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Shares in TAAT Lifestyle & Wellness [CSE:TAAT/FRA:2TP2] were rising again today as the market anticipated heavy demand for its alternative to tobacco product, due to hit shelves in Ohio late this month. The company has been working hard on the distribution of its non-nicotine solution to retail outlets in the US state, considered to be an ideal launch pad for the product.

Beyond Tobacco has been designed to replace cigarettes in a smoker’s daily routine. According to Setti Coscarella, CEO of TAAT and a former senior executive at Philip Morris, the failure of nicotine patches and vaping solutions can be attributed to many of the daily habits that smokers form. Its proprietary Beyond Tobacco material has been designed to look, feel and smell like tobacco cigarettes, but it contains no nicotine.

TAAT anticipates heavy demand from Ohio smokers

TAAT reported this weekend that it is anticipating heavy demand from outlets in Ohio for the product, which will be priced at a cheaper rate than cigarettes but which can be distributed on the same shelves as tobacco products. Its factory in Nevada has been instructed to work 16 hours a day to ensure that there is enough product to meet the Ohio demand.

The factory is now producing 300lbs of product per day, enough to produce a full pallet of 1,440 boxes of TAAT. The processing facility has already reached over 50% of its capacity, necessitating an upgrade of the on-site machinery.

TAAT is now installing new equipment on site at its Nevada production hub that can help it to meet demand, taking daily production capacity to 2400lbs per day (based on a 16 hour day). This includes conveyor belts and a vacuum sealer. We understand that the product could launch in Ohio before the end of the month.

TAAT Lifestyle & Wellness shares see more buying

Shares in TAAT Lifestyle & Wellness shares were seeing increased volume on the Canadian Securities Exchange on Monday, up in early trading from just over 2.75 to approach the 3.0 mark. This followed some further buying activity on Friday and likely reflects rising excitement on the part of investors as the company gears up for its initial launch in Ohio.

Shares in TAAT had hit a high over 4.2 in October as the company announced its initial drive into the US market and identified Ohio as its primary target state, with a high density of smokers and short distances between distribution points.

We think it highly significant that TAAT is steering away from a niche product distribution strategy, avoiding specialist tobacco distribution, instead taking on mainstream tobacco brands in their own backyard.

TAAT is building a team of seasoned tobacco professionals at the top of its organisation, led by Coscarella, who have the distribution knowledge and contacts to make a US and global mass market distribution strategy work properly. We think it is essential that this sort of expertise is in place and the Ohio strategy bears this out.

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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