THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

7 December 2023

Chill Brands Group plc

("Chill Brands" or the "Company")

Trading Update

Chill Brands, the consumer packaged-goods distribution company, is pleased to provide an update on its trading, focussed on positive developments around its Chill ZERO nicotine free vapes and the Chill.com marketplace.

Highlights

·    Purchase of vape products by leading US retailer with launch into seven new states.

·    Sales made to more than 475 independent retail stores since UK launch during August 2023.

·    Late stage negotiations to place Chill ZERO products in a major UK retail chain.

·    Expansion of e-commerce footprint with sales growth on Amazon.co.uk.

·    Growth of Chill.com marketplace platform with more than 40 external brands listed.

Purchase of Vapour Products by Leading US Retailer

Chill Brands has received a purchase order for its nicotine-free vape products from Smoker Friendly, the largest dedicated chain of smoke shops in the United States. Starting in 2024, Chill ZERO products will enter an initial 60 stores of Smoker Friendly's many US locations. 

The agreement to launch with Smoker Friendly follows the Company's pilot phase which provided initial sales data demonstrating clear consumer demand for nicotine-free vape products. The pilot scheme saw Chill Brands' products enter stores in Colorado, Arizona, Florida and Texas. 

From early 2024, Chill ZERO products will be stocked by select Smoker Friendly stores in Colorado, Wyoming, Montana, North Carolina, Florida, Missouri, Arkansas, Tennessee and Indiana. These stores will carry all 13 existing vape product variations across the 600, 1,500 and 3,000 puff ranges.

Sean Musgrave, vapour category director for Smoker Friendly, said: "We're excited to work with Chill Brands and look forward to trialling the Chill ZERO products. We are seeing demand grow with respect to nicotine-free vape products. Our customers are looking for a product that has no nicotine, yet still delivers the satisfaction of vaping, and I feel that Chill ZERO can satisfy that request."

Growth of UK Retail Channel

Since releasing its vape products to the UK market during August 2023, Chill Brands has now made sales to more than 475 independent retail stores throughout the UK. These locations have been secured through the Company's partnership with The Vaping Group and include franchised branches of Premier, Spar and Nisa Local.  

Having compiled four months of sales data, the Company is pleased to report that it has observed a positive trend in reorder rates from independent retailers. Stores placing reorders are doing so within around two months of first carrying the brand (depending on their initial purchase amount), reflecting continued demand for Chill ZERO nicotine-free vape products. The Company will seek to maintain strong reorder rates and a rapid replenishment cycle as it scales its distribution to new stores.

In addition to these independent stores, and as announced on 9 October 2023, the Company has received an order that will see its Chill ZERO products stocked in an initial 150 of WHSmith's 1,700 stores. Chill products are expected to enter WHSmith travel stores in the near future and further information will be provided following their ranging date.

In addition, Chill Brands is in advanced negotiations to place Chill ZERO in another major UK retailer and will provide a further update upon confirming an order, which is expected during December.

E-Commerce Update

As announced on 12 October 2023, Chill ZERO products are now available for purchase by UK consumers on Amazon Prime. Since their launch on the platform in late October, Chill ZERO listings have gained thousands of monthly views with a sustained weekly increase in traffic and first page rankings for 'nicotine free vape' and other key search terms. Purchases have now been made by more than 200 individual customers and the Company expects sales of its products on the Amazon platform to continue to expand in 2024.

Further to announcements made during November 2023, Chill Brands has expanded its B2B distribution network through product listings with leading wholesale operators who have a combined reach of more than 9,000 business customers. Flawless (www.flawlessvapedistro.co.uk) is the UK's leading distributor to category specialist vape stores, while Vape Local (www.vapelocal.co.uk, operated by Phoenix 2 Retail) is one of the country's leading suppliers to convenience store accounts. These listings are intended to facilitate new business-to-business sales, introducing the Company's products to a wider network of retailers.

The Company is pleased to note that its vape products are now carried by a number of additional consumer-focused category specialist e-commerce sites including oceanvape.co.uk, totally-vapour.co.uk, and royalvapes.co.uk. Certain products are also carried by dyspensr.com in the United States. These product listings serve to expose Chill Brands' products to a broad number of consumers across different demographics and geographies, establishing brand recognition and creating further sales opportunities.  

Chill.com Marketplace Update

The Company has also seen substantial growth of its Chill.com marketplace website which offers a curated collection of health, wellness and alternative products. Chill.com now hosts 44 external brands between its US and UK-focused subdomains.

Since Chill Brands' last update on the Chill.com marketplace, new brands joining the US site have included NUBU infused Manuka honey, Peak State nootropics coffee, Perfy superfood soda, AWKN hangover prevention supplements, Hempress Hygienics female care products, and More Labs, the brand behind the leading US electrolyte beverage Morning Recovery.

In the UK, new brands joining Chill.com have included Yumi chewable vitamins, Quanna sexual wellness, Wild natural deodorants, and Goodrays, one of the UK's leading CBD beverage brands.

Chill Brands continues to build a pipeline of new brands and products that will periodically join the Chill.com website. During 2024, the Company intends to execute numerous marketing campaigns and event activations with the intention of driving new customer traffic to the growing website. 

Callum Sommerton, Chief Executive Officer of Chill Brands, said: "The Company has come a long way during 2023 and I am incredibly proud of the significant milestones we have achieved. The coming months will see us take action on our plans to expand the retail footprint of our Chill ZERO products, secure new listings with major retailers, and further define our Chill.com marketplace as a go-to destination for health and wellness including alternative products featuring hemp, nootropics, adaptogens and other popular natural ingredients.

Having laid firm foundations from which to grow, I am confident that Chill Brands has strong growth potential and we are keen to deliver value as we seize the opportunities ahead of us."

-ENDS-

About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is concerned with the development, marketing and distribution of wellness and recreational products containing natural, functional ingredients. The Company's proprietary product range is distributed by some of the most recognisable convenience retail outlets in the US and includes nicotine-free disposable vapour products that cater to the rapidly growing market for tobacco alternatives. Chill Brands also operates the chill.com e-commerce website, on which it is building a marketplace of products from third-party brands.

Publication on website

A copy of this announcement is also available on the Group's website at http://www.chillbrandsgroup.com

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