Juul CEO Kevin Burns Steps Down Amid Growing Vaping Health Crisis
SAN FRANCISCO (CBS SF/CNN) --- San Francisco-based Juul co-founder and CEO Kevin Burns stepped down Wednesday and a major tobacco industry merger called off amid a growing vaping health crisis and bans on e-cigarettes.
Burns will be replaced by K.C. Crosthwaite, who had been chief growth officer at tobacco company Altria, a major investor in Juul.
In that position, Crosthwaite oversaw expansion into alternatives to traditional cigarettes, and played a key role with commercial and regulatory efforts related to the US launch of iQOS, a device that heats tobacco rather than burning it.
The embattled company also said Wednesday it has a new marketing strategy: It will suspend all TV, print and digital ads and it will stop some of its lobbying efforts. Juul had been funding a major effort to defeat a San Francisco ballot measure targeting underage vaping.
The White House has joined the battle against the sale of flavored e-cigarettes.
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According to a plan proposed by the Food and Drug Administration two weeks ago, the government will temporarily ban non-tobacco-flavored e-cigarette products such as mint and menthol, which many have argued are geared toward teens.
The Centers for Disease Control and Prevention has issued its support for the new regulations. CDC director Robert Redfield said in a statement that the FDA rules are "an important step in response to the epidemic of e-cigarette use among our nation's youth, and will help protect them from a lifetime of nicotine addiction and associated health risks."
The San Francisco-based company said it was committing to fully support and comply with any new federal policy related to vaping products.
Last week Walmart, the nation's largest retailer, announced it would no longer sell vaping products.
"I have long believed in a future where adult smokers overwhelmingly choose alternative products like Juul," said Crosthwaite. "Unfortunately, today that future is at risk due to unacceptable levels of youth usage and eroding public confidence in our industry. Against that backdrop, we must strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate."
Juul was founded by Adam Bowen and James Monsees, and was incorporated in 2015. Burns became CEO after having previously worked as president and chief operating officer of Chobani.
"Kevin transformed our start-up into a global business, and we are incredibly grateful for his commitment to and passion for our mission," said Bowen and Monsees.
Meanwhile, tobacco giants Altria and Philp Morris, which were once one company, have ended their discussions to reunite in a colossal merger that could have been worth more than $200 billion.
Shares of Philip Morris, which sells cigarettes internationally and owns the iQOS e-cigarette brand, rose more 5% in premarket trading following the news while Altria, which sells Marlboro and other tobacco brands in the US and owns a nearly 35% stake in Juul, was up nearly 3%.
Both tobacco companies are grappling with how to rejuvenate sales growth at a time when a growing number of cigarette smokers around the world are quitting because of the well-documented links to cancer and heart disease.
The hope was that e-cigarettes would rejuvenate sales at a combined company.
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