TAAT CEO Setti Coscarella catches up with Cantech Letter

When we last sat down with former Philip Morris International executive Setti Coscarella his new company, TAAT (TAAT Stock Quote, Chart, News CSE:TAAT) was launching Beyond Tobacco™, a proprietary formulation of base cigarette material that looks, smells, tastes, smokes, and even sounds like tobacco, despite containing zero tobacco and zero nicotine.

At the time we noted that TAAT was facing a big challenge in a tobacco industry that is dominated by five global corporations; Philip Morris International, Altria Group, British American Tobacco, Imperial, and Japan Tobacco.

Yet despite the headwinds, TAAT flourished in 2021. We talked to Coscarella about what 2022 holds for the company.

Setti, when we last talked to you, TAAT was tackling the U.S. market first by focusing on Ohio. How has the retail strategy progressed since then?

We have grown by leaps and bounds. From a few stores in one state we are now approaching 2,000 stores in over 20 states within a year. We have also expanded internationally with master distribution agreements and orders coming in from UK/Ireland, Australia and Austria. We are finding that the TAAT brand and message is resonating with our consumers and new wholesalers are coming online weekly. The trade show strategy and cash and carry strategy has worked well for us and we will look to leverage these successes and scale upon them in 2022.

Last January you told us you weren’t looking to rush things but rather “observe sales and demand patterns throughout an entire calendar year, which might help us to shape our strategies for subsequent years.” Are there things you have learned that you care to share with us?

For sure, our initial product we put into market was very good by objective standards. Focus groups enjoyed the product and we put it into market. Subsequently, we received some feedback from our consumers on how we could make TAAT even better. So we put our R&D team to work on revising the formulation to eliminate some of the pain points our consumers were experiencing. I think they did a tremendous job in quickly identifying the underlying issues and moved diligently towards a solution. We launched our reconstituted blend in late summer, and I believe it is the absolute best alternative to traditional tobacco cigarettes on the market today. Not only did this revision solve some of the experiential pain points, it also allowed us to achieve significantly improved unit economics on our product and greater efficiency in manufacturing. I have been nothing short of impressed with what our team has been able to do in such a short period of time.

How are you feeling about your ability to produce the product en masse? Could TAAT handle a large, unexpected order?

I would believe so. We have already started building our inventory for larger US distribution orders and have safety stock available for international orders. The only caveat for international is packaging which will have unique specifications depending on the jurisdiction. So when we do receive international orders, we work with our local partners to ensure that our packaging is compliant for that market and once we have signoff we get to work on manufacturing.

What about international ambitions? Could TAAT be a significant company if its sole focus was the American market?

As I have always said, the US is an enormous market opportunity for TAAT, it generates almost $100 billion in tobacco sales annually. Half of 1% market share in this market alone would be approximately $500 million annually. In Europe, I think the opportunity is even greater. Smoking rates tend to be higher than in the US and the market there has been actively looking for better alternatives longer than in the US. When we initially sent some samples over to the EU for feedback, the response was overwhelmingly positive both from samples of wholesale/retail and end consumers. Upon learning this, we moved quickly to begin establishing some toeholds in key markets. We have a number of active discussions currently underway which, if they come to fruition, could land a number of new EU countries in 2022.

What do you want to accomplish in 2022?

I believe 2022 will be a great year for TAAT. The team in Las Vegas has grown by leaps and bounds over the last year and are executing daily on growing the business. I would like to see toehold positions developed in all US states where TAAT can be sold and then a concerted effort on building concentration and density of convenience stores throughout each state. We will also continue to work or European relationships to expand TAAT into more countries. Our goal at TAAT is to make it available to as many, if not all, of the over 1 billion smokers around the world.