After resigning as a lead strategist at Philip Morris International, the world’s largest tobacco company, Setti Coscarella has been appointed Chief Executive Officer of Taat as it approaches the planned launch of Beyond Tobacco™ cigarettes. At Philip Morris, Coscarella led a commercialization team for its Reduced Risk Products (“RRP”) portfolio and launched a new business unit as well as several initiatives that transformed how RRPs are marketed in Canada. The Company believes that Coscarella’s experience with RRPs is especially relevant to Beyond Tobacco™ given their substantially similar target markets. Over the course of this summer, Taat has announced many developments relating to Beyond Tobacco™ including positive results from initial retail market testing, a successful test production run, and agreements with two U.S. distributors. Taat anticipates that Mr. Coscarella’s leadership can maximize the early-stage and long-term performance of Beyond Tobacco™ following its planned launch.
You have been involved in big tobacco previously in your career. Could you walk us through your past experience and tell us about what made you excited to come on board for this new opportunity at Beyond Tobacco?
My main role at Philip Morris was in the commercialization of our Reduced Risk Portfolio, which in Canada includes our Heat not Burn technology called IQOS. The main reason PMI undertook this initiative is that they understood that smokers want a better choice compared to traditional cigarettes. While quitting is the best choice a smoker can make, over 1 billion people globally continue to smoke. This creates a tremendous opportunity in the market to develop novel technologies which can help them transition to better alternatives. I had a wonderful experience at PMI and got to learn firsthand how tobacco products are made, marketed, distributed, and sold to hundreds of millions of consumers each and every day. The opportunity I see at Beyond Tobacco is enormous. Most people, smokers included, have a negative bias against tobacco and nicotine, so I think we can really create something special with Beyond Tobacco’s nicotine-free and tobacco-free cigarettes and give the market what it actually wants.
What kind of potential does Beyond Tobacco have from your perspective?
To articulate the potential Beyond Tobacco has, consider how common it is for smokers to want to quit. There was a 2018 study by the CDC that found 55.1% of adult smokers had attempted to quit in the past year… but only 7.5% of adult smokers had successfully quit smoking in the past year. That translates to six out of seven quitting attempts on average being unsuccessful, meaning that the potential is extraordinarily large for a product like Beyond Tobacco, for those who seek an alternative. Over the past few years, the vape market has exploded in popularity. However, from many of the studies I have seen and research I conducted, the vast majority of these products are not entirely “sticky” with consumers. They may transition for a few months, but they always seem to go back to their combustible cigarettes. This can be likened to coffee drinkers who switch to caffeine pills. While they still get the caffeine, they become deprived of the coffee-drinking experience, which for a lot of people could be the reason they go back to actual coffee. From my perspective, the market wants a combustible product which can eliminate tobacco and nicotine and Beyond Tobacco has exactly that.
Beyond Tobacco products are made from a plant based, hemp formulation, with no harmful additives. How do you plan to market this to consumers and educate them about the enormous health benefits that your products offer compared to traditional tobacco products?
In my opinion, nicotine is possibly the most useless drug in existence. It has absolutely no efficacy and provides no benefit to the user other than to keep you addicted. The reason people smoke tobacco is because they are perpetually in withdrawal. Many people think that nicotine alone is the reason people smoke, but that is not true. If it were, nicotine patches and other NRTs would actually work for most smokers, but their track record suggests otherwise. There’s a lot more that goes into it and that’s why most smokers who try alternative products end up going back to cigarettes. The benefit for Beyond Tobacco is that we can deliver a far better molecule than nicotine in a format that is familiar to a smoker and a taste that is superior to that of a cigarette. Beyond Tobacco is a plant based alternative to traditional tobacco without any of the harmful additives and preservatives that go into a cigarette. I truly believe that when a tobacco smoker is presented with the option of Beyond Tobacco, they will make the smarter choice.
Taking that a step further, if your product formulations are all hemp based, what kind of marketing does this enable you to do that would not normally be possible due to very strict regulations in the tobacco industry? How do you plan to leverage this?
I’d rather not give away my entire playbook before I get started, but you are right. The regulatory environment affords Beyond Tobacco some liberties that were once enjoyed by Big Tobacco during their golden age. I plan on leveraging this to the fullest and most responsible extent. Furthermore, Beyond Tobacco has already undergone extensive development and testing, and we have secured production capacity and distribution agreements. As such, there are very few steps remaining before launch, meaning we benefit from a relatively fast entry to the market under these preferable conditions.
You clearly know what it takes to build a global brand. How do you see getting Beyond Tobacco products in every store in North America within the next year or two?
First, the product needs to be right, and based on our initial testing and feedback to date, I am very confident that we have the right product. Distribution comes next and I’m very excited by the agreements the team has been able to procure to date, with access to 10,000+ U.S. retail stores through World Wide Vape and 20,000+ stores through West Coast Vape Supply. Having these agreements already helps to get the products on the shelves which I have no doubt we will be able to achieve. From there comes the consumer marketing and the infrastructure to help get the products off the shelf and into the consumer’s hands, which is what I like to call the Consumer Journey. We will be building that out in the coming weeks, including plans for in-store promotions, retailer and consumer education, and innovative methods of prompting on-the-spot user trials in compliance with COVID-19 protocols in each market. This will give us a rock-solid commercialization plan which we can leverage throughout the US and then build on it as we expand globally. We will be shortlisting markets that we believe best represent the target audience for the Beyond Tobacco product, and will look to establish a presence there quickly. In the next one to two years, we will proactively identify international markets for the global expansion of Beyond Tobacco.
Can you talk about the brand Beyond Tobacco and why you think that message will resonate with a global audience?
For me, Beyond Tobacco is more than a brand; it’s a destination. When I say it’s a destination, I say that because I believe once we have executed our launch that’s exactly where we will be. There has already been much disruption in other consumer product categories such as dairy, sugar, eggs, beer, and wine. Legacy incumbents in each of these categories have lost market share to innovative firms that make alternatives due to a pattern of consumers embracing the approach of making positive changes by keeping their habits (e.g., sweetening their coffee) while quietly cutting out the things they wish to discontinue their consumption of. I very much believe this trend can repeat itself with tobacco. Consider that more than one billion people worldwide use tobacco, all of whom consume nicotine - a drug that is effectively useless. Beyond Tobacco will give them something significantly better in a familiar format. This means they can make the positive change, but without feeling like they’re giving anything up.
You’ve tested and tried the products. What stood out to you most?
In all my years as a former smoker and while working in the tobacco industry, I have never come across a product that can replicate the taste and experience of smoking tobacco, and that includes vapes. When I tried Beyond Tobacco, it was the first time I ever tried something that wasn’t tobacco that tasted exactly like tobacco. I also enjoyed the feeling I got from the CBD much more than the nicotine, I think smokers will respond very well to this product as it enters the market.
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