Vape-related Deaths Turn Smokers Towards Alternative Quit Smoking Aids

NEW YORK, July 14, 2020 /PRNewswire/ -- More smokers are trying to quit than ever before, making electronic cigarettes the most popular alternative to smoking in recent years. Major tobacco companies like Vector Group (NYSE:VGR), Altria Group (NYSE:MO), British American Tobacco (NYSE:BTI), and Philip Morris International Inc. (NYSE:PM) decided to take the "if you can't beat em, join em" route and jumped onboard with the vaping movement in an attempt to corner the market. Now, vapes are at risk of losing their top spot in the alternative tobacco market after vape-related deaths and illnesses led to restrictions and full-fledge flavor bans. Add to that the increased concerns surrounding lung disease during the pandemic and it's glaringly clear that consumers are steering away from e-cigarettes. Vape giant Juul Labs, and its largest investor Altria Group, are feeling the effects of the vape bans. Meanwhile, Vype brand owner British American Tobacco has been forced to downgrade revenue growth expectations due to lacklustre sales in the US. Luckily, alternative smoking products like Taat Lifestyle & Wellness Ltd. (CSE:TAAT) Beyond Tobacco™ cigarettes are ready to provide a better-for-you alternative to a wanting market.

Taat Lifestyle & Wellness Ltd (TAAT.CN) is a Las Vegas-based early-stage life sciences company that has developed nicotine-free and tobacco-free alternatives to traditional cigarettes. Using a unique proprietary blend of all-natural ingredients and meticulous engineering of the user experience, Taat Beyond Tobacco™ cigarettes were designed to emulate every aspect of smoking, but without the nicotine and added chemicals found in cigarettes. To assist smokers in attaining a seamless transition away from tobacco cigarettes, Taat Beyond Tobacco™ cigarettes contain at least 50mg of CBD per stick, which has been shown to mitigate tobacco withdrawal symptoms and reduce dependency.

Taat Lifestyle & Wellness Ltd. (TAAT.CN) is gearing up to launch its product to the market this fall and has already signed a monumental distribution deal with Worldwide Vape (WWV). As per the agreement, WWV will make the company's tobacco-flavored and menthol-flavored Taat Beyond Tobacco™ cigarettes available for up to 10,000 retail stores in 38 US States.

The company also just completed the first phase of initial retail market testing for its Beyond Tobacco™ cigarettes, which resulted in positive responses from users. At the beginning of May 2020, "test" versions of the Beyond Tobacco™ cigarettes were offered for sale at over 50 retail locations in California and Nevada to solicit feedback from users. During the testing, users consistently gave testimonies that reflected their satisfaction with Beyond Tobacco™ cigarettes as an acceptable replacement for legacy tobacco products. The feedback also resulted in a reorder rate over 75% from participating retailers whose supply of Taat Beyond Tobacco™ cigarettes sold out during this first phase.

Apart from disrupting the $849 billion tobacco industry, Taat Lifestyle & Wellness Ltd.  has also identified a significant opportunity to compete in the $80 billion menthol cigarettes market with its menthol flavored Taat Beyond Tobacco™ cigarettes. Despite their popularity, menthol flavored cigarettes have a bad reputation due to their appeal to young people and have been banned in Brazil, Canada, the UK, Chile, the European Union, and some US states. The entire US could soon follow suit after the House recently approved a bill to ban the sale of flavored e-cigarettes and flavored tobacco products, including menthol cigarettes.

Unlike tobacco-based menthol cigarettes made by companies like Philip Morris International Inc. and British American Tobacco, Taat Lifestyle & Wellness Ltd's (TAAT.CN) menthol flavored Taat Beyond Tobacco™ cigarettes won't be exposed to the same regulations because they are nicotine- and tobacco-free.

Vape Industry Continues to Take a Beating

Just last year, the vape industry was estimated to be worth $19.3 billion. The market has since taken a hit following a series of vape-related deaths and illnesses. In January, the Centers for Disease Control and Prevention (CDC) reported 2,602 hospitalizations and 59 deaths linked to vaping. In 2019, several US states took matters into their own hands and imposed bans on the sale of vaping products. Then, in January 2020, the US Food and Drug Administration (FDA) issued a policy to stop vape companies from manufacturing, distributing, and selling flavored cartridge-based e-cigarettes other than tobacco or menthol flavors.

The increase in government regulations, along with numerous lawsuits, is severely hindering Juul's revenue. In May, the company cut its internal valuation by 35% to $13 billion after outlining plans to drop roughly one third of its workforce. The company's sales have also fallen about 10% over the past year, although it still holds 60% of the vape market. Juul's largest investor Altria Group (NYSE:MO) reported a $4.1 billion write-down on its Juul Labs investment in January and now values its 35% stake in the e-cigarette company at $4.2 billion, a significant drop from the initial $12.8 billion investment. In October 2019, Altria devalued its investment in Juul by $4.5 billion.

Vype brand owner British American Tobacco (NYSE:BTI) is also facing financial setbacks, although the company has blamed its slower-than-expected growth on pandemic-related smoking bans. The company cited the pandemic's impact on emerging markets like Bangladesh, Vietnam, and Malaysia, ongoing lockdown measures in South Africa, Mexico, and Argentina, and tobacco bans in South Africa as a few reasons for withdrawing its full-year forecast. British American Tobacco's adjusted revenue for 2020 is now expected to grow between 1% and 3% on a constant currency basis, down from expected growth between 3% and 5%.

Vector Group (NYSE:VGR) seems to be the only tobacco company not facing financial woes as the tobacco and vape industry struggle. In the first quarter of 2020, the company reported a revenue of $454.5 million, compared to $420.9 million in Q1 2019 and recorded an operating income of $53.3 million, compared to $42.6 million for the same period last year.

Of course, if tobacco and vaping laws continue to tighten, it could hinder companies like Vector Group, Altria Group, British American Tobacco, and Philip Morris International Inc. moving forward. Although the White House has said that President Donald Trump's administration opposes the recent bill to ban flavored products and add a new excise tax on nicotine, the industry will no doubt continue to face opposition in the US and around the world. The laws do, however, favor alternative tobacco products like Taat Lifestyle & Wellness Ltd's (TAAT.CN) Beyond Tobacco™ cigarettes.

For more information on Taat Lifestyle & Wellness Ltd (CSE:TAAT), click here.

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