Dividends and Juul to pay $440 million in teen vaping probe

In the world of marketing, the idea is to capture the consumer when they are relatively young and have them for them as a customer for a long time, there is a term called Customer Lifetime Value and through big data, companies are measuring it more and more. In some cases, the type of customer service will depend on the number. In the world of cigarettes, capturing a consumer when they are young, given some of the chemicals in the cigarette are addictive will ensure even though there are fewer smokers, the ones that do will smoke a lot.

In the era of fewer smokers, cigarette companies turned to something else and the something else was vaping. Vaping has a a high nicotine count which tends to mean those who vape will vape on a regular basis. This is okay for adults, but what should the rules for teens be?

In an article by Matthew Perrone and Dave Collins of the Associated Press, Juul labs has agreed to pay $440 million to settle a 2 year investigation by 33 states to the marketing of vaping products to teens. The money will be paid out over a period of 6 to 10 years with some going to education. The settlement total amounts to 25% of Juul’s US sales.

Juul had a variety of flavors of its vaping including fruit and candy which were clearly aimed at the teen market. Also included was restrictions on where Juul products can be placed in stores, age verification on all sales, limits to on line and retail sales, not using cartoons in advertising, not paying social media influencers and using billboards where 85% of the audience is adults.

Linking to dividend paying stocks, while Juul was doing its advertising, many teens tried and likely continue vaping and more importantly the company was sold to Philip Morris cigarette company. Over the past 2 years, Phillip Morris wrote down their investment but still sells vaping.

Linking to dividend paying stocks, all companies want to do what is legal and profitable and sometimes the closer to the line, the more profitable the product is. How close to the line of legal a company goes is often what determines its morals and ethics. The ideal is profitable companies stay well within the line of being legal and are sued for normal elements. Lawsuits consume time and energy and generally companies have to give up most of what they made by going across the line. In your investments, how active is the legal department?

There are more questions than answers, till the next time – to raising questions.

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