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Juul Scales Back Overseas Expansion

Juul Labs Inc. told staff this week it may exit the South Korean market and has postponed its planned launch in New Zealand, as the troubled e-cigarette company scales back its expansion outside the U.S.

The company aggressively pushed to enter new markets last year, but, in the rush to expand, it made missteps that resulted in embarrassing setbacks, according to current and former employees. In China, for example, online retailers pulled Juul off their sites just days after the company had launched there.

The San Francisco startup is blamed for a surge in underage vaping in the U.S. and is now under investigation by several federal agencies. Its vaporizers and refill pods are currently for sale in 21 countries, including the U.S.

Attempting to improve relationships with regulators at home and abroad, the company’s new CEO, K.C. Crosthwaite, is taking a more methodical approach, a Juul official said. He wants to get clarity on e-cigarette policy before launching in a country rather than afterward, this official said.

In anticipation of a U.S. ban on most flavored e-cigarette cartridges, the company last fall halted U.S. sales of its sweet and fruity flavors. The company did the same in Canada on Tuesday, stopping production of its mango, fruit, vanilla and cucumber refill pods.

“We must earn the trust of society by listening to and working cooperatively with regulators, public health officials” and others, a Juul spokesman said. “We have therefore been reviewing how best to reset local operations and making adjustments on a case-by-case basis.”

Mr. Crosthwaite has scaled back distribution in Israel, where, after Juul launched in 2018, the government imposed new regulations on e-cigarette nicotine strength, packaging and marketing, according to a person familiar with the matter. Last year, he also paused Juul’s launch plans in the Netherlands because the regulatory environment there was unclear, this person said.

On Monday, Juul told more than a dozen New Zealand staff they might be laid off, this person said. In New Zealand, 29% of 14- and 15-year-olds say they have tried vaping at least once, according to a survey funded by the New Zealand government. Such a high youth vaping rate was a factor in Juul’s decision, the person said.

Juul launched in South Korea last May and has its own retail store in Seoul. The company this week told employees in the country that it is considering scaling back operations or closing that business altogether, the person said.

Juul hasn’t been selling as well in South Korea as some of its competitors have. And the vaping market there is relatively small because of sharp restrictions on the levels of nicotine that e-cigarettes may contain. Juul’s refill pods in that country have a 0.7% nicotine concentration compared with 3% or 5% in the U.S.

“Our performance has not met expectations” in South Korea, the Juul spokesman said. “As a result, we need to adjust locally and reset the business…. We remain fully committed to and optimistic about our long-term future in South Korea.”

Write to Jennifer Maloney at [email protected]

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