Mr. Setti Coscarella reports

TAAT BEGINS FOCUSED INITIATIVE ON IN-STORE ACTIVATION FOR EXISTING PLACEMENTS IN NATIONAL U.S. GAS STATION CHAINS

In 2022, TAAT Global Alternatives Inc. is commencing a targeted in-store activation strategy for national gas station chains in the United States, a key retail segment for the tobacco industry that represents a steadily growing share of TAAT retailers. In its Jan. 18, 2022, press release the company stated its plan to enhance in-store activation strategies to further strengthen its volume of repeat orders. TAAT has elected to place a specialized focus on developing in-store activation tactics to engage smokers aged over 21 in gas stations where tobacco products are sold, as the relatively standard in-store experience of purchasing tobacco in gas stations could allow for such tactics to be scaled rapidly across the United States without significant modification. Furthermore, the existing presence of TAAT in major national gas station chains enables the company to execute these tactics in short order through its network of tobacco wholesalers. Current locations of TAAT retailers can be viewed on the recently updated store locator feature on TryTAAT.

By driving in-store conversions in settings such as gas stations through focused initiatives, the company believes it can more efficiently acquire smokers aged over 21 as users of TAAT which could lead to long-term repeat purchases of TAAT products at retail. One of the company's objectives in 2022 is to further grow its wholesale reorder rate, which is generally propelled by robust in-store sales on a repeat basis.

Approximately one month after launching TAAT for the first time in Ohio, the company announced a statewide video advertisement campaign on over 10,400 gas pump displays, reportedly leading to numerous smokers aged over 21 requesting TAAT in a given station's retail store after viewing the video advertisement. After evaluating purchasing interactions at fuel retail points of sale, the company has identified several opportunities to optimize its in-store activations in gas stations, to include the following:

• Countertop and pump signage/displays: Because the concept of a nicotine-free and tobacco-free alternative to cigarettes is unprecedented for many smokers aged over 21, the company plans to implement conspicuous brand fixtures for countertops in gas stations as well as fuel pumps, explicitly conveying the value proposition of TAAT (that is, its Beyond Nicotine slogan). As this form of promotion is prohibited for tobacco products in the United States, this is a unique opportunity to capture the attention of smokers aged over 21 as a method for activation at the point of sale for tobacco products;
• Staff training and in-store audits: Given the fairly routine nature of a tobacco cigarette purchase by a current smoker aged over 21 with an existing brand preference, in-store personnel can play a key role with respect to introducing the idea of an alternative such as TAAT original, smooth or menthol at the point of sale. To this end, the company plans to work with its wholesale partners to institute sales training programs for staff in an effort to open more dialogues for the purpose of driving conversions. Correspondingly, TAAT plans to privately conduct audits to ensure sales procedures are being followed, in line with standard in-store evaluation protocols for the CPG (consumer packaged good) industry;
• TAAT Twos small-format samples: Throughout 2021, anecdotes from TAAT retailers indicated that smokers aged over 21 were often hesitant to purchase a full 20-stick pack to sample TAAT for the first time. Because tobacco cigarettes are not offered in sample pack sizes, TAAT plans to capitalize on this deficit by offering TAAT Twos, a two-stick pack of TAAT original, smooth or menthol as an approachable and low-cost option for sampling TAAT. The company believes that by lowering the barrier to sampling TAAT it could improve conversion rates in settings such as gas stations;
• Integration with chain-wide programs: Beginning this year, the company will actively seek to participate in chain-wide programs of the national gas station chains whose stores currently carry TAAT products, to optimize conversions at the store level with the assistance and supervision of the franchisor. By doing so, the company could more easily penetrate new markets that are not serviced by its existing distributors through potential rollouts led by a given gas station chain at the corporate level.

TAAT chief executive officer Setti Coscarella commented: "We are very pleased to have landed placements of TAAT in over 2,000 stores in the United States in about one year of selling TAAT at retail, and we are excited to have the opportunity to leverage this presence by optimizing our in-store activation tactics to prompt more smokers aged over 21 to try TAAT. Although this is something we plan to do in all of our existing and newly added points of sale, gas stations represent a unique opportunity for us based on the initial performance of TAAT in some of the largest chains across the country whose stores already carry the product. For motorists who are smokers aged over 21, filling up on gas wherever their travels may take them, the process of pumping gas, going into the store and buying a pack of cigarettes is fairly routine and may appear to provide little opportunity to influence them to purchase an alternative such as TAAT instead. However, between our initial gas station advertisements in Ohio last January and the performance of TAAT in national chain gas stations across the country over the course of the year, we have come to better understand how to navigate the activation process effectively in that setting. As we develop relationships with these national gas station chains as well as the tobacco wholesalers with whom they do business, we have recognized this is a key segment of retailers for us in line with our objective to fortify our market share in the United States in 2022. We therefore look forward to executing these strategies in partnership with our tobacco wholesalers, capitalizing on our existing presence in gas stations to bring smokers aged over 21 a better choice."

About TAAT Global Alternatives Inc.

The company has developed TAAT, which is a tobacco-free and nicotine-free alternative to traditional cigarettes offered in original, smooth and menthol varieties. TAAT's base material is Beyond Tobacco, a proprietary blend which undergoes a patent-pending refinement technique causing its scent and taste to resemble tobacco. Under executive leadership with Big Tobacco pedigree, TAAT was launched first in the United States in Q4 2020 as the company seeks to position itself in the $814-billion global tobacco industry.

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