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Taat Lifestyle & Wellness (CSE:TAAT/Frankfurt:2TP2) continues to press ahead with its expansion in the US this week. The owner of an alternative to tobacco called ‘Beyond Tobacco’ has announced it has entered into its first distribution deal with ADCO Distributors Inc in Ohio. ADCO is an established distributor of major tobacco brands like Marlboro, Newport and Camel.

ADCO Distributors said it would be carrying Taat cigarettes in its original, smooth and menthol variants. ADCO has more than 5000 connections to convenience points of sale in Ohio.

Beyond Tobacco: an alternative to nicotine-based tobacco

Taat has developed a Beyond Tobacco material that it is positioning against tobacco products. It contains no tobacco or nicotine and is being aimed at smokers who want to leave tobacco and nicotine behind. The proprietary flavouring blend is designed to blend the flavour and scent of tobacco, engineering the smoking experience without the provision of nicotine intake.

Taat had made no secret of its plans to use established distribution channels for tobacco as it moves into the US market. If it is to become a nicotine-free alternative for smokers trying to give up smoking, it will need to compete alongside established tobacco brands.

Setti Coscarella, CEO of Taat, has a Big Tobacco background, having previously been involved in new product development at Philip Morris. He sees regionally-focused distribution in the US as an important part of building a footprint for any new consumer product.

“Because we are competing with incumbent tobacco products, making Taat available to retailers through the same wholesale channel as tobacco products is an important part of getting the product on the shelf,” Coscarella said. Correspondingly, making it available for consumers to purchase at retail through the same channels as tobacco products is crucial to aligning the product with existing purchase routines of legal-aged tobacco smokers.”

The true ‘anchor’ task for Taat lies ahead: getting interest in Taat from stores in the ADCOO Ohio network. Production of the first distribution-scale batch of Taat product is underway and is expected to hit the US market in the next few weeks.

Global expansion plans

Taat, which is also listed in Germany as well as in Canada, reinforced its distribution ambitions by hiring Michael Saxon to its advisory board. Saxon has deep experience in the global tobacco distribution market and has worked to build market share for big names in the tobacco industry, including Altria Group and Philip Morris International. He is very familiar with the tobacco distribution market in the United States.

Taat’s US expansion plans seem well advanced. It has taken delivery of 3.2 tons of its proprietary Beyond Tobacco material to its Las Vegas processing warehouse and has said it expects to produce 15,000 10 pack cartons from this material.

Taat seems to be moving remarkably quickly in its distribution plans. Like Beyond Meat (NASDAQ:BYND), it has developed a product which it claims will can be realistically positioned as an alternative to tobacco products, and can play a part in helping people to give up smoking altogether. Coscarella thinks that, by replicating the ritual of smoking, without the presence of addictive molecules, this can be achieved.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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