Altria-Juul Tie-Up News Puts Consumer Staple ETFs In Focus

Per a Wall Street Journal report on Nov 28, Altria Group Inc (MO - Free Report) is in talks to acquire a minority stake in the e-cigarette company Juul. Altria said it doesn’t believe in responding to "rumors and speculation" while Juul denied the comment. Juul was valued at about $15 billion in the latest round of fundraising. Shares of Altria rose 1.8% on Nov 29.

Altria is a tobacco giant, known for the Marlboro brand in the United States. The company has its own e-cigarette alternatives in the United States, like MarkTen and Green Smoke. It is also keenly awaiting approval from the concerned authorities to market IQOS, a “heat-not-burn” product which has been developed by Philip Morris International Inc (PM).

Juul’s performance has been quite impressive in the e-cigarette space. While Altria’s e-cigarette products only account for a small share of its $25.6 billion revenues, Juul happens to be a frontrunner in the $3 billion e-cigarette market, having a 75%share.         

Juul’s popularity has been growing over the past year. However, the latest policies coming from the regulators could weigh on the operations of Juul. This is because Food and Drug Administration Commissioner Scott Gottlieb recently had threatened that e-cigarettes will be pulled out of the market if the agency’s new limits on the sale of fruity flavors do not lead to a slowdown in the rapidly increasing consumption among teens.

The tobacco industry has been showing signs of cooling. In 2017, cigarette smoking fell to its lowest point in its entire history. The industry seems to be in search of some kind of revival as Morningstar analyst Philip Gorham, suggests more spending on the side of companies to manufacture next-generation nicotine products.

Whatever the case, against the backdrop of a likely Altria-Juul deal, we highlight ETFs in detail that provide significant exposure to the company:

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