Editorial Coverage: An estimated 17% of the world, or 1.3 billion
people, use tobacco, creating a global tobacco market that approached one
trillion dollars in 2020. Given all of the health risks
associated with smoking, a significant portion of those tobacco
users are looking for other smoking options, alternative that offer
a smooth and satisfying tobacco-free and nicotine-free experience
that tastes as well as or better than traditional tobacco products.
For many, eliminating nicotine is a priority. Addressing this
problem head on and carving out a new market niche,
TAAT(TM) Lifestyle & Wellness Ltd. (CSE: TAAT) (OTCQB:
TOBAF) (Profile) recently
launched TAAT, a nicotine-free and tobacco-free cigarette,
available in three flavors: Original, Smooth and Menthol. The
retail launch included a comprehensive unveil in Ohio, and an
e-commerce site went live last week. The company is reshaping the
smoking experience by offering a smokable alternative. TAAT is
looking to grab significant shelf space alongside the big tobacco
oligopoly of Philip Morris
International Inc. (NYSE: PM), Altria
Group Inc. (NYSE: MO) and British
American Tobacco Industries p.l.c. ADR (NYSE: BTI) as
well as Chinese vaping giant RLX
Technology Inc (NYSE: RLX).
- TAAT looking to capture a sizeable share of the $100-plus
billion U.S. tobacco market.
- The Beyond Tobacco(TM) base material undergoes patented 14-step
refining process to taste, smell and smoke like tobacco.
- TAAT CEO Setti Coscarella, CRO Tim Corkum bring decades of
tobacco industry experience after serving in leadership roles at
Marlboro maker Philip Morris.
- TAAT has recently been named to CSE25(TM) as one of the biggest
CSE Composite Index companies by market capitalization.
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Bringing a Substitution Model to Smoking
Health and wellness has become a top priority in today’s world,
creating a global climate of consumers clamoring for choices that
offer the same experiences they’ve come to enjoy but with different
ingredients. This is on full display with the surging popularity of
alternative food and beverages that create the same feeling that
one is accustomed with only a change in ingredients. Today, burgers
and seafood look, smell and taste like hamburger and crabmeat,
respectively, while being made from plants. Zero percent alcohol
wine and beer that cut out traditional ingredients such as gluten
are so refined that they can fool even the most discerning palates
of alcohol connoisseurs.
That same sentiment is carrying over to the world of tobacco,
where enthusiastic adult smokers are eagerly looking for different
options. Many want tobacco-free and nicotine-free alternatives;
however, they also seem to prefer the sensation and experience of a
Same Format, Different Ingredients Model
& Wellness Ltd. (CSE: TAAT) (OTCQB: TOBAF) has brought the
“same format, different ingredients” model to the smoking market
like no one before. With senior leadership coming directly from big
tobacco, the life sciences company has developed its products to
closely replicate a conventional tobacco cigarette while changing
the composition so it doesn’t include tobacco.
Based on consumer response, TAAT hits its target dead center.
Early market testing revealed no significant experiential
differences between TAAT and tobacco cigarettes. That response
speaks volumes as TAAT looks to capture a sizeable share of the
$100-plus billion U.S. tobacco market.
Furthermore, the company is using an attractive pricing
structure to offer a substantial consumer savings compared to
top-selling tobacco cigarettes. As TAAT embarks on a nationwide
launch after commencing sales in Ohio late in December 2020,
management has engaged a leading consumer packaged goods sales
agency to accelerate brick-and-mortar retail sales while online
sales are generated through a brand-new online portal.
Meticulously Crafted, Perfectly Priced
The Beyond Tobacco(TM) base material of TAAT undergoes a 14-step
process to taste, smell and smoke just like tobacco, which includes
a patent-pending refinement process. In doing so, TAAT touches the
all-important five sensory elements of a smoking tobacco cigarette.
This includes nearly identical packaging and smoke volume (visual),
crackling sound upon lighting (auditory), a tobacco-like scent
while burning (smell), and “hand-to-mouth” motor habits (touch).
Ashes can even be “flicked” in a similar manner to tobacco ashes.
TAAT completes the sensory experience by using its patent-pending
Beyond Tobacco base material to
create a tobacco-like taste without using nicotine or tobacco.
The formulation provides a competitive edge over other types of
tobacco alternatives currently available. Primarily, it appeals to
current smokers aged 21 years and older who are looking to keep the
experiences they enjoy while leaving the nicotine behind. Even
better, smokers aged 21+ who switch to TAAT are not replacing one
nicotine product with another, as is often the case with
alternatives such as vaping.
In addition, while the packaging and smoking experience may be
nearly the same as a tobacco cigarette, the price point for TAAT’s
product offering is far different. A pack of TAAT is priced at
$3.99 in Ohio, approximately a 43% savings from a pack of Marlboro,
which costs about $7.00 per pack.
