With the rapid decline in sales of vaping products in the US and unclear regulations in the near future, the vaping world was issued another huge hit with the closure of one of the original vaping brands, V2.
VMR products are best known for their V2 brand, which includes V2 Cigs and V2 Pro, offering a number of simple e-cigarette solutions for new vapers. The last couple of years have been particularly hard for VMR accumulating significant losses mounting up to $25,281,000.
VMR was quick to point out blame, mentioning that uncertainty of regulation in the industry, and the fast-changing innovation of the products with huge cash-rich companies, along with the new tariffs on China-based manufacturing all contributed to the downfall of VMR products.
Juul was the only willing acquirer of the brand, offering a $75,000,000 deal after long legal discussions by the two parties. This $75 million offering covers all costs for the disposal of the brand which includes:
Based on the above debt, the total that VMR products are likely to receive is less than $31,352,380.
Huabao International Holdings Limited who own VMR products say that their initial investment of $25 million for a 51% share has just about broken even thanks to this deal and say that it is in the best interest of the brand and the company’s shareholders.
Check out the full press release of the disposal of VMR Products.
Unfortunately, this has some bad news for VMR Products current customers, they do state that all orders received before closure will be honored and you should receive your order. However, you will not be able to buy directly from them for the foreseeable future.
VMR do however ship to a number of wholesalers who also offer products and all orders for the stock will also be honored, but again no future orders. So existing customers may find the V2 products from other retailers for a limited time.
One such supplier is Buy V2 Cigs which is based in the UK who state they have a huge stock base and willing to ship to the US. They were responsible for all the V2 Cig sales in the UK and continue to serve their customers.
First impressions were that Juul was aiming for a monopoly brand within the US, but following the immediate closure of VMR products and the disposal of their products quickly closed this argument.
Juul is, in fact, looking at the larger market in China. Huabao, the sellers of VMR Product is approved to sell vapor products to the Chinese State Tobacco Monopoly Administration (STMA), a Chinese government agency responsible for enforcing the tobacco monopoly in China and more importantly has the oversight of the China National Tobacco Corporation which has a virtual monopoly in serving the country's customer base of 350 million smokers.
Juul believes having government-sanctioned access to this market will be hugely profitable in the future.