TAAT Global Alternatives (CSE:TAAT / OTCQX: TOBAF) is the maker of Beyond Tobacco, a faux tobacco mixture that is catching on quickly in the US as an alternative to nicotine tobacco. Its utility for the millions of US smokers who are looking to give up is obvious – it replicates the look and smell of tobacco without the addictive qualities of vaping (which is heavily nicotine based).
Red Bull remains a privately held company
But CEO Setti Coscarella has recently been making comparisons between his company and energy drink manufacturer Red Bull, Many investors would love to get into Red Bull of course, but it is a privately held company. TAAT on the other hand is already listed. But does the company hold up to scrutiny as another potential consumer retail super growth play?
Red Bull actually started in the 1970s, when it was a syrupy tonic, where it was used by blue collar workers in Thailand. They loved the energy boost they got from it. What it required to make Red Bull a global, high energy lifestyle brand, was a change to the taste to make it more palatable, and slicker packaging and marketing.
Red Bull launched in Austria in 1987. Its beginnings were relatively humble – it focused sales on the German language markets in Europe, and did not really start to expand from these until the mid-1990s.In 2020 Red Bull sold 7.9 billion cans in over 170 countries and employs more than 12,000 people. It is still privately held.
So how is TAAT going to be like Red Bull?
One of its focus points is taste – Beyond Tobacco tastes and smells like real tobacco. It needs to produce a good experience for smokers to contemplate it as an alternative to real cigarettes. Herbal cigarettes are simply not cutting it in this respect. Like Red Bull, which made changes to a Thai syrup to make it tasty for foreigners, TAAT is gunning to be the tasty alternative to tobacco.
Coscarella and his team are also working on packaging, which he believes is important. Red Bull chose to drop its traditional bottle packaging in the 1970s to go with a can. This was a strong statement of identity. TAAT is doing the same – it has deliberately chosen a similar packaging format to cigarettes as it seeks to compete for the dollar to traditional smokers.
TAAT is even following the Red Bull game plan when it comes to distribution, with a sales network that is already nationwide. While the company has been concentrating on physical outlets in key tobacco consuming states, it has a digital distribution strategy in place as well.
“It took 40 years for Red Bull to get to where it is today,” Coscarella says. “But what we have so far is incredibly promising. Gaining market share in the global tobacco industry is a marathon, not a race. It is worth $814bn per year. It’s a big mountain to climb. But with TAAT’s emerging track record of success, and it’s promising case studies, it’s safe to say that much like Red Bull this is the beginning of a journey that, over time, will create a global brand.”
There is another similarity which Coscarella did not touch on: Red Bull spent heavily on sports sponsorship in its early years and continues to do so today. This has played a big role in promoting awareness of its brand globally, associating the company with high octane, high adrenaline sports. TAAT has also started to spend on sports sponsorship in key US markets, backing the Professional Bull Riding (PBR) league in the United States and heavyweight boxing.
Red Bull has arguably created the global energy drinks market from scratch. TAAT is still at a very early stage in its development, but is rapidly creating a viable alternative to addictive cigarettes for millions of smokers who want to start their journey to kicking the habit. Watch this space.