As a former senior executive at both Philip Morris (PMI-NYSE) and Altria (MO-NYSE) Saxon knows the politics and business of smoking in Europe and North America.
He’s connected, he’s competent and he sees A Big Place for TAAT in the fast-growing harm reduction market. TAAT has no tobacco, no nicotine and 97% fewer chemicals.
“I think the TAAT product is part of the broader conversation in this space,” he told me over the phone this week. “When the product showed some early and promising signs that it was heading in a direction—that it could be part of the harm reduction conversation—that really piqued my interest.”
He says TAAT has a different strategy than the other junior entrepreneurs trying to break into this $800 billion market.
“Everybody so far in this harm-reduction conversation has tried to solve the problem with a ‘new-to-the-world-product’ as I like to call it.” (Think heat-not-burn or vaping…)
“But what our founder Joe Deighan did that was interesting was…other than those alternatives, he said there might be people who like the traditional form of cigarette.
“I think our TAAT product looks and feels like the traditional product that smokers are already using every day. I think we're asking for less of a hurdle in terms of the jump they need to make to make the switch to TAAT.
“This third version of our product has been refined to resemble the traditional smoking experience…all the hard work in product development has been done.”
Saxon is convinced that TAAT now has the right harm reduction product for this multi-billion dollar market—and the sales strategy to start making it pay almost immediately. In fact, urgency was the one theme that dominated our talk. There is no existential angst here. He is hitting the ground running, and fast.
“The key for a product like this is to make sure you're available in the majority of the store—so that when they need to make that repurchase it's easily available.
“You want to make it easy for them to find, and easy for them to purchase. That’s what we will be focused on over the next three months and that's where we could make an immediate change here in my first weeks in the role.”
When you own a distributor, you get to quickly set your point of sales support, decide on pricing and be able to do whatever it takes to move product.
TAAT paid just over $6 million for ADCO. Big volume will bring EBITDA. TAAT is meant to be even MORE profitable than traditional cigarettes. With no excise tax—because this is not a tobacco product—it can sell for a big discount to any other top-selling brand, and still generate huge cash flows.
Before ADCO, TAAT was selling its tobacco-free, nicotine-free “sticks” in 2500 stores and increasing sales at 10% per quarter—so they were doing OK. And re-orders are often more than 50% of revenue—another great sign.