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Business Observer Friday, May 31, 2019 2 weeks ago

Chew on this: Duo creates healthy alternative to smokeless tobacco

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A pair of Clearwater entrepreneurs have what they believe is an ideal product for a potentially explosive market. It pays off, they've learned, to remain nimble.
by: Brian Hartz Tampa Bay Editor

The ongoing search for an effective way to help people give up cigarettes and smokeless tobacco has been one of the great public health challenges of our time.

A pair of ambitious Clearwater entrepreneurs, after a few years of tinkering, now believe they have bit into a possible solution. Behind a company called TeaZa Energy, they plan to make big money from a product that not only helps tobacco users quit, but is good for their health and completely circumvents the gray area of e-cigarettes and vaping devices. 

Along the way, the company, founded in 2014, picked up some valuable startup lessons. Namely, the founders learned about remaining nimble to meet opportunities and not being tied to an original plan or strategy.    

“I tried chewing tobacco when I was younger and had mostly bad experiences,” says TeaZa Energy founder Dr. Brent Agin, a family medicine doctor. “The idea came from driving long distances and trying to replicate the reason people would chew tobacco, which is to stay alert through the power of oral satisfaction.”

Agin says he tried chewing sunflower seeds but they dried out his mouth and left his tongue and gums feeling raw and salty. Plus, they’re messy. His mind turned to the energy drink market and hit products like Red Bull and 5-Hour Energy.

TeaZa Energy, the result of Agin’s ruminations, is a product that mimics the smokeless tobacco pouches beloved by truck drivers and baseball players, right down to the “hockey puck”-style packaging. But instead of tobacco, the pouches are filled with ground-up tea leaves, as well as naturally occurring herbs and spices.

“We had a product identity crisis. People really didn’t know what it was.” Brent Agin, founder of TeaZa

And crucially, there’s no nicotine — and no need to spit the juices out. The leaves, spices and even the pouches can be swallowed, Agin says. TeaZa Energy contains caffeine, and the company also offers a decaf version.

Marketing the product to retail outlets, however, has been a hit-and-miss effort so far, says TeaZa Energy COO Matt Morrow, a friend of Agin who came aboard to help with production and logistics.

“Amazon is the majority of our business,” Morrow says. “Over the past two years, we’ve made a big push to move into retail.”

Market research revealed a swathe of TeaZa consumers, as much as 25%, don’t smoke or dip and never have, and so with tobacco usage trending downward on a macro level, Agin and Morrow decided to veer away from the round, puck-like containers and switch to a flip-top package. Their strategy was to lean into the product’s appeal to the energy and nutritional supplement market and make it more attractive to retailers that shied away from carrying tobacco products.

But that approach didn’t pan out the way they intended.

“We had a product identity crisis,” Agin says. “The package had ‘tea’ and ‘energy’ on it. People really didn’t know what it was. But at the end of the day, if it looks like a duck, walks like a duck and quacks like a duck …”

It’s not only a duck; it’s a duck that won endorsements from past and present pro athletes, like retired Major League Baseball pitcher David Wells, who had been notorious dippers. So TeaZa shifted again, and embraced the “tobacco crowd,” as they call their customer base.

The puck-like containers returned, and gradually TeaZa has made inroads at convenience stores like Rally, Chevron and 7-Eleven, as well as independently owned “smoke shops” that sell tobacco products. In total, a couple dozen retail outlets in the Tampa Bay area now carry the product. Agin and Morrow continue to search for a national partner that would help the product truly break through on a massive scale.

“For retailers that are looking to provide their customers better alternatives and folks like CVS and Walgreens that have actually removed tobacco products from the store shelves, this is something that they could replace it with," Morrow says, "something with good margins they can offer to their customers."

The duo believe the time is right for TeaZa, saying the tobacco alternative market is forecast to grow to $40 billion over the next five years. TeaZa, meanwhile, is on track to exceed $1 million in gross annual revenue after a slight dip year-over-year in sales in 2018. 

“I think we took our foot off the gas a bit, relative to the tobacco market,” Morrow says. “But every year prior to that, we had world-class return on investment numbers. We were profitable and making good money but we weren’t doing what we needed to sell more product.”

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