REG - Chill Brands Group - Update on Synthetic Nicotine Products

Chill BrandsAnnouncement

03/08/2022 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220803:nRSC6885Ua&default-theme=true

RNS Number : 6885U  Chill Brands Group PLC  03 August 2022

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

3 August 2022

Chill Brands Group plc

("Chill Brands" or the "Company")

 

Update on Synthetic Nicotine Products

Chill Brands Group, the international consumer packaged goods company,
provides an update regarding the status of its synthetic nicotine products.

Summary

·    US Regulators have introduced additional restrictions for synthetic
nicotine products with substantial costs to manufacturers and retailers.

·    Chill Brands ends future development and US sales of its tobacco-free
nicotine product line.

·    Company working with international partners to transfer remaining
synthetic nicotine inventory for sale.

·    All other Chill Brands products remain unaffected.

Background

In December 2021, the Company launched a new range of 'tobacco-free nicotine'
("TFN") chew pouch products containing synthetic nicotine. These TFN products
were marketed as an alternative to traditional tobacco-derived nicotine
pouches. At the time of their launch, these synthetic nicotine products were
not subject to the same regulations or restrictions as regular tobacco
products and presented a compelling growth opportunity for the Company.

In March 2022, a federal funding bill that amended the statutory definition of
"tobacco product" was passed by the US Congress. Amongst other changes, the
bill gave the US Food and Drug Administration (FDA) authority over synthetic
nicotine and brought the Company's TFN product line within the scope of
tobacco regulations.

As a result of these changes to the US legal landscape, manufacturers of
synthetic nicotine products must now submit Premarket Tobacco Applications (a
"PMTA") for their products to legally remain on sale.

Status of Chill Brands' TFN Products

To date, Chill Brands has complied with all legal requirements in relation to
the regulatory status of its TFN product line. The Company filed the requisite
PMTA applications for each of its flavour and strength variants before the FDA
deadline of 14 May 2022 and its TFN products have remained on sale without
incurring any significant additional costs.

While the Company has already completed this initial regulatory stage at
limited cost, the Board has identified that the full cost of pursuing a PMTA
through to completion could exceed US$400,000 per product variant or flavour.
In the event that full PMTA authorisation could be obtained, the Company would
also face additional restrictions in respect of the marketing and online sale
of its TFN products while being unable to use many major carriers to ship
synthetic nicotine orders. Finally, the Company notes the FDA's stated
intention to further restrict the sale of nicotine products.

In light of these factors, the Company has determined that it would not be
commercially viable to continue with the development of its TFN product line
or the PMTA submission process. Chill Brands' TFN synthetic nicotine products
will therefore be withdrawn from sale in the US and development of that
product range will cease with immediate effect.

The Company is making final arrangements to transfer its complete remaining
inventory of TFN products to a number of international partners for sale in
global markets where the same restrictions do not apply.

These changes will have no effect on the Company's other products which remain
on sale.

Callum Sommerton, Chief Executive Officer of Chill Brands, commented: "While
synthetic nicotine initially presented itself as a promising growth category,
recent developments have made it increasingly difficult and costly for
challenger brands to remain on the market. With further regulatory changes
expected, we have taken the difficult decision to call time on our TFN product
range.

Naturally this is disappointing, but this decision will at least allow us to
avoid expending further capital which will be better allocated to developing
other products and potential revenue streams. As we mitigate the financial
impact of these developments through the sale of our remaining synthetic
nicotine inventory, we are now wholly focused on the success of our existing
CBD range and the introduction of new complementary products that will be
unveiled in due course."

-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)

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCBCGDIDGGDGDD