NJOY, one of the biggest manufacturers of electronic cigarettes has filed for Chapter 11 bankruptcy.
A lot of people don’t realize how big of a role that NJOY has played in keeping e-cigs available to vapers. In 2010, they fought the FDA in court to prevent vapor products from being classified as an unregulated drug delivery device. After the FDA lost this battle, they began the process of trying to regulate vapor products as tobacco products, which is where we are today.
But without NJOY, we very likely wouldn’t have any of the vapor products we have today. We owe a lot to them. They have continued to support lobbying efforts for vapor products, supporting trade organizations and played a big part in consumer advocacy.
Something else a lot of people don’t realize is that NJOY is an independent company based in the United States. They’ve also always prided themselves on not being owned by a tobacco company. This is a company worth supporting and that’s why I talk so highly of them all the time.
NJOY hit it big when the vapor industry really started to take off. They received funding that valued them at $1 billion in 2014.
According to their bankruptcy filing, they now owe more than $32 million and have since accumulated a deficit of $234.5 million.
One of the claims stated in the filing was that NJOY’s King product, which is a disposable cigalike, went from $93 million in sales in 2013 to just $7.4 million in 2015.
So what happened between 2013 and now?
Some people think it’s because new and better products starting hitting the market and people weren’t as interested in cigalikes anymore. And in that time, thousands of new manufactures and stores started doing business, eating into NJOY’s profit. NJOY didn’t evolve much over the last few years and that could have played a part in their demise.
They tried entering the open-tank market with the release of the Artist Collection e-juice, but it seems that it wasn’t enough.
Other people believe that the FDA’s recent rulings on August 8th might have played a role. Dr. Michael Siegel pointed out on his blog that NJOY had substantial expenses in preparing for the FDA deeming regulations. While that probably was quite expensive for NJOY, it looks like there were many other issues that resulted in their large amount of debt, namely the failure of the King product, but also sponsorships and legal fees.
So what does this mean for NJOY?
Well, chapter 11 bankruptcy usually means that the company hopes to restructure and continue doing business on a smaller scale. But from what I’ve been reading, Chapter 11 an extremely complicated process and sometimes ends up moving into Chapter 7 bankruptcy and liquidation of the assets.
I hope it doesn’t come to that.
I’m sad to hear this news and Ireally hope that NJOY makes it out of this. I’m a big fan of their company and ethics. I also love their NJOY Daily cigalikes, their pre-filled tanks, and their Artist Collection e-juice.
My biggest fears are that they will either go out of business or sell off the business to big tobacco. Let’s hope for the best for NJOY.