By Walt Bogdanich and Michael ForsytheThe consulting firm’s work with opioid makers is well known, but for decades McKinsey worked with Big Tobacco and has also advised Juul, the e-cigarette company.
McKinsey & Company in New York City. The firm’s work with opioid makers is well known, but its work with cigarette and vaping companies has escaped public scrutiny.Credit...John Taggart for The New York Times
When McKinsey & Company, the global consulting giant, sat down with executives of Juul Labs in late 2017, the vaping company was well on its way to becoming a sensation among teenagers eager to latch on to the latest fad — inhaling flavored, supercharged nicotine vapor through a sleek new device easily hidden from parents and teachers.
With grand ambitions, Juul needed marketing advice from McKinsey, the most respected voice in consulting, to help it on its way to a valuation greater than the Ford Motor Company. For less than two years of work, McKinsey billed Juul $15 million to $17 million.
But the client came with a reputational risk, and McKinsey preferred to keep the arrangement secret. Although its product was conceived as a way to help adults stop smoking, Juul stood accused of marketing nicotine to teenage nonsmokers, addicting a new generation in much the same way the cigarette industry hooked their parents. This month, several years after McKinsey took the company as a client, Juul agreed to pay $438.5 million to settle government investigations into its marketing practices, though it did not acknowledge wrongdoing in the settlement. Those marketing practices had included using young models, social media and flavored nicotine.
McKinsey, which was not involved in the settlement, said its work with Juul had focused on youth vaping prevention. That work was just the latest in a decades-long history of consulting for companies that sell addictive products. The full story of McKinsey’s role in advising these companies — while also consulting for their government regulators — has never been told.
