Significant Opportunities in The Global Tobacco Market

NEW YORK, March 17, 2021 /PRNewswire/ -- Despite concerns connected with tobacco use, the global tobacco market reached an estimated $818 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 1.8% from 2021 to 2028; the United States is forecast to account for an estimated $50.9 billion of that in 2021. An innovative smoking alternative is set to snatch a slice of this billion-dollar industry. Capitalizing on the opportunity, TAAT(TM) Lifestyle & Wellness Ltd. (CSE: TAAT) (OTCQB: TOBAF) (Profile) now offers the 1.3 billion smokers in the world a true smoking experience without the risks associated with tobacco and nicotine. The disruptive company is reshaping the smoking experience with the launch of TAAT(TM), a nicotine-free and tobacco-free cigarette. The launch of the product has recieved so much positive response both online and on the ground that the company already plans to expand beyond its initial retail program in Ohio. TAAT joins well-known tobacco and nicotine companies 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 newcomer RLX Technology Inc. (NYSE: RLX), that are seeking to offer alternatives to traditional cigarettes.

• Despite significant concerns, global tobacco market reaches more than $800 billlion annually.
• Alternatives don't replicate the smoking taste or experience.
• Beyond Tobacco(TM) undergoes 14-step process, resulting in a substance that tastes, smells and smokes like tobacco.
• TAAT's breakthrough product mimics both taste and experience without tobacco or nicotine and at lower cost

Click here to view the custom infographic of the TAAT editorial.

Finding the Delicate Balance

Today's consumers are much more attentive to wellness issues, yet they still cling to pastimes and experiences that are familiar and comfortable. That's a delicate balance to find in the world of smoking, where legitimate concerns are at odds with the sensations and relaxation that so often comes with the rituals of smoking.

Hand-in-hand with the wellness trend is another closely related new movement, a movement that holds promise for smokers seeking a tobacco-free and nicotine-free smoking experience. A growing number of companies are transforming everyday edible items into alternative options by substituting ingredients. Plant-based meat is a prime example. Carefully formulated and crafted, these types of alternatives mimic original flavor, texture, taste and experience. Harmful ingredients are eliminated while preserving what makes the item both familiar and enjoyable.

Moving Beyond Tobacco

That's precisely what TAAT Lifestyle & Wellness Ltd. (CSE: TAAT) (OTCQB: TOBAF) conceived with its TAAT alternative cigarettes. Available in three flavors (Original, Menthol and Smooth), the tobacco-free, nicotine-free product is made from an exclusive Beyond Tobacco(TM) base material. The material undergoes a 14-step process, including a patent-pending refinement step, which results in a substance that tastes, smells and smokes just like tobacco.

By creating this experience that goes beyond smoking, TAAT touches the all-important five sensory elements of smoking a 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's Beyond Tobacco base material even offers a tobacco-like taste — all without using an iota of nicotine or tobacco.

That's not all. Not only is the TAAT smoking experience identical on every sensory level, it has a practical appeal too. A pack of TAAT is priced at $3.99 in Ohio, approximately 43% less than a pack of Marlboro, which costs about $7.00 per pack.

Eyeing Expansion

In February, TAAT announced that it had contracted with Texas-based CPG sales agency CROSSMARK to launch its innovative smoking solution in the retail space. CROSSMARK began those efforts in late February, launching TAAT cigarettes in Ohio, where more than three-quarters of its retail accounts, which number more than 7,000 convenience stores, showed interest in carrying the product. With such an impressive response, TAAT is already eyeing opportunities to move beyond Ohio's borders.

Experience has been a key driver in the rollout success. With more than a decade of experience in sales for a major global tobacco firm, TAAT's Ohio account manager has been working side-by-side with CROSSMARK to provide sales training for CROSSMARK representatives to ensure that TAAT is ideally positioned among the many tobacco category offerings available.

"These are exciting times for the company as we enter the final month of Q1 2021," said TAAT CEO Setti Coscarella. "Now that our product line has had the opportunity to be tested by smokers aged 21+ across Ohio with consistently positive reception, we can start to roll TAAT out more aggressively with the knowledge that we have a solid product formulation and commercialization playbook."

