeted amid the regulatory crackdowns and declining sales. Altria valued its Juul stake at $1.6 billion as of March 31.

Shares of Altria, which assisted Juul with its FDA application, fell 5% in early Wednesday trading after The Wall Street Journal reported on the expected FDA decision. Altria declined to comment.

Write to Jennifer Maloney at jennifer.maloney@wsj.com