REG - Supreme PLC - Vaping Category Update

SupremeAnnouncement

18/10/2023 07:15

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RNS Number : 4491Q  Supreme PLC  18 October 2023

18 October 2023

 

Supreme plc

("Supreme," the "Company" or the "Group")

 

Vaping Category Update

 

Supreme (AIM: SUP), a leading manufacturer, supplier, and brand owner of
fast-moving consumer products, today outlines a series of proactive measures
within the Group's owned-brand vaping products to seek to mitigate the growing
rise of underage vaping as well as reduce the environmental impact of
disposable vapes.

 

As an industry leader, and to ensure its owned brands do not create any
interest from underage vapers, Supreme today announces the following proactive
measures over the coming months, which it believes should be adopted across
the UK vaping market:

 

1.    Plain packaging: Packaging across its entire 88vape range, from
disposables to 10ml liquids, will be immediately assessed to ensure the use of
colour is very limited (used only to differentiate one stock item from
another) and the packaging is plain and uniform. Supreme does not use images,
cartoons or characters on its packaging.

 

2.    Discontinue all bright coloured disposables: The Company's 88vape
disposable range will be switched to either plain black, white or grey
hardware with any bright colours discontinued at the earliest opportunity.

 

3.   Age-appropriate flavours only: The naming conventions of all flavours
across the 88vape range will be simplified, for example "Peach Dream" will be
become "Peach" and "Sweet Strawberry" will become "Strawberry" to reduce the
shelf appeal for underage vapers. Any flavours which are likely to be more
appealing to underage vapers will be removed entirely from the range.

 

4.   To trade only with retailers with age robust verification: Supreme
will increase its 'pre-order' due diligence on all retailers and e-tailers in
its network to ensure they expressly confirm that they have robust age
verification protocols in place. Supreme will no longer trade with those that
cannot comply with this requirement.

 

5.   Responsible location of products in store: Supreme will strongly
recommend to all retailers that their Vaping products should not be located
close to confectionery and will work with retailers to find a suitable
location in store to avoid underage vapers from coming into contact with
vaping products.

 

6.    Vape disposal bins in store: Supreme is currently rolling out vape
disposal units across the entire estate of its largest customer, B&M
Retail, in a bid to encourage more responsible disposal of the single use
devices.

 

7.   Government co-operation: Supreme will continue to cooperate with the
government in all its efforts to combat underage vaping and would welcome
further legislation of the industry, such as those proposed by the Vaping
Industry Association who argue that the sale of vaping products should be
licenced with substantial fines for those retailers that are found to be
selling vapes to underage individuals.

 

8.    Industry co-operation: Supreme will encourage other vape brand owners
that they work with to follow suit.

 

Sandy Chadha, Chief Executive Officer of Supreme, commented:

"As a business, we are fully committed to eradicating underage vaping so that
the industry can get back to its core objective; to support adult smokers to
find an affordable, sustainable, safer alternative to smoking. Whilst we
believe flavoured vapes are a critical part of many ex-smokers 'quitting
journey' as they seek to replace that tobacco taste for something more
palatable, we are also desperate to ensure that those flavours do not spark
any interest in younger people.

 

We are fully supportive of any further legislation in the sector and believe
it is the right thing to do to begin to transition our business by removing or
changing anything from within our product set that could be deemed
compromising. As government guidance evolves we may seek to re-assess this
approach."

 

"I would like to go on record to pledge my support to the initiatives
currently being recommended to the government by the Vaping Industry
Association who argue that licensing the sale of vaping products (similar to
alcohol) will directly address the problem such that only reputable and
responsible retailers should be permitted to sell vapes in the first place
with substantial fines for those that are found to be selling vapes to
children."

 

"Finally, I would also like to highlight the 'black market' or illicit vape
market to the government as a core source of vapes for young people given
their accessibility and the interest generated by these brands on social
media. These illicit vaping products which are non-compliant with UK
regulations and have larger tank sizes (meaning they last longer), higher
nicotine concentrations and can contain banned products. Unless we stand up to
this black market (by stricter border-force and increased investment into
trading standards) then even the strictest laws governing the legal vape
market won't make a notable change to whether young people choose to vape."

 

As announced separately today, Supreme continues to trade in line with
expectations(1) for the year ended 31 March 2024, which were significantly
increased on 26 September 2023. A copy of the Company's trading update issued
today is available at:

 

https://investors.supreme.co.uk/regulatory-announcements/
(https://url.avanan.click/v2/___https:/investors.supreme.co.uk/regulatory-announcements/___.YXAxZTpzaG9yZWNhcDphOm86OTU1M2UxM2MxMzBhZmNkZWY0YzA3MzI4MDgzYThiN2U6NjpjMjBiOjM3MWE0ZDIwNGUzYzRlOWRhNTFjNGIxOTE1YzRkZmRlMmY1MWY0ODRmN2Y2NTNkOTZmMDk4MWE3YjI5N2I0MTU6cDpU)
.

 

(1) Company compiled analyst Adjusted EBITDA(2) consensus for the year ending
31 March 2024 prior to release of this announcement was £29 million.

(2) Adjusted EBITDA means operating profit before depreciation, amortisation,
share-based payments charge, fair value movements on non-hedge accounted
derivatives and exceptional items.

Enquiries:

 

 Supreme plc                                            via Vigo Consulting

 Sandy Chadha, Chief Executive Officer

 Suzanne Smith, Chief Finance Officer

 Grant Thornton UK LLP (Nominated Adviser)              +44 (0)20 7383 5100

 Samantha Harrison / Harrison Clarke / Samuel Littler

 Berenberg (Broker)                                     +44 (0)20 3207 7800

 Mark Whitmore / Marie Moy / Mara Grasso

 Vigo Consulting (Financial Public Relations)           +44 (0)20 7390 0230

 Jeremy Garcia / Kendall Hill

 supreme@vigoconsulting.com

 

About Supreme

 

Supreme supplies products across five key categories; batteries, lighting,
vaping, sports nutrition & wellness, and branded household consumer goods.
The Company's capabilities span from product development and manufacturing
through to its extensive retail distribution network and direct to consumer
capabilities. This vertically integrated platform provides an excellent route
to market for well-known brands and products.

 

The Group has over 3,300 active business accounts with retail customers who
manage over 10,000 branded retail outlets. Customers include B&M, Home
Bargains, Poundland, Tesco, Sainsburys, Morrisons, Amazon, The Range,
Costcutter, Asda, Halfords, Iceland and HM Prison & Probation Service.

 

In addition to distributing globally-recognised brands such as Duracell,
Energizer and Panasonic, and supplying lighting products exclusively under the
Energizer, Eveready, Black & Decker and JCB licences across 45 countries,
Supreme has also developed brands in-house, most notably 88Vape and has a
growing footprint in Sports Nutrition and Wellness via its principal brands
Sci-MX and Battle Bites.

 

investors.supreme.co.uk/
(https://url.avanan.click/v2/___https:/investors.supreme.co.uk/___.YXAxZTpzaG9yZWNhcDphOm86OTU1M2UxM2MxMzBhZmNkZWY0YzA3MzI4MDgzYThiN2U6NjplNWM2OmRhMTI5NGE5NmFjOTYwYmFhYmM2MjdiNWVlZTZjM2U0ZjYxODA2OGZlOTRlMjZkNDBjMzAwMWIyZmZkN2IxNTc6cDpU)

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