Juul/CNNMoney
Now playing
01:59
Juul announces CEO Kevin Burns to be replaced
Four astronauts from three countries are preparing to leave Earth this week aboard a SpaceX Crew Dragon capsule, marking the third-ever crewed flight for Elon Musk's company, and the first from SpaceX to make use of a previously flown rocket booster and spacecraft. CNN's Rachel Crane reports from Cape Canaveral, Florida.
NASA TV
Four astronauts from three countries are preparing to leave Earth this week aboard a SpaceX Crew Dragon capsule, marking the third-ever crewed flight for Elon Musk's company, and the first from SpaceX to make use of a previously flown rocket booster and spacecraft. CNN's Rachel Crane reports from Cape Canaveral, Florida.
Now playing
03:00
See SpaceX rocket launch to International Space Station
Consumer Reports
Now playing
01:38
Watch Consumer Reports trick Tesla's Autopilot system
Now playing
03:14
ConsenSys CEO: Crypto is crossing the chasm into popular culture
A pedestrian walks by a now hiring sign at Ross Dress For Less store on April 02, 2021 in San Rafael, California. According to a report by the Bureau of Labor Statistics, the U.S. economy added 916,000 jobs in March and the unemployment rate dropped to 6 percent. Leisure and hospitality jobs led the way with 280,000 new jobs followed by restaurants with 176,000 jobs and construction with 110,000 new positions. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
A pedestrian walks by a now hiring sign at Ross Dress For Less store on April 02, 2021 in San Rafael, California. According to a report by the Bureau of Labor Statistics, the U.S. economy added 916,000 jobs in March and the unemployment rate dropped to 6 percent. Leisure and hospitality jobs led the way with 280,000 new jobs followed by restaurants with 176,000 jobs and construction with 110,000 new positions. (Photo by Justin Sullivan/Getty Images)
Now playing
01:49
Weekly jobless claims fall to pandemic low
e-skin wearable health someya spc intl_00001205.png
e-skin wearable health someya spc intl_00001205.png
Now playing
03:09
Electronic skin could track your vital signs
NEW YORK, NY - SEPTEMBER 07:  Venus Williams speaks onstage at theCURVYcon Powered By Dia&Co on September 7, 2018 in New York City.  (Photo by Slaven Vlasic/Getty Images for theCURVYcon)
Slaven Vlasic/Getty Images for theCURVYcon
NEW YORK, NY - SEPTEMBER 07: Venus Williams speaks onstage at theCURVYcon Powered By Dia&Co on September 7, 2018 in New York City. (Photo by Slaven Vlasic/Getty Images for theCURVYcon)
Now playing
03:03
Venus Williams: Major tournaments can succeed this summer
AirTag
Apple
AirTag
Now playing
01:17
See AirTag, Apple's new device for tracking your lost stuff
John Oliver addressed the recent fatal police shootings of Daunte Wright and Adam Toledo in a passionate monologue on "Last Week Tonight."
Last Week Tonight/HBO
John Oliver addressed the recent fatal police shootings of Daunte Wright and Adam Toledo in a passionate monologue on "Last Week Tonight."
Now playing
01:38
John Oliver to White Americans: 'March in the streets'
WASHINGTON, DC - DECEMBER 12: U.S. President Donald Trump departs on the South Lawn of the White House, on December 12, 2020 in Washington, DC. Trump is traveling to the Army versus Navy Football Game at the United States Military Academy in West Point, NY. (Photo by Al Drago/Getty Images)
Al Drago/Getty Images
WASHINGTON, DC - DECEMBER 12: U.S. President Donald Trump departs on the South Lawn of the White House, on December 12, 2020 in Washington, DC. Trump is traveling to the Army versus Navy Football Game at the United States Military Academy in West Point, NY. (Photo by Al Drago/Getty Images)
Now playing
02:18
Trump said electing Biden would crash the markets. It didn't
Scene video following a crash involving a Tesla Saturday night in Spring, TX
Scott Engle
Scene video following a crash involving a Tesla Saturday night in Spring, TX
Now playing
01:09
Fatal Tesla crash had no one in the driver's seat, police say
CNN
Now playing
03:22
Bank of America CEO reveals his top worry about the economy
US Navy
Now playing
01:28
Pentagon confirms UFO video is real, taken by Navy pilot
marte fotos volcan olympus mons sistema solar hope ultravioleta perspectivas mexico_00000411.png
marte fotos volcan olympus mons sistema solar hope ultravioleta perspectivas mexico_00000411.png
Now playing
04:12
Why we are going to Mars
Twitter | @brady9dream
Now playing
02:10
Pet owners pitch their pups to be dog brew's 'Chief Tasting Officer'
LONDON, ENGLAND - DECEMBER 07:  A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England. Cryptocurrencies including Bitcoin, Ethereum, and Lightcoin have seen unprecedented growth in 2017, despite remaining extremely volatile. While digital currencies across the board have divided opinion between financial institutions, and now have a market cap of around 175 Billion USD, the crypto sector coninues to grow, as it continues to see wider mainstreem adoption. The price of one Bitcoin passed 15,000 USD across many exchanges today taking it higher than previous all time highs.  (Photo by Dan Kitwood/Getty Images)
Dan Kitwood/Getty Images
LONDON, ENGLAND - DECEMBER 07: A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England. Cryptocurrencies including Bitcoin, Ethereum, and Lightcoin have seen unprecedented growth in 2017, despite remaining extremely volatile. While digital currencies across the board have divided opinion between financial institutions, and now have a market cap of around 175 Billion USD, the crypto sector coninues to grow, as it continues to see wider mainstreem adoption. The price of one Bitcoin passed 15,000 USD across many exchanges today taking it higher than previous all time highs. (Photo by Dan Kitwood/Getty Images)
Now playing
03:10
Bitcoin has an energy problem
(CNN Business) —  

Altria’s big investment in Juul isn’t looking so hot now amid growing concerns about health risks tied to vaping and a broad regulatory crackdown on e-cigarettes. But the tobacco giant is unlikely to give up on Juul anytime soon.

If anything, the decision by Juul to replace CEO Kevin Burns with former Altria (MO) executive K.C. Crosthwaite is a sign that the US-based seller of Marlboro still considers vaping a growth market that will help offset the decline in traditional tobacco cigarettes.

The data supports that. According to figures from market research firm Nielsen, electronic cigarette sales in the US nearly doubled to $4.5 billion in the 52 weeks ending August 24. Tobacco cigarette sales fell 3% to $59.3 billion during the same time period.

Nielsen doesn’t break down sales by specific company. But Wells Fargo analyst Bonnie Herzog estimates that with about 75% market share, Juul is the clear leader. That puts it well ahead of Vuse, owned by British American Tobacco (BTAFF) subsidiary Reynolds American, and Imperial Brands (IMBBF)-owned blu.

Altria is expected to continue focusing on Juul as a way to generate more sales.

Experts said Altria is also savvy enough to realize that working with the government makes more sense than fighting it. The Food and Drug Administration is looking to crack down on underage vaping by banning flavored e-cigarettes.

New Juul CEO has more experience with regulators

Because Altria has decades of expertise dealing with the FDA and other federal as well as state regulators, the company may take further steps to ease any concerns about addiction and targeting younger customers.

“We expect Mr. Crosthwaite to focus on damage control immediately – adopting a more conciliatory tone around the risks of the product and controlling the message in the media about the product and brand,” said Stifel analyst Christopher Growe in a report.

That’s a skill set that Burns, who previously was chief operating officer at yogurt maker Chobani and worked for more than a dozen years as a partner at private equity firm TPG Capital, may not have possessed.

Altria CEO Howard Willard admitted as much in a speech at The Global Tobacco & Nicotine Forum conference in Washington on Wednesday.

“This is a pivotal moment for the industry and strong leadership and action are urgently needed,” Willard said, adding that “I’ve worked closely with K.C. at Altria for many years and am confident in his leadership and integrity and that he will help Juul urgently confront and reduce underage vaping.” Willard said.

Along those lines, Juul also agreed this week to halt “all broadcast, print and digital product advertising in the US.”

But Altria has other non-traditional products in store even if there is a further crackdown on Juul and vaping.

Altria to remain focused on heated tobacco and cannabis

The company still intends to go ahead with plans to market the iQOS e-cigarette from Philip Morris (PM) in the US despite the fact that Altria and Philip Morris (PM) called off merger talks Wednesday. (iQOS cigarettes, unlike vaping pens, still contain tobacco but they heat it instead of burning it.)

Altria also spent $1.8 billion for a 45% stake in Canadian cannabis company Cronos (CRON) last year.

Stifel’s Growe added that regardless of what happens in the US with Juul, he thinks Juul still has the potential to gain share overseas, even though India recently banned vaping and China is looking to put more regulations on it.

“We believe [Crosthwaite] will focus intently on international growth which looks muddy at this time, but remains a strong growth potential for the brand,” Growe said.

A lawyer that is suing Juul, Altria and Philip Morris for false advertising said he thinks Altria isn’t going to throw in the towel on Juul just yet either – even if the value of the company’s 35% stake in Juul, originally worth nearly $13 billion, may have to be reduced.

“Juul claims that it’s not Big Tobacco. But they are the same thing. Getting rid of Burns and hiring someone from Altria is not surprising. It was inevitable,” said Jonathan Gdanski, an attorney at Fort Lauderdale-based Schlesinger Law Offices.