Marketing Blitz and Expansion
While meticulous and methodical in its development, TAAT is
starting to hit the gas in expansion. Subsequent to its December
launch in Ohio, TAAT initiated a 60-day, digital, out-of-home
(DooH) advertising campaign composed of video ads streaming on
thousands of video screens on gasoline pumps across a network of
chain and independent gas stations in Ohio; the videos promoting
TAAT products target smokers aged 21 and older. The “out-of-home”
video ads are running concurrently with other promotional
initiatives targeting legal-aged smokers, including a digital
marketing campaign for the TryTAAT landing
In just two months of being sold at retail, the brand is gaining
traction as evidenced by
60% of retailers that have carried TAAT for three or more weeks
placing at least one reorder, with many reorders increasing in
volume. The Menthol variety was the first to be sold out and
reordered during its first weeks of availability in Ohio. The
TryTAAT campaign is also being warmly received, considering that
one-third of all visitors to the page had submitted requests for a
sample pack of TAAT, representing an exceptionally high conversion
rate by industry standards.
This month, TAAT engaged
CROSSMARK Inc., a Texas-based omnichannel sales agency with more
than 25,000 employees serving all of North America. TAAT will
leverage CROSSMARK’s existing relationships with more than 100,000
convenience retailers directly serviced by the firm to potentially
expand availability of TAAT products in Ohio and elsewhere in the
United States. The new relationship dovetails perfectly with TAAT’s
launch of its new ecommerce website this month, which sold more
than CAD $50,000 of
product in its first 48 hours.
Tobacco Industry Acumen
TAAT has assembled a world-class management team with diverse
experience deeply rooted in the tobacco industry. CEO Setti
Coscarella not only spent years working in private equity and
banking, he was also a lead strategist for Reduced-Risk Products
("RRP") in Canada for international cigarette behemoth Philip
Morris International where he developed deep expertise in
commercializing smoking alternatives.
TAAT chief revenue officer Tim Corkum also has a long history in
tobacco, working various senior roles involving sales, supply chain
management and commercialization during his 21 years at Philip
Morris across Canada and in the Caribbean.
Under this leadership, TAAT has raised capital and organized for
expansion by doubling production capacity and filing trademarks in
54 countries. In October, TAAT received $5 million in a private
placement from a group of investors led by Debbie Chang, co-founder
of Horizons Ventures (in her personal capacity), a Hong Kong-based
venture capital firm. As management evaluates domestic and
international commercialization, the company optimized its Las
Vegas, Nevada, processing facility with automated workflows and
adding new machinery to efficiently increase production Beyond
Tobacco base material by 100%.
These efforts and leadership have not gone unrecognized. TAAT
share price has appreciated substantially, including a big jump in
September that led to TAAT being added to two Canadian stock
indices in December 2020 including the CSE Composite Index as well
as its CSE25(TM) index, an exclusive subset featuring the 25
largest companies in the index by market capitalization.
With hundreds of millions of people around the world smoking
cigarettes and many aspiring to leave nicotine behind, a huge
opportunity exists for savvy companies ready to seize the moment.
Even with the negative effects of vaping being fleshed out as the
market matures, Grand View Research still sees 23.8% growth in the
space from 2020 to 2027, ultimately reaching a projected $67.3
International Inc. (NYSE: PM), maker of Marlboro,
Virginia Slims and some of the world’s most popular cigarette
brands, made the decision in 2016 to transform its
business, moving away from combustible products to smoke-free
ways to deliver nicotine. The company set a goal of getting 40
million of its customers to quit smoking by 2025, of which it
touted making substantial progress in a 2019 report
showing a reduction in cigarette shipments and a rise in shipments
of its smoke-free products.
PM parent company Altria
Group Inc. (NYSE: MO) has a 10-year vision to lead the
transition of adult smokers to a noncombustible future. The company
is the owner of highly popular smokeless tobacco brands such as
Copenhagen and Skoal, in addition to a large stake in Juul Labs, a
top-selling e-cigarette brand in the United States. Altria is also
a large shareholder in Cronos, which it believes it can help
position in the legal cannabis market as part of encouraging
consumers to move beyond smoking to potentially reduced harm
Tobacco Industries p.l.c. ADR (NYSE: BTI), which makes
Camel and Newport cigarettes and Grizzly smokeless tobacco, has
also focused some R&D and marketing on less-risky products to
give its customers more options, including its Vuse (vapor), glo
(tobacco heating) and Velo (nicotine pouch) products. In the
company’s 2018 Harm
Reduction Focus Report, BAT lays out its commitment to support
consumer use of what are labeled PRRPs, o potentially reduced-risk
Technology Inc. (NYSE: RLX) made a big splash with its
initial public offering in January, bumping up its IPO price from
$8 per share to $12 per share before opening at $22.34 as investors
jumped headlong into the Chinese vaping company. Ultimately, the
company jumped 86% in its U.S.
stock market debut, giving the Chinese vaping firm a market
capitalization of nearly $35 billion. While RLX Technology sells
products in 13 countries, its bread and butter is China, where it
controls 62% of the market with only a 1.2% penetration rate.
With smokers aged 21 and above looking for alternatives that
provide the pleasure of smoking without the nicotine or tobacco,
the tobacco industry is clearly showing an interest in widening its
reach and providing choices to its consumers.
For more information about TAAT Lifestyle & Wellness Ltd.,
please visit www.TAATGlobal.com.
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