Coscarella noted that CROSSMARK's efforts will run concurrently with TAAT's continued in-house sales efforts and promotions for its online store, which has seen similar success.

Catching Fire Online

TAAT launched its online storefront on Wednesday, Feb. 17, 2021, only a few days after its Ohio unveiling. As part of that launch, the company offered a Taste Explorer Bundle, which consists of one 20-stick pack of each of the three TAAT varieties: Original, Smooth and Menthol. Available to smokers aged 21 and older, the bundle provides the chance to sample each offering without having to purchase a full carton.

Within the first five days of operation of the online store, TAAT was reporting more than C$100,000 in sales. Based on this early-stage performance, TAAT announced that would continue its efforts to attract adult-aged smokers to the online store. Those efforts, the company noted, included a campaign of targeted integrated banners in online content as well as a digital out-of-home campaign on thousands of Ohio gasoline pump displays. 

"To sell more than C$100,000 worth of a relatively new product in such a short period is absolutely exceptional," said Coscarella. "Countless smokers aged 21+ in the United States have been eagerly awaiting the launch of our online store on Wednesday, which I believe has contributed significantly to our product sales this past week. Our iterative rollout of TAAT in the United States has been very strategically planned to test the initial reactions of smokers aged 21+ when introduced to the concept of a nicotine-free and tobacco-free smoking experience, while also gauging reception of the product after it is sampled for the first time."

Years of research and product development preceded TAAT's rollout of its proprietary TAAT offering. After perfecting the product, the company then devoted nearly two months gathering feedback from adult-aged smokers as well as retailers and wholesalers of tobacco about the new product. "I believe those insights have proven useful, as they played a role in creating our strategies for launching the TAAT online store on Wednesday, which has been a remarkable success so far," Coscarella said.

Making Significant Moves

With a rising wave of smokers seeking alternatives to tobacco and nicotine, it's little wonder that many tobacco companies are seeing the writing on the wall and making significant moves to offer smoking options.

Philip Morris International Inc. (NYSE: PM) has gained attention as a major cigarette brand that has publicly announced its commitment to "find alternatives to cigarettes as quickly as possible." Last year the company announced that the U.S. FDA authorized PMI's IQOS as a modified risk tobacco product, making the smoke-free innovation the "first and only electronic nicotine product to receive such authorization from the Food and Drug Administration."

Altria Group Inc. (NYSE: MO) has stated that "tobacco harm reduction can only be successful if smokers find less risky products satisfying." With that in mind, the company has invested in delivering a compelling portfolio of noncombustible products to adult smokers; the portfolio includes three noncombustible product platforms with the potential to reduce harm: heated tobacco, oral tobacco and e-vapor. "Our diversified model allows us to meet adult consumers where they are going and invest appropriately to support their migration and conversion from combustible cigarettes," the company said.

British American Tobacco Industries p.l.c. ADR (NYSE: BTI) CEO Jack Bowlesunveiled the company's evolved strategy in March 2020, a strategy with a clear corporate purpose to "build A Better Tomorrow(TM) by reducing the health impact of our business." The strategy included the company's commitment to provide adult consumers with a wide range of enjoyable and less risky products, to continue to be clear that combustible cigarettes pose serious health risks and to encourage those who otherwise continue to smok to switch completely to scientifically substantiated, reduced-risk alternatives.

A newcomer to the industry, China-based RLX Technology Inc. (NYSE: RLX) is a leading branded e-vapor company that entered the market in January with an initial public offering that shot up from it initial price of $8 per share to $12 per share before opening at $22.34 as as result of investors keen interest. The company is dedicated to pursuing valuable scientific advances in further understanding and minimizing the health risks associated with e-vapor products.

With an intransigent multibillion-dollar smoking industry ripe for innovation and change, companies savvy enough to provide alternatives that meet and exceed smokers' expectations are likely to reap significant rewards.

For more information about TAAT Lifestyle & Wellness Ltd., please visit www.TAATGlobal.com.

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