Alternative tobacco specialist TAAT Lifestyle & Wellness [CSE:TAAT] is already selling out of the menthol version of its Beyond Tobacco cigarettes in Ohio, the company reported yesterday.
The cigarettes are already on re-order with retailers while TAAT says it will continue to promote the other varieties of the cigarettes.
Non-nicotine material intended to help smokers kick the habit
The news is a great testament for the Beyond Tobacco strategy, which aims to provide legal age smokers with a non-nicotine alternative that can help them to kick the habit. According to Grand View Research, the size of the menthol cigarette market alone is $80 billion. Major tobacco brands have been offering menthol cigarettes to consumers since the 1950s.
TAAT said that the popularity of its menthol variant could play a key role in potential expansion initiatives in the north-eastern United States due to the high proportion of menthol combustible tobacco sales in specific states. Based on Nielsen data from 2011-16, the three states with the highest proportion of menthol cigarette in combustible tobacco sales were Pennsylvania, Maryland and Delaware.
Menthol sales could be a key part of the strategy
The Armchair Trader added TAAT Lifestyle & Wellness to our pick list when the share price stood at C$1.26. The shares are currently trading at C$2.60 but have reached as high as $4.00 in trading in the last two months. We continue to believe TAAT represents a revolutionary approach to tackling the social issue of nicotine addiction globally, and an alternative for smokers to vaping. It is selling into an enormous potential market of existing smokers, using a price that is well below that of traditional tobacco products.
“Unlike those who prefer traditional tobacco cigarettes, legal-aged smokers of menthols enjoy a very specific combination of flavours which is difficult to duplicate, especially in non-combustible formats,” said Setti Coscarella, CEO of TAAT Lifestyle & Wellness. “Our objective with TAAT is to offer legal-aged smokers a better alternative to tobacco cigarettes by aligning our tobacco-free and nicotine-free products with what they are already enjoying, which includes menthol flavouring in TAAT Menthol to closely emulate the experience of smoking a menthol cigarette.”
Although non-flavoured tobacco comprises the majority of the tobacco market, there are many markets in the United States in which over one third of all cigarettes sold are menthols. As such, this is not a product category to be overlooked.
Ohio sales data to help TAAT plan next moves
Beyond Tobacco has only been on sale for a few weeks in Ohio, but TAAT says the incoming sales data is particularly valuable. For starters, it is testament that the product can sell, and sell well. TAAT has an extremely experienced management team with long and successful track records in the Big Tobacco space; they are well suited to the strategic roll out of a product of this sort and on this sort of scale.
“I have brought many tobacco category products to market across North America, and this phase in which meaningful sales insights begin to emerge is pivotal to any product launch and shaping the product’s long-term commercialization plan, whether at a regional or national level,” said Tim Corkum, Chief Revenue Officer at TAAT.
TAAT looks very well positioned to challenge traditional tobacco products in Ohio as it is also able to sell at a lower price point. It is also good to see key personnel in the firm are already considering a roll out to other populous US states.
- Podcast: Setti Coscarella, TAAT Global Alternatives, on Q3 results and European expansion (4 days ago)
- TAAT Global Alternatives receives second round of C$10m from Horizon Ventures for Beyond Tobacco (5 days ago)
- TAAT’s third quarter numbers see massive growth in sales from US distribution (12 days ago)