REG - Chill Brands Group - AGM Statement

Chill BrandsAnnouncement

29/09/2022 13:00

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RNS Number : 2013B  Chill Brands Group PLC  29 September 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018), AS AMENDED BY REGULATION 11 OF THE
MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

29 September 2022

Chill Brands Group plc

("Chill Brands" or the "Company")

 

AGM Statement

Chill Brands Group, the international consumer packaged goods company, will
hold its Annual General Meeting ('AGM') today at 3.00pm (BST) at the offices
of Allenby Capital Limited, 5th Floor, 5 St Helen's Place, London EC3A 6AB. At
the AGM the Company's Chief Executive Officer, Callum Sommerton, will make the
following statement:

"Our AGM is upon us again and our report and accounts for the financial year
ended 31 March 2022 will be released shortly, providing reflective commentary
on the Company's financial and operational performance. Comparatively, this
statement is intended to provide a forward-looking review of the Company's
status today along with its prospects for the future.

It will come as no surprise to anyone who has followed Chill Brands for some
time that the Company encountered significant difficulties during the period
ended March 2022. These challenges were addressed by fundraising activities
carried out in April and May which ultimately led to a restructuring of the
Group's management team and operating model.

Since being appointed as Chill Brands' Chief Executive Officer, my priority
has been to reduce spending and redress flaws within the Company's approach to
sales and marketing. While this work is ongoing, we have taken considerable
strides to provide the Company with a firm foundation from which to grow both
in terms of revenue and shareholder value.

I am pleased to provide this update on our progress and look forward to
sharing further information about the Group's development during the weeks and
months to come.

Financial Management

Responsible management of the Group's finances is an essential part of
correcting past mistakes and planning for the future. Since April, we have
scrutinised every aspect of the business to ensure that funds are allocated
only to activities for which there is a strong business case and a clear path
to return on investment. Our work so far has led to a major decline in
recurring expenses that is estimated to amount to an annual reduction of at
least US $1,000,000.

In addition to cost cutting measures, we continue to implement strong controls
to improve financial governance and accurately assess the health of the
business. These steps will better enable us to further reduce our cash burn
rate, extend our runway, and ultimately deliver a Company that is cash flow
positive.

Retail Operations

Having previously struggled to resource the planned rollout of products into a
wider group of US convenience store locations, we have reconfigured the
Company's approach to the retail channel. The Company's complex master
distribution agreement has been brought to a close and we have developed
essential internal infrastructure to help us manage and scale Chill Brands'
retail footprint.

The Company recently signed agreements with additional brokerage partners and
we have started to receive purchase orders in connection with new stores and
distributors, which we expect to continue and accelerate over the next two
quarters. Separately, and in line with renewed branding and marketing
strategies, we are now distributing updated sales collateral materials to
retail stores with the aim of improving brand recognition and sell through
rates.

Chill Brands is now working with partners that know its business, understand
its products, and have the connections and industry knowledge to help the
Company scale. The Company's efforts start again from a firm baseline of
retail locations including 363 branches of Yesway/Allsup's, 157 Smoker
Friendly outlets, and 80 independent vendors with further expansion planned
during the remainder of 2022 and beyond. The Company also aims to commence
sales pilot programmes to establish new routes to market and will provide
further information as additional distribution agreements are executed.

eCommerce Operations

After announcing a switch to an eCommerce-led sales strategy in January 2022,
the Company has been working to redevelop Chill.com which will launch in
October. Following the release of the improved website, our strategy will be
fixed around marketing fundamentals including search engine optimisation (SEO)
and conversion rate optimisation (CRO).

Even without the implementation of an effective marketing strategy the
Chill.com site has contributed significantly to our sales performance during
2022, having generated in excess of $20,000 gross monthly sales during certain
peak periods. I expect this performance to improve as we assign greater
attention, resources, and expertise to our digital sales channels.

Over time we have also replaced certain discontinued marketing activities from
the past year with new campaigns that are considered more relevant to the
Chill brand and its customers. This has included a grass roots social media
marketing drive in collaboration with influencers who in many cases have
accepted sample products in lieu of cash payments. These social media
personalities have a combined follower count in excess of 5 million and their
posts have generated organic exposure for the Chill brand which we will
continue to pursue on an ongoing basis.

In addition to our own sales activities, we continue to hold discussions with
select brands with a view to onboarding their products to Chill.com as we seek
to build on the concept of a wellness and relaxation marketplace. These
conversations will be supported greatly by the launch of our new site with
further updates to follow.

Brand and Product Development

In concert with adjustments to our retail and eCommerce strategies, we have
also been undertaking a complete refresh of the Chill brand. Its new identity
and appearance have been meticulously crafted in line with market analytics to
create a brand that reflects consumer trends and is more appealing to those
customers who are most inclined to buy the Company's products.

I am also pleased to report that a number of product development projects are
now underway. These efforts are intended to diversify the Company's range such
that it will comprise both premium CBD products and other products that
contain alternative natural ingredients. Early discussions with the Company's
distribution partners suggest there is strong demand for the proposed new
products and further details will be shared as these projects progress.

Outlook

After what has been an incredibly difficult year for the Company, I find that
there are still many reasons to be optimistic. Chill Brands is a promising
business with valuable assets the likes of which are not a common feature of
comparable consumer goods companies.

Our ownership of the Chill.com domain has been a consistent source of interest
from organisations much larger than ourselves and it has value both as we
build our brand but also as a digital asset that could generate significant
funds for the Company on any eventual sale. We also continue to progress
through rounds of testing in relation to our unique seed genetics and will
provide further information regarding routes to commercialisation for those
biological assets in due course. Finally, the Company sells what our team
believes to be some of the most differentiated products developed by any CBD
brand on the market today. Our CBD chew pouches consistently attract new
customers seeking alternatives to mainstream oral tobacco products, while our
unique CBD isolate infused herbal smokes have recently invited interest from
new sales venues which we hope to open shortly. I am sure that these novel
products will bear fruit when paired with our updated brand and marketing
strategy.

Much of our work in stabilising the Company and re-energising the Chill brand
has yet to become visible, but we are working tirelessly to realise our vision
of a differentiated and above all profitable wellness business with an
expanded product range and the ability to scale. I believe this can only be
delivered by building a solid framework for omnichannel sales, ensuring that
we can continue to advance online and in stores without exhausting our
resources. There is still much to be done and it is essential that the Company
begins to execute. We can no longer focus on the relative strength of our
partners and advisors or disguising our roadmap from competitors, but must
instead be driven by revenue growth and tangible progress.

I am grateful to our shareholders for their support of the Company through
what has been an exceptionally challenging period. Thank you for your
patience, I am confident that the future of Chill Brands is bright."

-ENDS-

About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an international company
concerned with the development, production, and distribution of best-in-class
hemp-derived CBD products, tobacco alternatives and other consumer packaged
goods (CPG) products. The Company operates primarily in the US, where its
products are distributed online and via some of the nation's most recognisable
convenience retail outlets. The Group's strategy is anchored around lifestyle
marketing that is designed to enhance the popularity of its products,
channelling visitors to its landmark chill.com website.

Publication on website

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

Media enquiries:

 Chill Brands Group plc                                  contact@chillbrandsgroup.com
 Allenby Capital Limited (Financial Adviser and Broker)  +44 (0) 20 3328 5656
 Nick Harriss/Nick Naylor (Corporate Finance)

Kelly Gardiner (Equity Sales)

 

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