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The new Juul chief sent to ‘douse fire’ of vaping crisis

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He has spent his entire 22-year career working for a tobacco company but KC Crosthwaite is keen to demonstrate he is no Marlboro Man.

As he resigned from Altria, which makes the top-selling tobacco brand, to take charge this week of Juul Labs, the vaping company that has pledged to render cigarettes obsolete, he recognised that the start-up’s employees “may have questions” about his background.

“The answer is simple,” Juul’s incoming chief executive wrote in a memo to staff. “For over a decade, I have believed that the future lies with alternatives to combustible cigarettes.” He added: “On every level — personally and professionally — I believe in this company’s mission.”

Questions about Juul’s links to Altria, which had already taken a 35 per cent stake, are among many that Mr Crosthwaite is facing as he takes charge of a company whose explosive growth is suddenly under threat.

Fifty-five years since the US surgeon-general estimated that smokers were almost 10 times as likely to die of lung cancer as the rest of the population, e-cigarettes — once lauded as a less harmful alternative — are at the centre of their own public health crisis.

“He has a very tough job because he has to douse the fire,” said Jonathan Fell, co-founder of Ash Park Capital, a consumer goods investment house that holds Altria stock.

US President Donald Trump has threatened an outright ban on flavoured versions of the devices that have been blamed for encouraging underage vaping and getting school pupils addicted to nicotine. US medical experts have tied hundreds of cases of lung damage to e-cigarettes. At least 12 deaths have been reported.

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While public health officials have not blamed Juul for the mysterious illness, as the country’s most popular brand it is nevertheless in the middle of the regulatory crosshairs.

“Juuling” has become a verb, synonymous with vaping. Campaigners seized on Mr Crosthwaite’s appointment as evidence that the San Francisco-based company is just another cog in the Big Tobacco machine.

Yet his supporters say deep experience managing often delicate regulatory relationships is just what is needed for youthful Juul, formerly run by ex-Chobani yoghurt executive Kevin Burns.

Mr Crosthwaite’s job move was certainly the talk of the Global Tobacco & Nicotine Forum — the “Davos” of the sector — in Washington this week.

Originally from New York, KC — short for Kevin Carlyle — joined Philip Morris, as Altria was previously known, in a sales role in 1997 after attending Milwaukee’s Marquette University. Over the next decade he worked his way up the US business with positions including district manager and director of new and smokeless products under the Marlboro brand.

After a stint as marketing director of John Middleton, the cigars and pipe tobacco unit, he moved to Zurich for his first international assignment at Richmark, a non-combustible start-up Altria launched with Okono, an affiliate of a nicotine chewing gum company.

By 2013, he was back in Richmond, Virginia, overseeing the company’s core product as general manager of Marlboro. After just over a year as chief executive of Philip Morris USA, Altria chief executive Howard Willard picked Mr Crosthwaite in May 2018 to be the group’s chief growth officer — an atypical job title in an industry whose main product is in terminal decline.

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Altria’s $13bn agreement to take a stake in Juul followed by the end of the year. Mr Crosthwaite became an observer on its board, as well as a director of Cronos, the cannabis company in which Altria also invested.

The Juul deal has brought questions from Altria investors. The price tag raised eyebrows when it was announced last December and the recent furore over e-cigarettes has only heightened scrutiny of the decision.

Uncertainty over the future of Juul was a big reason for the breakdown, announced within minutes of Mr Crosthwaite’s job change, in $200bn merger talks between Altria and Philip Morris International.

Wall Street views another project in which Mr Crosthwaite was closely involved more favourably: Altria’s partnership with its former stablemate PMI to bring IQOS, a different type of product that aims to replace traditional cigarettes, to the US.

Juul credits Mr Crosthwaite for navigating Washington’s regulatory labyrinth and helping to convince officials to grant regulatory approval to the “heat-not-burn” device, which is due for an imminent US launch.

An early riser, often seen in the gym at 6am, the 44-year-old is also fond of golf but spends most of his time outside work with his family in Richmond, Virginia. Friends describe him as a hardworking straight shooter.

As he seeks to balance Altria’s interests with those of Juul’s non-tobacco shareholders, the new chief executive will be hoping he can forge a similar reputation among the company’s varied stakeholders.

Howard Willard, Altria’s chief executive, said the new Juul chief took a “collaborative and co-operative approach” to his work, “which I think is going to be necessary”. Mr Crosthwaite was, he added, “well equipped to help them navigate what I think anybody would say is a challenging environment”.

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Via Financial Times

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